Millennials more likely to face working-age poverty than any previous generation, report finds

Close to a quarter of people born between 1981 and 2000 are set to be below poverty line in their late twenties

The risk of poverty is rising for younger working-age people and their children (Getty)

Millennials are on course to face record rates of working-age poverty thanks to government housing and welfare policies, according to new research.

Twenty-two per cent of those born between 1981 and 2000 are likely to be living in relative poverty in their late twenties – a higher proportion than any previous generation, the Resolution Foundation estimates.

Almost a quarter of the 1991-95 cohort are expected to be in relative poverty in their late 20s – an age where poverty rates have, historically, been low because a high proportion of people are working.

Meanwhile, the poverty rate for the post-war “baby boomer” generation who are now entering retirement has fallen to 15 per cent – the lowest on record.

“The risk of poverty tends to be highest in early childhood or later retirement,” said Fahmida Rahman, researcher at the Resolution Foundation. “But those risks have fluctuated over time.

“While almost half of the pre-war ‘greatest generation’ lived in pensioner poverty during the 1980s and early 90s, a combination of economic tailwinds and policy success has since helped to reduce pensioner poverty by two-thirds for the baby boomers entering retirement today.”

While improvements to state pensions have reduced poverty for older people, the risks are rising for younger working-age people and their children.

Children born today are more likely to face poverty at the start of their lives than any other generation over the last 60 years, the report found.

Four in ten babies born between 2016 and 2020 are forecast to be in relative poverty – defined as living on less than 60 per cent of the median income – by the time they are two years old.

The report puts much of the blame down to large increases in housing costs from the 1980s onwards. These changes have boosted the wealth of baby boomers, who have seen the value of their homes soar, while eating up an increasing chunk of younger people’s earnings, particularly those who are privately renting.

At age 25, around 14 per cent of millennials are in poverty before housing costs, compared to 22 per cent after housing costs.

The report is published just a day after the government was forced to defend its policies after Labour claimed that child poverty is now a “humanitarian disaster”.

Shadow economic secretary to the Treasury, Jonathan Reynolds, said child poverty had reached an “unconscionable level” and asked what ministers believed had caused the situation.

He added: “Let me ask the government: if it doesn’t accept that Conservative policies are creating this crisis, what do ministers believe is responsible for this humanitarian disaster?

Economic secretary to the Treasury, John Glen, responded: “What is important is that this government continues to focus on creating jobs and allowing families to experience the value of that job and receive more money in their household take-home pay, and that is what we will continue to focus on.”

Earlier, Mr Glen said the government takes child poverty “extremely seriously” and is committed to ensuring that “all children have the best life chances”.