Young people are a generation of renters, increasingly in debt, overwhelmingly low-paid and left to fend for themselves by society. They are a vulnerable demographic, but our policy decisions don’t recognise it. Research from the RSA’s Young People’s Future Health and Economic Security team seeks to bridge this gap.
At the start of 2022, RSA research showed extremely high levels of insecurity among young people in the UK, with 47 percent of young people being in a precarious financial position. However, not all young people are equally affected. Our research shows that 57 percent of those aged 22-24 are financially precarious, compared to 38 percent of 16-18-year-olds. Young renters and young people in full-time work are also particularly vulnerable at 58 percent and 63 percent respectively.
What lies behind that insecurity, and what can we do about it? The RSA’s Young People’s Future Health and Economic Security team, in partnership with the Health Foundation, are trying to understand and tackle that gap.
Our working hypothesis is that young people’s insecurity is being driven by two factors.
- A young person premium: where young people face a higher cost of living just through being young.
- An atomised generation: where young people are left with increasingly little collective security.
The young person premium
Demos' 2021 report, Bouncing Back: Boosting young people’s financial wellbeing after the pandemic, found that young people are paying nearly twice as much as the national average on essential spending. In particular, young people were paying more for their housing, bills and travel, among essential expenses. At £2,241 a month, young people are spending, on average, over double what their older (65+) counterparts spend.
By definition, these costs are neither avoidable, nor negotiable. Young people, overwhelmingly housed in the private rental sector, in undesirable housing and having to pay more to travel to work have little say in cutting these costs. Financial education surely has a role to play in navigating an increasingly complex and demanding financial world, but it can only go so far. Research from the Resolution Foundation in 2019 found that this generation, with millennials 7% poorer than the previous generation.
All this amounts to young people paying simply for being young, we call this the young person premium.
An atomised generation
A higher cost of living is one thing but add into the mix the lack of structural financial support young people can expect, and the financial vulnerability they face becomes even clearer.
Our latest report, Age of insecurity, details how young people are coming of age in the shadow of a system which wasn’t designed to support independence or a safe transition to adulthood. Young people are facing structural challenges as individuals first and foremost. We call this atomisation: the breaking of societal bonds that should support young people, leaving them isolated and vulnerable.
We know that universal credit and housing benefits both support young people at lower levels than their older counterparts. We know that young people today have fewer opportunities to access affordable or social housing than their parents at their age. We know that young people access collective support like trade unions at the lowest levels of all age groups.
We found in these gaps, young people increasingly rely only on themselves to protect their security, seeing not having enough money as a personal failing, rather than system failure.
I don’t want to rely on other people for much more of my life. Even though I don’t have to rely on them, I don’t want to take from others for much more… it seems unreasonable.
Where these bonds have been broken, particularly in young peoples’ housing and work, we see the impact this can have on young people’s health and wellbeing. The young people we spoke would often describe their situations using words like 'panic', 'depression', 'absolutely terrifying'.
Clearly, a system that places financial responsibility squarely on individuals isn’t working.
The cost-of-living crisis
If young people’s essential spending is already high, and their recourse to support is low, an inflationary crisis is the last thing this generation needs.
A growing body of research shines a light on the challenges facing young people. The Joseph Rowntree Foundation's cost of living tracker 2022/2023 shows that 92 percent of households with a young person reported going without essentials, while 80 percent have reported being in arrears. In December 2022, TSB's Money Confidence Barometer survey, found that young people are seven times more likely to have taken out new or additional debt in the past 12 months, or expect to in the next 12 months, than their grandparents.
The cost of housing, another source of insecurity for young people, is also only set to deepen over the coming year. 16-24-year-olds spend, on average, 47 percent of their gross income each month on rent, significantly more than the national average of 33 percent. Renters, the majority of whom are young people, faced on average a 12 percent increase in the cost of housing, and this is due to increase further in the coming year.
This has a real impact on young people’s lives. The Prince’s Trust's NatWest Youth Index 2023 shows young people are disproportionately facing challenges to their mental health as a result of the cost-of-living crisis. And the Leaders Unlocked Cost of Living National Report shows that young people’s relationships and confidence in their future are taking the hit.
What can we do?
If we know that young people are structurally vulnerable to the cost-of-living spiralling, and in need of greater support, where is the evidence our policymakers are taking this challenge seriously?
Hansard shows that, despite 77 debates on the cost of living crisis, Cost of Living: Support for Young People is the only debate focused explicitly on the challenges faced by young people. Responses from the government focused primarily on skills and early years support, important interventions of course, but ignored the immediate challenges faced by young people.
In our Cost of independence report, we highlighted that policymaking was systematically disadvantaging young people in three key ways: our systems are not dynamic enough to meet the needs of young people as they age, they discriminate against young people by not recognising their specific needs, and they don’t think about supporting young people long-term.
These are all a result of young people’s voices being missing from policy conversations. A discrete piece of work as part of the RSA’s Young People’s Future Health and Economic Security project will seek to fill that gap. A mixed research approach, with an emphasis on qualitative data, will ensure we’re focusing on the story behind the data.
Over the coming months, we will reengage with the diary research participants who fed into the our Age of insecurity report to understand how their lives have changed since June 2022. We will conduct a standalone survey to understand how young people’s insecurity in the UK has been changed by the cost-of-living crisis. We will also place young people’s voices front and centre, by convening our young advisors to structure our findings.
Already, through our first round of interviews, we’ve heard of increased anxiety around housing and essential spending, greater uncertainty about the future, and general malaise about government being able to change anything. These are concerning findings, that we shouldn't ignore. Our hope is that by putting young people's voices front and centre we can help build long-term security and a more positive future.
Hannah Webster Riley Thorold James Morrison Jamie Cooke Al Mathers
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