“Affordability” has become the political buzzword of the moment. IF Senior Researcher, Toby Whelton, looks at what affordability actually means for young people.
A new cliché
Seemingly overnight, affordability has become a defining buzzword of our time. While originating in the U.S, it has now embedded itself in UK politics. It is even an early frontrunner for the 2026 word of the year.
In the first Cabinet meeting of 2026, Starmer stated that making life affordable will “remain our focus”. In light of the energy shock caused by the war in Iran, he has gone further, stating that Labour will “pull every lever that is available to the government” to help with the cost of living.
Labour is not alone. The ascendant Greens have put the climate agenda on the back burner in favour of a message of affordability. Last month, Zack Polanski distilled their economic vision as “ending rip-off Britain” by nationalising water companies, capping rents, capping energy bills, and scrapping tuition fees.
A brief history
It is worth appreciating the novelty of the term. Previously, the word “affordable” was often used as a euphemism for government support. Policies such as “affordable housing” were intended to provide a minimum standard of provision for the poorest in society. In some ways, it was antithetical to the idea of an “aspirational” middle class in search of financial independence, home ownership, and status-signifying goods.
The fact that the term is now being used to court young professionals reflects the reality that typical middle-class aspirations are increasingly out of reach for the majority of young people. In terms of assets, home ownership, and living standards, those in the middle of the income distribution now often have more in common with those below than those above.
What does “affordability” actually mean?
At a glance, the meaning of “affordability” seems self-evident, but upon further scrutiny it becomes much more slippery.
The literal definition of “afford” is to have enough money to purchase something. If something is unaffordable, it is unable to be bought.
This does reflect the reality for millions in the UK. Studies on the lived experience of poverty have documented the series of trade-offs low-income households often face. For example, a household may have to forgo heating in order to afford public transport. Parents may have to choose between buying children’s clothing or providing a dinner with adequate nutrition. In less severe scenarios, families may have to decide between eating at restaurants for a celebration or saving for a domestic holiday.
A minimum income standard
It is hard to measure that which is not bought. The best indicator we have is the Joseph Rowntree Foundation’s Minimum Income Standard (MIS). This measure approximates the cost of a basket of goods and services that is considered by the general public to be necessary to meet an acceptable standard of living.
For single working-age adults, this is estimated to be £30,500 a year. Those on the National Minimum Wage reach 76% of the MIS. That is, in theory, £7,300 worth of essentials they cannot afford. For those reliant on out-of-work benefits, they meet just 27% of the MIS, implying £22,265 worth of essentials forgone.
By contrast, pensioners have been relatively well protected. A single pensioner on Pension Credit meets 95% of their MIS requirement; the full state pension equates to 93% before any income from private pension savings.
Meanwhile, poverty rates among university students have soared. Maximum student maintenance loans cover just half of living expenses.
This shows that, for working-age adults on government support or low wages, there is an affordability crisis in the most literal sense. They cannot afford the most basic standard of living.
Cost of being young
However, when politicians state that life has become unaffordable, what they really mean is that life is now more expensive. In other words, the same basket of essentials now takes up more of a household’s weekly budget, leaving less for discretionary spending or savings.
The proportion of weekly expenditure dedicated to essentials is an effective proxy for living standards. Our previous research tracked this measure over the last 20 years for different age groups. We found that younger cohorts have faced the greatest decline in living standards, while older generations have been largely insulated.
Under-30s, on average, dedicate 70% of their weekly expenditure to essentials, while over-65s spend 56%. For young households, this represents a 16 percentage point rise compared to 20 years ago. Under-30s are spending £147 less a week on non-essentials, such as eating out, holidays, and home improvements.
This has been the case for the vast majority of young people, regardless of earnings. Historically, the proportion of budgets dedicated to essentials was largely determined by income. Those who earned more spent less on essentials as a percentage of their total budget.
However, this trend has been subverted by age. Regardless of where individuals lie in the income distribution, younger age groups are spending more on essentials compared to older households. For example, the highest income quintile of under-30s still spends 10% more of their total budget on essentials than the lowest income quintile of over-65s.
Who needs help?
Rhetoric around the cost-of-living crisis often has a flattening effect, along the lines of “we are all feeling the hurt”. And it is true that monthly bills have risen for everyone. But, when we examine the data, it is clear that young people have been disproportionately affected.
A narrow focus on reducing bills obscures the fact that different pressures affect different age groups. For example, capping energy bills will help all ages, but it is unlikely to meaningfully alleviate pressures on younger households. If the funding comes from higher taxation or harsher student loan repayments, many young people may be left worse off.
A symptom not a cause
Younger generations have been in a cost-of-living crisis long before Putin’s invasion of Ukraine. This is the result of stagnant wages, the withdrawal of government support, low financial resilience, student debt, higher taxation, and declining home ownership. A political strategy that confines itself to the cost of essentials will only tackle the symptoms, not the cause.
The chief problem is not that the cost of essentials has risen, it is that wages have failed to rise as fast. Increased earnings growth is realistically the only way that the cost-of-living crisis can be “fixed”.
The affordability agenda is politically attractive because it articulates an essential truth: life has become more expensive for millions of households. However, without addressing the structural causes, it is unlikely to produce an economy that is fairer for all generations.