The cost of child poverty locally

Many local authorities we spoke to were aware that poverty came with long-term costs, and that reducing child poverty could produce long-term economic savings. However, these costs were unarticulated and it was difficult for child poverty leads to convince councillors of the potential scope of the savings that could be made by addressing child poverty.

One local authority had produced as estimate of the costs of child poverty, and outlined that this had been a useful tool in generating interest in the issue of poverty from a broad range of councillors and departments, so it was able to achieve greater ‘buy in’ from the different, but necessary, parts of the council.

With this in mind, CPAG commissioned Loughborough University – which produces the national estimate for the costs of child poverty – to produce local authority estimates.

The current, national cost of child poverty is estimated to be £29 billion per year, broken down into:

  • £15 billion spent on services to deal with consequences of child poverty, such as increase NHS and school costs;
  • £3.5 billion lost in tax receipts from people earning less as a result of 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;
  • £8.5 billion lost to individuals in net earnings (after paying tax).

It is difficult to break down local authority costs by the root causes – for example, making it proportionate to service spending levels would not work because in places with more deprivation, a higher proportion of that cost could be saved by reducing poverty. Therefore, assuming that the cost is proportionate to the number of children in poverty in each local authority is a reasonable way to illustrate local costs.

The figures below represent the total amount of money that is ‘lost’ in local authorities due to child poverty – reflecting extra expenditure and lost income, in effect, the amount of money that is drained from each area due to child poverty. Each child living below the poverty line is estimated to cost around £10,861.42 annually. The annual estimates of the number of children living in poverty in each area are derived from estimates produced for End Child Poverty.