Latest news from Loughborough University
5 Jun 2013
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 Loughborough University expert Donald Hirsch.
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 (CRSP) at Loughborough University, estimates the current cost of child poverty to be £29 billion a year. The main 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 50 per cent, 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.
Donald Hirsch 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, which had 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."
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.”
Notes for editors
Article reference number: PR 13/99
- The new research by Donald Hirsch estimates the current cost of child poverty to be £29 billion a year. 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.
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.
Child Poverty Action Group have written to the Chancellor ahead of the forthcoming spending review. 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. The text of the letter can be found on our website: www.cpag.org.uk
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 Loughborough University 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 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.
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.
- Loughborough is one of the country’s leading universities, with an international reputation for research that matters, excellence in teaching, strong links with industry, and unrivalled achievement in sport and its underpinning academic disciplines.
It was awarded the coveted Sunday Times University of the Year 2008-09 title, and is consistently ranked in the top twenty of UK universities in national newspaper league tables. In the 2011 National Student Survey, Loughborough was voted one of the top universities in the UK, and has topped the Times Higher Education league for the Best Student Experience in England every year since the poll's inception in 2006. In recognition of its contribution to the sector, the University has been awarded six Queen's Anniversary Prizes.
It is a member of the 1994 Group of 11 leading research-intensive universities. The Group was established in 1994 to promote excellence in university research and teaching. Each member undertakes diverse and high-quality research, while ensuring excellent levels of teaching and student experience.