It’s a bitterly cold winter’s day in Newsham Park in Liverpool, yet a group of people are out in the Grade II listed Victorian park’s landscaped rose garden moving a young tree to a better location while others do litter picking.

Until recently, the park, sandwiched between the city’s deprived areas of Tuebrook, Stoneycroft and Kensington, was seen as a no-go area by local residents. Vandals would destroy trees, groups of homeless people and people with addictions would gather, and crime rates were high, exacerbating the social isolation of many residents. Some of the large Victorian buildings around the park house drug rehabilitation centres, hostels for the homeless and other projects, fuelling tension with neighbours.

“The disconnect between people in the community, between generations and groups, and the increasing anxiety about crime has resulted in us becoming a very fragmented community and an anxious place,” says Christina Ashworth, a self-employed business coach, who founded Treehouse Liverpool, a collective of local people who work together to improve their park. “The people who suffer disproportionately from the impact [of antisocial behaviour] are the socially isolated and of those we have many.”

Vinnie Deary, 61, had been litter picking by himself for years. Then he was approached in 2013 by Treehouse Liverpool. The members invited him to join them in repainting the rails around the lakes, and since then he has taken part in most of the group’s activities. A joiner by trade, he lost his job 15 years ago, when he developed epilepsy, and has been unable to find suitable work since. As well as transforming his social life, Deary says, it has made his area more neighbourly. He says: “It’s amazing. People just want to get involved with you when you start doing something like this. It’s brought the community together.”

Tim Smit, executive vice-chairman and co-founder of the Eden Project, is calling for more projects like Treehouse. A study published today finds that disconnected communities could be costing the UK economy £32bn every year. The research, commissioned by the Eden Project’s neighbourhood initiative, The Big Lunch, which receives £1m-£2m a year from the Big Lottery Fund, reveals the annual cost to public services of social isolation and disconnected communities, including demand on health services and policing.

The study found that far from just being a symptom of old age, loneliness and social isolation affected a broad range of people: “[There are] key triggers that can disrupt lives and create a situation in which loneliness becomes the norm,” the report says. “[These] include becoming a new mum at a young age, facing empty nest syndrome or retirement, experiencing long-term health issues or mobility limitations, dealing with bereavement or going through a family breakdown, such as divorce or separation.”

According to the Office for National Statistics, Britain is the loneliness capital of Europe. We’re less likely to know our neighbours than residents anywhere else in the EU, and a high proportion of the population have no one to rely on in a crisis. It’s more than simply feeling lonely – research shows that isolation can have huge knock-on effects on both mental and physical health, which is one of the reasons why social isolation is costing the UK so much money.

According to the research, which was carried out by the consultancy the Centre for Economics and Business Research (Cebr), disconnected communities are also linked to a loss of productivity, with a net cost to the economy of about £12bn every year, based on previous research that found happiness could be associated with a 12% rise in productivity.

“Productivity is boosted by happiness generated through community involvement and the social cohesion it brings, and is also effected by the lower stress, higher self-esteem, health and lifestyle benefits gained through community involvement,” the report concludes. The solution, Smit says, is social connection with neighbours. Neighbourliness already delivers substantial economic benefits to UK society, representing an annual saving of £23.8bn in total, the study finds. This saving, which was calculated based on a detailed survey of 122,000 people from Eden Project’s Big Lunch newsletter databases and a review of previous research, comes from sharing between neighbours, an increase in social connection, and reductions in the demands on public services such as healthcare, social care, welfare and the environment.

“We estimate that, based on our assumptions, involvement in community activities and initiatives is currently delivering reduction in the demands on the health services that can be valued at £2.7bn,” the report states. “This has the potential to rise to an estimated £7.9bn if there is more widespread involvement in community initiatives.”

Using the Home Office’s data on the economic cost of crime, the researchers also estimate that £205m would be saved from policing budgets. It says: “The increased sense of community that arises from greater social cohesion can be associated with a 1% reduction in crime ... [which] can be translated into a reduction in the demands on policing services.” Once people get involved in The Big Lunch or a local project, “they are more likely to say hello to people in the street, and it starts to feel like a neighbourhood rather than your home is your fortress”, says Smit. “Meeting new people and realising that they don’t eat babies and that they are nice is really socially important, and that’s what inspires us.

“Our country is a pretty marvellous place and we need to give people the opportunity to remember that. A lot of beastly people shout rather loudly so you get a wrong impression of what the majority are about and so we’re trying to create a platform for people who do care about looking out for others.”

He’s not alone. Tackling the issue of social isolation has become a top priority for large funding bodies such as the Big Lottery Fund, which has just announced £2.7m funding for a Campaign to End Loneliness project in order to drive public action to create 250,000 acts of kindness – such as regular phone calls and volunteer work in the community.

Back in Liverpool, Deary says the park is totally changed since Treehouse started gardening, tree planting, outdoor yoga and wild play sessions for children. “Once you get people involved, a lot of others pay more attention to it. The trees aren’t getting damaged like before ,” he says. “Instead of being covered in graffiti and run-down, people are looking after it.”

Further south, in Southend-on-Sea, volunteers and participants of Just Ride, which runs inclusive drop-in cycling sessions, have had similar experiences. The concept behind Just Ride, which is funded by sponsorship from local cycling businesses and a £7,000 grant from the Big Lottery Fund – and based at a local athletics track – is to get everyone out cycling together, no matter what kind of bike they need to do that. Tandems, side-by-side tandems, tricycles and wheelchair tandems, are available for all to try.

While many participants have learning disabilities and come with local day services, others come just to ride if they are afraid of cycling on streets or are feeling lonely. It’s also popular with those going through rehab for strokes or if they have had an operation.

Gwen Cook, who helped to launch the project after attending a Big Lunch training session, says: “I just want people to enjoy cycling – but it really is a way of bringing people together, and I love that. It helps you to see people as people. Some participants also become volunteers. It’s a proper community.”

One participant, Zayd Rahman, takes a break from cycling laps around the track. He fell seriously ill in February last year and doctors were forced to amputate one of his legs. As football coach who played football five times a week, the loss of his leg has been a huge shock, not least because of the isolation he has felt. For the last five weeks, he and his partner, Farhana, have been attending Just Ride.

“I was going for counselling and was asked about my hobbies, but my hobbies were playing sports so I felt there was nothing I could do,” he says. “The nice thing about this project is it’s given me the confidence to try cycling and get back to my former self and not be depressed. Everyone has been so friendly and supportive here – and for people to show that they care has meant so much.”

Farhana, who is not currently working, says: “For us, it was important to get out of the house. We like seeing the regular faces here and getting to interact with all different people from all different backgrounds. It’s really made a difference.”

While the report makes no specific recommendations, the message is clear: more community-led projects such as Treehouse, Just Ride and the Big Lunch, should be encouraged, says Oliver Hogan, director of Cebr. “The next step is obviously to provide more funding for these kinds of initiatives. These things aren’t really resource intensive, they are more time intensive, with people giving up their time.”

Ingrid Koehler, service innovation lead at the Local Government Information Unit, says local authorities are waking up to the cost of social isolation, but some of the traditional ways that councils helped to bring people together are suffering due to budget cuts. According to Unison, 467 libraries, 578 children’s centres, and more than 300 youth centres have closed across England since 2010.

“What we’re talking about is the reading group at the library, the festivals and events, the allotments, the play groups and the community centres where clubs can meet,” says Koehler. “Some of these universal services, which are about just providing a venue and the opportunity to meet people, are slipping away.

“I don’t think we have a handle on what the decline in universal services such as these will have on loneliness. The impact won’t have truly hit yet, but I think it’s on its way.”

Smit does admit the impact of the Big Lunch initiative and all the community projects it supports is equally hard to measure, but says the benefits are priceless. “It’s extremely powerful. If you feel the soul go back into a place, you can’t really quantify it in money.”