High levels of child poverty are currently costing the country at least £29 billion each year, or £1,098 per household, according to new calculations prepared by Loughborough University for the Child Poverty Action Group.

The research updates a similar study for the Joseph Rowntree Foundation in 2008, which found the cost of child poverty to the UK at that time to be £25 billion a year. 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 resulting from reduced productivity, lower educational attainment and poorer physical and mental health.

Key findings

• £15 billion is spent each year on services to deal with consequences of child poverty, including social services, criminal justice and extra educational support.
• £3½ billion is 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 is spent on benefits for people spending more time out of work as a result of having grown up in poverty.
• £8½ billion is lost to individuals themselves in terms of net earnings (after paying tax).
• 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 coalition's tax and benefit policies, the cost to the country would increase to at least £35 billion every year.

Commenting on the findings, Alison Garnham of CPAG said: 'This research shows that policies which increase child poverty are a false economy, costing the country as well as poor children themselves dear. 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.'

Source: Donald Hirsch, An Estimate of the Cost of Child Poverty in 2013, Child Poverty Action Group
Links: Report | CPAG press release | Guardian report