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Public Spending on Children in England: 2000 to 2020

Authors: Elaine Kelly, Tom Lee, Luke Sibieta and Tom Waters

This report provides new estimates of total spending by the government on children in England, including benefits, education spending, services for vulnerable children and healthcare. In the most recent year of data (2017–18), total spending was over £120 billion or over £10,000 per child under 18.

Supporting children is a major aim of public spending. This occurs through various channels and reflects different types of needs. Benefit spending is designed to support children through topping up the incomes of families with children. Education spending represents an investment in future skills and productivity. Some spending responds to needs, such physical or mental health problems or family breakdown.

Even after the inclusion of state benefits, families with children face higher levels of poverty than other demographic groups. In 2016–17, around 30% of children were in poverty, compared with around 18% of working-age adults without children and about 16% of pensioners. A further motivation for directing spending towards children is a desire to mitigate the impact such disadvantage has on children’s life chances, and thus to improve social mobility.

Thus, there is considerable interest in just how much is spent on children through these various sources, the extent to which this meets the needs of children and how this has changed over time. However, precisely because of the multiple sources of spending on children, it can be difficult to produce clear and consistent estimates of the total level of public spending on children over time. Figures produced by the Office for Budget Responsibility show estimates of the profile of spending and taxes across an individual’s lifetime: most education spending is concentrated at younger ages, welfare spending is lower and taxes are higher during working life, and there is a gradual increase in spending on welfare, health and long-term care for older people (Office for Budget Responsibility, 2017). There is clearly significant interest in the extent to which these patterns are changing over time. The production of consistent figures over time is fraught with difficulties, however, because of changes in the nature of policy programmes and the way in which figures are presented.

Estimates also exist for long-run changes in spending in specific areas, such as education spending (Belfield et al., 2017), early years (Stewart, 2013; Stewart and Obolenskaya, 2015) and the welfare system (Hood and Norris Keiller, 2016). All of this work has shown that the consideration of the long run (i.e. at least ten years) is important as it provides historical context. It also shows that the overall changes can mask significant changes in priorities within particular areas of spending. One should therefore seek to show what is happening within each area of spending over time too.

In this report, we detail the total and per-head levels of public spending on children across different areas of spending back to 2000 and projected up to 2020. Given changes in the size of the child population over this period, our headline findings are based on spending per child and how this has changed over time. We include as many different elements of spending as possible, for as many different years as possible. Our main estimates include spending on benefits and tax credits, education up to age 18, and family and children’s services (e.g. social work and Sure Start). Our main estimates exclude healthcare due to data limitations. However, we are able to include health spending for the most recent years in order to get a sense of the overall magnitude.

The 20 years from 2000 to 2020 have been a period of policy change. Public spending increased significantly over the 2000s, whilst cuts to public spending since 2010 have been the main way in which recent governments have sought to cut the deficit. There have also been big variations across areas of public spending in terms of how much they increased over the 2000s and the extent of the cuts since 2010. Spending on schools, health and benefits for pensioners has been largely protected since 2010, with bigger cuts to other areas of spending. Therefore, we also provide additional analysis of the driving forces of changes over time, such as the analysis of how tax and benefit reforms have affected different family types across the income distribution and the trends in spending per pupil at each stage of education.

Although we know that the needs of children are higher than those of many other demographic groups, it is beyond the scope of this report to assess whether the high levels of spending on children are sufficient to meet these needs over time. Instead, by showing spending per child over time, we show how policymakers’ spending priorities have changed over time in terms of the total level of spending on children, and the extent to which this reflects population changes.

Where possible, we also compare changes in spending over time with those seen for pensioners and working-age adults. Whilst the levels of spending per head are likely to be very different across demographic groups, because of the very different levels of needs they possess, looking at changes over time could provide some indication of how policymakers’ priorities are changing over time. For example, we compare and contrast trends over time in benefit spending per head for children and pensioners. For a small number of years, we can also examine trends in spending on adult social care and healthcare. However, due to data limitations, the latter is probably a significant underestimate of the total level of health spending on pensioners.

Our analysis also speaks to a wider debate on the particular economic challenges facing young people today. For example, previous work has shown that the average living standards of pensioners have risen significantly over time relative to working-age families with children. As a result, pensioners are also now less likely to face poverty than working-age adults and children, which is a major historical change (Cribb et al., 2015). Young people are also less likely to own their own home compared with previous generations of young people (Cribb et al., 2018).

In what follows, we start by describing our overall methodological framework (Section 2), before then taking each area of public spending in turn: benefits (Section 3); education (Section 4); children and family services, as well as social care (Section 5); and health (Section 6). In each case, we start by detailing the specific methodology, data and assumptions used, before then showing the overall level of spending on different elements of each area of spending over time, and then providing additional analysis that helps us better understand the context for and drivers of trends over time. In Section 7, we then combine these estimates to show the total level of spending over time and changes in spending per head. In Section 8, we conclude and we list a number of recommendations for how data could be improved in this area.