Father Peter McVerry doesn't mince words. On Tuesday, at the funeral of Daniel McAnaspie, a 17-year-old who died tragically in the care of the HSE, he said: "We can't ignore this morning the fact that a major contributing factor to Daniel's death was the neglect of the state."

For more than 30 years McVerry has been working with homeless and neglected young people, and he has regularly made pronouncements like this. The trust that bears his name (The Peter McVerry Trust) oversees homeless hostels, drug treatment services and a drop-in centre. Though his words often seem hard-hitting and even angry on paper, his voice is soft and his demeanour is remarkably calm.

"There are lots of Daniels," he says, sitting in the basement office of the Sherrard Street drop-in centre for young adults where he works. "I do about one funeral a month – a young person who's died from an overdose... a suicide... a murder. It doesn't get easier. In fact it gets harder every time. But I have learned to integrate it into my spirituality. I'm not God. I can't solve the world's problems, all I can do is make life a little bit happier for some of them."

A former Clongowes boy, McVerry's own youth was sheltered enough. The son of a Belfast doctor and a Welsh nurse, his parents imbued him with both a sense of service and a strong faith. "My mother was a protestant," he explains. "But if you married a protestant in those days you'd go to hell, so she converted to catholicism. Like many converts she became more catholic than the catholics. There was a rosary every night with all the trimmings and you were expected to be there."

The faith he inherited led to a vocation, although his early life as a Jesuit priest seems, in some respects, as aimless as that of any contemporary, middle-class twenty-something. He taught for a while at Belvedere college, studied theology and philosophy, and flirted with academia (he began a chemistry PhD). It was in 1974, when the Jesuits in Ireland decided to engage more with issues of social justice, that he really found his place in the world, moving into a flat in Summerhill, Dublin, for six years.

"Going to Summerhill was a total culture-shock," he says. "People lived in tenement flats. There'd be eight families living in one house. The place was crawling with rats – rats the size of kittens, immune to every poison ever invented. Parents would talk about waking in the morning and finding a rat on the baby's cot. There was no sound-proofing and you'd hear every word from the other rooms. Summerhill was used by Dublin Corporation as a sort of dumping ground for families who'd been evicted from other areas. Now, there were many fine families there, but in every house of eight families there were one or two with serious problems – parents who'd return from the pub at two in the morning and spend the night fighting with the whole house listening. Children would be awake until four or five in the morning, then unable to go to school. And yet I enjoyed it. The people were lovely even though everything was stacked against them."

In 1979 McVerry opened a hostel for homeless boys and has been working with homeless young people ever since. From his perspective, things have got "both better and worse" for the poor of Ireland since then. "The physical living conditions for most people have improved," he says. "The slums have transferred to private rented accommodation to a degree. Low income families are still living in disgraceful places, but for most, housing has improved. During the Celtic Tiger years people who'd never worked in their lives got jobs. It allowed them to hold their heads up high, to look after their children with a sense of pride, to go on holidays. On the down side, those who were left behind, those stuck in poverty, are more stuck than ever before. Fifteen years ago the people we were working with couldn't get a job, but they could get a little flat for a hundred pounds deposit and 25 pounds a week. Five years ago, you could get a job, a low-paid temporary job, but a job. But you couldn't get a flat, because rents had shot through the roof. And now you can neither get a job nor a flat and people are really and truly desperate."

He's very disappointed at how wealth was squandered during the boom years. "We should have been spending our surplus, making public services in Ireland the best in the world," he says. "We should have had a first class education service, a first class health service, a first class housing service, a first class childcare service. Instead we went for tax cuts. The number of homeless people during the Celtic Tiger years actually doubled. In 1996 we had 2,500 homeless people. In 2008 we had 5,000."

Why does he think that happened? "Excessive individualism was government policy at every level," he says. "The attitude was: 'The world is at your feet, go out and make the best of it. Don't worry about anyone else.' They led us to believe that security was to be found in material assets, in our houses, in our cars, and as people subsequently discovered, that was a mirage. Security is not to be found in your assets, it's found in community. But during the Celtic Tiger we sold young people a very dubious message and left them, I think, feeling extraordinarily insecure. It put a lot of pressure on them: 'What if I don't do well in school? What if I can't get a job?' They had no sense of being part of a society that would watch over them. They were left feeling isolated and alone."

McVerry regularly sees the more extreme results of this disintegrating sense of community, "The young people who come here have some enormous problems. They're carrying an awful burden on their shoulders, but they're so resilient. They're terrific really. We've got horrific cases. There's a young lad who has a door slammed in his face every time he tries to go home. 'You're not wanted here!' Imagine what that's like for a young person. And the drug problem has got a lot more complex over the last while. Previously it was predominantly a heroin problem, now the majority are what we call poly-drug-users. They take a whole cocktail of drugs. They do it to escape their lives. We have young people here who as children had to go buy the drugs for their parents before they went to school in the morning; kids who had to help their mother inject because she couldn't find a vein. Of course they develop problems themselves. Although we help them out with practical things, our main purpose is just to be there for them, to be a shoulder to cry on... and not to judge."

Do the problems he sees challenge his faith? He shakes his head firmly. "It's strengthened my faith. The God I grew up with: the God of judgement. I rejected that. These kids I work with have shown me a God of extraordinary love. The God I believe in is a God who loves us with an infinite and unconditional love. I read the gospel with a different perspective now. The church made a key mistake. We diluted the gospel because it was too radical. We have traditionally understood Jesus to be talking to us as individuals and so we follow a moral code to be rewarded in heaven. To me that's as inward-looking and self-centred as the economic boom. I think Jesus was really talking about a community. His whole mission was about creating a community that would be the Kingdom of God here on earth. If He saw the Christian community of today, where some are obscenely rich and others obscenely poor, he would turn in his grave... if he hadn't risen."

That sounds like a socialist Jesus, I say, trying to be funny, but he answers me seriously. "The principals of the gospel are closer to socialism than capitalism," he says. "Unfortunately, I think we're trapped in a global capitalistic economy. Even if we got a left wing radical government on the side of the poor, international investors would run a mile and the economy would go into a nosedive. So it doesn't matter what government you have, right wing or left wing, in that context the poor are always just going to get the crumbs that fall from the economic table. It saddens me at the moment that everyone is asking 'How can we get back to where we were in 2005 or 2006?' I don't want to go back there! I want a new economic model that puts the poor at the centre, that doesn't treat them as an afterthought. Sadly I don't see any 'green shoots' in that regard."

When it comes to a specific policy level, McVerry welcomes the idea of a referendum on the rights of the child. He thinks the most important issue is early intervention. He notes the absence of after-care services, and feels that we need a couple of thousand new social workers rather than the 200 continually highlighted by Minister for Children, Barry Andrews. He also says that he's tired of young people being placed in inappropriate care. "Daniel [McAnaspie] had 20 placements in the last 12 months of his life," he says. "What that means is that there were no places suited to his needs and he was being placed in whatever was available rather than what was suitable."

And despite his disappointment in the system, Peter McVerry still loves his job ("when people say 'take a lunch break' I say 'break from what?'") and remains passionately committed to the welfare of the young people who pass in and out of his care (after our interview he's due to drive with one of them to a drug treatment centre in the midlands). He stresses that there are plenty of happy outcomes for those who pass through homelessness, referring to one young man who just began a PhD, another running his own construction company, and a third who recently got in touch to say he was happy and engaged in Switzerland.

But he also wants us to recognise the sadder stories, cases like that of Daniel McAnaspie. Failed by the state, failed by us, by the time some teenagers arrive at Peter McVerry's doorstep it's too late and he knows it. "There are some who are so damaged that they are very likely to die young," he says. "They have been failed and sometimes all we can do for them is let them see that somebody cares before they die. Maybe that's all you can do for those particular young people... but even that's important."