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Child Poverty

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.”

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