An intergenerational audit for the UK

Along the journey from cradle to grave, all sorts of things – including meaning, nurturing and understanding – flow between the generations. This report audits the more quantifiable of those flows: time, money and other material resources. The economic significance of these flows has been changing in various ways. While this has positive aspects, families differ vastly in their ability to offer intergenerational support. Accessing and giving such support affects people’s life chances. So in this report we discuss how this support is distributed between and within cohorts. We do this in the typical order of events through adult life: finding somewhere to live, having children, confronting the infirmity of parents, and – perhaps – inheriting from them.

Parents support their children by providing somewhere to live. But that support has been extended in recent years: the proportion of younger adults (under-35s) living with parents has risen from one-in-four (26 per cent) at the turn of the century to nearly two-in-five (39 per cent) in 2021-2022, equivalent to an extra 2 million people. This is a large rise that isn’t easily explained away. We still find a powerful trend towards young people living with their parents for longer, even when we make allowances for young people starting their own families later and rising diversity (multi-generational households are more common in many ethnic minority groups) and discounting the growing number of students. The trend, then, isn’t about who our young people are, but rather the society – and particularly the economy – they are living in.

Living with parents can reflect positive choices – such as taking the chance to build up skills or acquiring rewarding, but risky, professional experience while saving on rent. But it can also be a more negative decision to forgo unaffordable independence. And indeed, among the ‘live at homers’ there is a concentration of young adults who may well lack attractive alternatives to falling back on family: 15 per cent are unemployed (against 5 per cent for other under-35s), and 33 per cent are working but low-paid (against 16 per cent for others). Some may jump to conclude that living with parents for longer is a trap – life may be tolerable in the family fold, but it could become hard to escape when that family home is in a stagnant town where real career opportunities are thin on the ground.

Our analysis largely dispels some of these concerns, and even suggests that the option of staying at home could be a useful springboard in many respects. Those initial high rates of unemployment and low pay simply reflect who is living at home – disproportionately less-educated young adults, for example, and those who grew up working class. And while the fact of living with parents makes moving address less likely (with a 5-percentage-point drop in the chance of moving within a year) there is no reduction in the chance of changing job or moving for work-related reasons. Most importantly, while the ‘live-athomers’ start out as a relatively disadvantaged group, there are signs that they tend to catch up over time. Indeed, after five years, young adults who began by living at home are just as likely to be employed as their contemporaries, and no more likely to be low paid.

While putting up adult children for longer is increasingly common, in the wealthier groups, financial gifts – which can support children in buying homes of their own – are increasingly important. Over the course of the 2010s, the number of people receiving gifts over £500 over a two-year period increased by 34 per cent, from 2.3 million in 2008-10 to 3 million in 2018-20. In parallel, the numbers receiving large gifts of £10,000 or more has more than doubled to reach nearly 650,000. Taking the rising number of gifts and their growing size together, their total inflation-adjusted value has risen from £13.1 billion in the two years prior 2008-10 to £29 billion in the two years prior to 2018-20.

Overwhelmingly, these gifts come from parents (73 per cent), and – inevitably – it’s wealthy parents that give more. In 2018-20, 23 per cent of over-50s in the top wealth quintile reported giving a financial gift, compared to only 3 per cent in the bottom wealth quintile. This difference remains, though less pronounced, after controlling for personal characteristics, including income.

There is strong evidence that family gifts are often used to buy property: in 2022-23, roughly 1-in-3 (36 per cent) of recent firsttime buyers (those who had owned property for less than three years) used gifts from family or friends to help purchase their home. This helps explain why the wealth gap on homeownership among young adults has been widening: many do still buy without family support, but they tend to do so later, and with larger mortgages – a recipe for living with more debt for longer. In this way, family wealth not only facilitates homeownership but also deepens enduring inequalities in living standards.

Mothers are working more – especially those with young children. In 1992, only four-in-ten (41 per cent) mums with an under five-year-old worked; by 2022 it was seven-in-ten (68 per cent). Consequently, families are much more reliant on maternal earnings: the contribution of women aged 25-40 in couples with children to total household income rose from 20 to 35 per cent over the same period.

Social attitudes have shifted, but childcare practice still lags this reality. For example, the proportion of parents that believe childcare responsibilities are ‘mostly shared’ (rather than being left, overwhelmingly, to mothers) has climbed from around a third (30 per cent) to something more like half (51 per cent). Yet women living with a dependent child are spending half an hour more a day on childcare than men, some 57 per cent extra. Yes, dads are doing more childcare and (slightly) less paid work than before, but motherhood still routinely disrupts careers in a way that has no analogue for fatherhood. The proportion of mothers of under-fives whose employment status is shaped by having children (whether that’s through inactivity or part-time working due to family commitments or simply being on parental leave) is around 30 per cent. For fathers, the comparable proportion is just 3 per cent. While this figure has been drifting down for women and inching up for men, on current trends it would take 200 years to reach gender parity.

Formal childcare has burgeoned to meet the gap created by more mothers moving into the workplace. Initially, this hit families hard in the pocket: for those with young kids, spending rose from 9 per cent of disposable income in 2001 to 16 per cent in 2016, before falling back to 11 per cent in 2019 as the state stepped in with more free hours for working parents. But costs remain high, both relative to where they started and as a proportion of family budgets.

In this context, grandparents often play a crucial role: more than a quarter (28 per cent) of grandmothers are supporting their children as parents. In total, grandparents provided an estimated 766 million hours of childcare to their grandchildren in 202223. If this support had replaced nursery care, its value would amount to approximately £3.5 billion. Almost half of mothers of pre-school children who are in paid work suggest childcare from relatives helps them to go out to work.

But despite the benefits and the growing need for grandparental care, neither the proportion of young children getting it, nor the average hours received by those who do get it has increased since 2005. There may be all sorts of powerful reasons why not: later average retirement, ill health and, closely related, the rising median age of becoming a grandparent, which increased by four years over the decade from 2011. Whatever the cause, though, it seems clear that public policy cannot rely on extended families for meeting growing childcare needs.

One important flow of support is mostly up, rather than down, the generations: namely, adult care. The UK is an ageing society, where formal care is costly and its public funding badly stretched. The share of over-65s in the population has increased from one-in-seven (14 per cent) to one-in-five (19 per cent) between 1975 and 2022. Need has grown in tandem, but in recent times resources have not: age-adjusted spending-per-person on adult social care by local authorities was 7 per cent below its 2009-10 level in 2022-23, with spending specifically on pensioners cut even more sharply. Meanwhile, over the past nine years, the cost of residential homes has soared, and is up by about 30 per cent in real terms.

Many needing care are left with little option but to rely on informal arrangements, which very often means relatives. In 1991, just 6 per cent of adults were providing at least five hours care a week for sick, disabled or elderly people; by 202122 that was up by half, at 9 per cent. We find that it is care responsibilities for relatively disadvantaged groups, such as poorer households – and especially single parent households – that have risen especially fast. While middle-aged adults still provide most care for adults overall, the sharpest recent rise has been among the younger generation. Millennials in early adulthood are around 30 per cent more likely to provide at least five hours of such care a week than previous generations did at similar ages.

As well as more carers overall, more of them are putting in serious time: the share dedicating more than 20 hours a week has almost doubled from 15 per cent to 28 per cent between 1991 and 2021-22. Intergenerational care creates significant social value for recipients and the broader community, while many carers appreciate the opportunity to support relatives and contribute meaningfully. However, the intensification of care often restricts those providing extensive support from engaging in the labour market.

But carers entirely missed out on the employment boom of the 2010s which benefited everyone else, widening the existing employment gap. New carers are 37 per cent more likely than others to leave employment in a given period. Similarly, individuals that have experienced an intensification of existing caring responsibilities are 70 per cent more likely to leave employment than carers who have not. The toll caring takes on employment is sufficient to shift the dial across the broader population, including non-carers: for example, the intensification of care duties over the past three decades could be lowering the employment rate across all women in the 26-50 age band by more than 1 percentage point.

If the Government is serious about its avowed ambition of an 80 per cent employment rate, it can’t ignore these large effects. The coming employment strategy will have to reckon with a raft of policies relevant to care, including: direct public provision of social care, respite care, and broader benefit-design issues.

Our final intergenerational flow – inheritance – has become increasingly significant, although of course only within families with resources. The volume and value of bequests are both up: across the 2010s, the number of adults receiving an inheritance over a two-year period rose from 1.7 million in 2008-10 to 2.1 million in 2018-20. By the end of the decade, nearly a third (32 per cent) of recipients were receiving £50,000 or more, compared to a quarter (25 per cent) at the start. Looking ahead, more over50s expect to leave substantial sums: those anticipating leaving an inheritance of £150,000 or more increased from 56 per cent between May 2012 and June 2013 to 64 per cent between October 2021 and March 2023. This suggests that the bigger bequests of recent decades look like they are becoming an enduring feature of our society.

The inheritance landscape is still dominated by what parents leave to children: in 2018-20, nearly half (49 per cent) of all inheritances came from parents, and over 70 per cent of those above £100,000. Property has a huge bearing, with 92 per cent of outright homeowners planning to pass on wealth, compared to just 45 per cent of renters, reinforcing the familiar fault-lines of advantage.

Perhaps less appreciated is the age of recipients – now most commonly in their 50s and 60s – which has important effects on how the wealth is used. Among the non-retired over-50s, those that received an inheritance of £50,000 or more were 4 percentage points more likely to retire early than those that did not receive an inheritance. This suggests that the higher numbers of large inheritances may act as a headwind against the government’s ambition of an 80 per cent employment rate, compounding with the headwind created by rising care responsibilities. Seeing as inheritors tend to be higher earners at advanced career stages, more early retirement could impose an especially heavy hit on tax revenues and overall output.

One thing pushing against the trend for bigger bequests, though, is the rising cost of care. This is because big bills can eat into the wealth of older people: in England, it is estimated that one in seven adults will incur care costs of over £100,000 in their lifetime. Two-thirds (65 per cent) of over 50s anticipate using their savings to fund care in later life, with half (50 per cent) expecting to sell assets, such as their home. This reliance on personal assets to pay for care in later life suggests that wealth intended for inheritance could be significantly depleted.

The general picture is that intergenerational support often plays a crucial role throughout adult life and appears to be growing in importance. But the same, younger, cohort that has already faced increased caregiving responsibilities could also find they will inherit less than they had hoped for.

This report shows that intergenerational flows of resources and support across generations carry significant economic weight, not only benefiting individuals but also impacting broader social outcomes, including labour-market participation. Certain types of support, like living at home, can offer a financial safety net that enables young people to take career risks, while changing family dynamics and social norms have increased maternal employment, with relatives often providing the informal care needed for mothers to work.

New challenges are, however, materialising from increased demands for adult care and the role of inheritances in enabling early retirement. To achieve the Government’s 80 per cent employment target, public funding must play a critical role. In the past decade, expanded childcare provisions have boosted parental employment, particularly among mothers, while gaps in adult social care have limited employment opportunities for caregivers. Meeting these evolving needs will require a balanced approach to social funding that prioritises both childcare and adult care, alongside policies that support sustainable employment across generations.