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Estimating the costs of child poverty

On 23 October 2008, the Joseph Rowntree Foundation (JRF) published a paper which estimates that child poverty costs at least £25 billion each year in losses to the Exchequer and in reduced GDP.

The paper stresses that the consequences of child poverty are wide-ranging and long-lasting. Children from low-income families are less likely to do well in school. They are also more likely to suffer ill-health and to face pressures that help explain an association with anti-social behaviours and criminality.

These consequences cost society both in terms of the money that government spends in trying to counter the effects of child poverty and in the economic costs of children failing to reach their potential.

Although such costs cannot be calculated precisely, the paper estimates that:

• Public spending to deal with the fallout of child poverty is about £12 billion a year, about 60% of which goes on personal social services, school education and police and criminal justice.
• The annual cost of below-average employment rates and earning levels among adults who grew up in poverty is about £13 billion, of which £5 billion represents extra benefit payments and lower tax revenues; the remaining £8 billion is lost earnings to individuals, affecting gross domestic product.

As such, the paper concludes that child poverty costs the country at least £25 billion a year. Whilst moving all families above the poverty line would not instantly generate this sum, the paper argues that in the long term huge amounts would be saved from not having to address the consequences of child poverty and associated social ills.

Estimating the costs of child poverty (PDF)