The UK’s baby boom of the early 2000s is about to flood universities and colleges with tens of thousands more school leavers every year, according to the former universities minister David Willetts.

Willetts warns, in a report published on Friday, that the comprehensive spending review needs to fund an expansion in further and higher education to absorb the increase, or risk too many young people being trapped in low-paid work.

“As part of the comprehensive spending review negotiations, there’s a strand of opinion in my party, among Conservatives, that too many people go to university, so they will say these choices need to be constrained,” Willetts said, launching a new report on the impact of the baby boom.

“But the underlying demographics show there was a real surge in the birthrate. I’m not sure people are familiar with how sharp the rise was over 10 years, from under 700,000 to over 800,000 babies born a year.

“If you then look forward 15 to 20 years later, that’s a 15% increase in the people trying to get into universities and colleges.”

The demographic pressures mean that the government’s efforts to cut spending on higher education by limiting the number of young people attending will be doomed, according to Willetts.

“If you say, we want 50% of school leavers to go into higher education and we don’t want more than that, you’d still have to be planning for a significant increase in the absolute numbers, which in the peak years will be an increase in the annual intake of 50,000,” he said.

But Willetts said the demographic increase in young people was an opportunity to reshape the British labour market, despite recent evidence that they were concentrating in retail and hospitality sector work.

“At the moment it looks unusually like young people are in fairly low paid sectors, and they’re not concentrated in the high paid sectors of the future, whereas in previous periods of the British economy that’s where young people were,” he said.

The report, written by Willetts and Maja Gustafsson for the Resolution Foundation, says the government has failed to forecast for changes in student numbers after the age of 16, meaning that funding for universities and college face relentless demographic pressure.

By 2025 the number of 16- to 18-year-olds in England is set to increase by 278,000. At current rates that would see an estimated 90,000 more studying at sixth form and further education colleges by 2024-25.

“The further education sector urgently needs a structural solution to funding that can deal with the demographic changes that the country faces,” the report states.

Demographic increase alone would see about 40,000 more students entering higher education each year until 2035. But if university participation rates for school-leavers continue to rise as in recent years, an extra 358,000 places will be needed.

Willetts said he was frustrated at the “media narrative” against expanding access to higher education.

“Across advanced countries there’s a hunger for more education. Looking at how Britain is going to invest and pay its way in the world in the next decade, a growing higher education sector looks to be part of it,” Willetts said.

In government Willetts was the architect of the current student loan and tuition fee regime, and ushered in GBP9,000 annual tuition fees for undergraduates. He favours retaining tuition fees at their current levels but lowering the repayment threshold at which graduates begin repaying their loans.