Child poverty costs UK £29 billion a year
The high levels of child poverty in the UK are currently costing the country at least £29 billion a year – or £1,098 per household – according to new research released today by Donald Hirsch of Loughborough University (updating his 2008 study for the Joseph Rowntree Foundation).
The estimate includes the costs of policy interventions required in childhood to correct for the effects of poverty, as well as the longer term losses to the economy which result from poor children’s reduced productivity, lower educational attainment and poorer physical and mental health.
The research, conducted by Donald Hirsch, Director of the Centre for Research in Social Policy at Loughborough University, estimates the current cost of child poverty to be £29 billion a year. The drivers of the costs are:
- £15 billion spent on services to deal with consequences of child poverty (e.g. social services, criminal justice, extra educational support)
- £3½ billion lost in tax receipts from people earning less as a result of leaving school with low skills, which is linked to having grown up in poverty
- £2 billion spent on benefits for people spending more time out of work as a result of having grown up in poverty
- £8½ billion lost to individuals in net earnings (after paying tax)
The research also shows that if child poverty rises by a quarter from its current level, as the Institute for Fiscal Studies has recently projected may happen by 2020 as a direct result of the government tax and benefit decisions, the cost to the country would increase to at least £35 billion every year.
Alison Garnham, Chief Executive of Child Poverty Action Group, said:
“We always put our children’s needs first in family life, and we should do as a nation too. This research shows that policies which increase child poverty are a false economy, costing the country as well as poor children themselves dear.
“In the last three years families with children have had to bear the brunt of the government’s austerity programme - it is no surprise that child poverty is projected to increase as a result. The spending review later this month is an opportunity to change course and prioritise families with children once again.
“We need spending plans that support rather than undermine a new child poverty reduction strategy. Policies must address low-income families’ concerns such as job creation and job security, living wages, and affordable childcare and housing.
“We know that short-changing children today will short-change the country tomorrow. This research shows that an economy balanced on increased child poverty is not a stable proposition.”
Donald Hirsch, who conducted the analysis, said:
"However much governments try to redefine poverty or ponder new solutions, the fact remains that millions of children continue to be damaged by growing up in families with inadequate resources. The scale of the cost of child poverty to us all continues to dwarf the investment made so far that produced major reductions in child poverty in the last 15 years. Because the damage done by child poverty lasts for decades, such investments need to be sustained over a long period."
Notes to Editors
- Donald Hirsch of the University of Loughborough’s new research estimates the current cost of child poverty to be £29 billion a year. His paper can be downloaded from this page as a pdf at the top of the right hand column.
- The research updates a similar study he conducted for the Joseph Rowntree foundation in 2008, which found the cost of child poverty to the UK at the time to be £25 billion a year. The full previous study can be found here: http://www.jrf.org.uk/publications/estimating-costs-child-poverty
- The per household figure of £1,098 was calculated using the number of UK households at the time of the 2011 census, which according to the Office for National Statistics is 26.4 million: http://www.ons.gov.uk/ons/rel/census/2011-census/population-estimates-by-five-year-age-bands--and-household-estimates--for-local-authorities-in-the-united-kingdom/stb-population-and-household-estimates-for-the-united-kingdom-march-2011.html
- The research it is not a precise calculation but an indicative figure. It applies the principle of making a “cautious estimate”. Where there were a range of potential effects it used the lower end of the cost range. Thus, the estimate represents a minimum of what child poverty is likely to cost the country, rather than a speculative figure of what it might cost in a worst-case scenario.
- Child Poverty Action Group have written to the Chancellor ahead of the forthcoming spending review warning of the need to consider the costs to the economy and the Treasury of failure to reduce child poverty. The new research reinforces the importance of spending plans that factor in the long-term economic and fiscal benefits of reducing child poverty – benefits which therefore will help reduce and prevent government spending deficits. A pdf copy of the letter can be downloaded from the top righ of this page.
- The Institute for Fiscal Studies has estimated that under the government’s current child poverty strategy, alongside their tax and spending plans, relative child poverty will rise to 3.4 million by 2020. The University of Loughborough researchers estimate that if this were to happen, the cost to the UK economy of child poverty would increase to £35 billion a year. The IFS figures are available at http://www.ifs.org.uk/comms/r78.pdf
- The government is due to publish a new child poverty strategy for the period April 2014 to March 2017 early next year. Its current child poverty strategy, for the period April 2011 to March 2014 can be found here: http://www.education.gov.uk/childrenandyoungpeople/families/childpoverty/a0076385/child-poverty-strategy
- CPAG is the leading charity campaigning for the abolition of child poverty in the UK and for a better deal for low-income families and children.
- CPAG is the host organisation for the Campaign to End Child Poverty, which has over 150 member organisations and is campaigning for public and political commitment to ensure the goal of ending child poverty by 2020 is met.
For further information please contact:
CPAG Press Officer
Tel. 020 7812 5216 or 07816 909302