Many studies of co-operatively breeding vertebrates have shown that social groups which contain more helpers experience higher reproductive success. Few of these studies, however, have demonstrated that this is a causal relationship. Using data on a co-operatively breeding population of European badgers Meles meles, this study shows that the relationship between helper number and group reproductive success is a spurious one generated through the effect of territory quality. Within this population, most variation in cub production, growth rate and survival is explained by variation in food availability between years and between territories. Unusually for mammals, juvenile mortality is markedly higher in females than in males. After controlling for such effects, helpers appear to have only negative effects upon group reproductive success, and mothers with helpers are in poorer condition at the end of the breeding period than those without helpers. A high proportion of helpers are sexually mature females which have failed to breed as a result of intense competition for resources. Under such circumstances, alloparental care represents a low-cost, low-benefit behaviour which may mitigate the negative impact that non-breeding group members have upon the reproductive success of their close relatives.