Welsh child payment scheme stalled until UK Treasury agrees tax rules, Senedd hears

A proposed Welsh child payment scheme designed to lift thousands of families out of poverty cannot be rolled out until the UK Treasury agrees to grant benefit and tax exemptions.

Deputy First Minister Sioned Williams confirmed the Welsh Government is seeking assurances from Westminster so that families receiving the new Cynnal payment are not left worse off through benefit deductions.

Ms Williams, who also serves as social justice and equality minister, was responding to questions in the Siambr on Wednesday September 30.

Reform MS Paul Marr asked for clarification on the rollout of the proposed scheme across Wales and within his constituency of Ceredigion Penfro.

Pointing out a discrepancy in government commitments, Mr Marr noted that the First Minister previously told the Senedd the scheme was being piloted, whereas the Programme for Government only pledged to “seek to pilot” it.

“The distinction there really matters, Minister, because ‘we’re going to’ is a commitment, while ‘seek to’ is not,” Mr Marr said.

Ms Williams explained the wording reflected a critical decision resting with the UK Government.

“What we don’t want to do with Cynnal is make families worse off,” Ms Williams said. “We want to make them better off. So, that means the UK Treasury has to give a benefit and tax disregard.”

She added that she has met with Baroness Sherlock, minister of state at the Department for Work and Pensions, who agreed to explore options to ensure the payments proceed without impacting tax or benefits.

The exchange followed broader criticism from Conservative MS Natasha Asghar, who accused the government of requesting more powers and expanding dependency rather than creating opportunity.

Households across Wales are “struggling with rising living costs”, Casnewydd Islwyn MS Ms Asghar said.

Suggesting there is “fundamental difference of values” between herself and the Conservative spokesperson, Ms Williams rejected “the narrative around dependency on benefits” – arguing that support must go to those most in need.

“People are eligible for those benefits because their income is currently not sufficient to make sure that they are able to live with dignity and meet their essential needs,” she said.

“We will not be quibbling about who is eligible for that support. If they are in need, if they are in poverty, if they are disabled and need our help, then we will help them.”

Fflint Wrecsam’s Plaid Cymru MS Carrie Harper urged the government to press ahead, pointing to Scotland – the only UK nation where child poverty rates are falling – as a blueprint.

She noted that 12,786 children currently live in poverty in her constituency, warning of a direct link between childhood poverty and young people becoming disengaged from education, employment, or training later in life.

“Scotland acts as an example to all of us in Cymru in terms of what can be achieved when governments have the tools to do more for their own people. 

“The Scottish child payment and their additional powers on welfare are making a tangible difference there.”