- New CPAG analysis shows child poverty costs the country £39.5 billion a year
Today’s annual poverty statistics show an estimated 350,000 more children were pulled into poverty last year, largely because the Government cut the £20 universal credit (UC) uplift half-way through the year.
The DWP’s figures show 4.2 million children were in poverty in the year April 2021- April 2022. This figure is likely to rise in future as the full effect of cuts to social security are felt.
The charity today publishes research which estimates child poverty costs the UK £39.5 billion a year – in lost tax and earnings, unemployment benefit and additional public services spending. This is up from £25bn in 2008 (see below).
Today’s Households Below Average Income, published by the DWP and covering April 2021- April 2022 shows:
- 350,000 more children were pulled into relative poverty (after housing costs) in 2021-2022. That means 4.2 million children (29% of all UK children) were in poverty - up from 3.6 million in 2010-11.
- 45% of all children in poverty were in families with a youngest child aged under five
- 71% of poor children lived in working families
- Poor families have fallen deeper into poverty: 2.7 million children were in deep poverty (i.e. with a household income below 50% of after-housing-costs equivalised median income) 500,000 more than in 2010/11
- 47% of children in Asian and British Asian families are in poverty, 53% of children in Black/ African/ Caribbean and Black British families, and 25% of children in White families
- 44% of children in lone parents families were in poverty
- 42% of children in families with 3 or more children were in poverty, up from 36% a decade earlier.
- 36% of children living in families where someone has a disability were in poverty
CPAG’s new research estimates the wider societal costs of child poverty based on costs to the economy due to the greater risk of unemployment and lower earnings potential of adults who grew up in poverty, and of the additional amount spent on public services to help address the damage done to children growing up in poverty. The research, commissioned by CPAG from Donald Hirsch, estimates that this year child poverty will cost the UK £39.5bn, made up of:
Lost earnings and taxes:
£12.3bn in future lost earnings retained by individuals (up from £8bn in 2008)
£5.0bn in lost income tax from those individuals (up from £3.3bn in 2008)
£1.6bn in additional future unemployment benefits (down from £2.0 billion per year in 2008)
Spending on universal public services
£17.4 bn on additional universal public services due to child poverty (up from £12.3 billion in 2008)
Most of the £17.4 billion comes from school education (£4.5 billion), children’s social services (£4.2 billion) and healthcare (£3.5 billion).
Spending on services targeted at children in poverty:
£3.1 billion on Pupil Premium and Early Years Entitlement for two-year olds (both introduced since 2008 but since 2021, spending on the Pupil Premium has risen from £2.5 billion to £2.7 billion a year, while spending on the Early Years Entitlement for two year olds has fallen from £0.5 billion to £0.4 billion).
Forecasts of continued growth in child poverty mean that the current estimated £39.5bn annual cost will reach £40.4 billion in 2027 (in today’s prices).
Commenting on today’s DWP’s child poverty statistics and CPAG’s own research on the economic costs of child poverty, Chief Executive of the charity Alison Garnham said:
"Children pay the highest possible price for poverty – they pay with their health, their well-being and their life chances. Our research shows the country also pays a heavy financial price.
Today’s DWP figures show that investing in social security is the way to remove children from poverty. Indeed, the Government did lift many kids from poverty with the £20 universal credit increase, but it plunged them back again with a subsequent cut.
In the face of today’s grim figures, and with another rise in inflation, it’s inexcusable for Ministers to sit on their hands. The Government must extend free school meals, remove the benefit cap and two-child limit and increase child benefit. The human cost for the children in today’s figures is incalculable. The economic fallout for all of us is vast. But if the political will is there, child poverty can be fixed."
Notes to editors:
Donald Hirsch was director of the Centre for Research in Social Policy (CRSP), Loughborough University from 2012 to 2022.
Today’s Households Below Average Income statistics are here
CPAG media contact: Jane Ahrends 07816 909302