Child poverty in Wales is likely to fall slightly next year. But without deeper change, it will then flatline at a stubbornly high level.
That is the central message from our latest projections at the Resolution Foundation. Using the same economic assumptions as the UK Government’s autumn 2025 Budget, we estimate that child poverty will dip in the short term, before levelling off.
The fall in child poverty levels in 2026-27 is driven by policy. The scrapping of the two-child limit and a 6% rise in the standard allowance of Universal Credit will boost incomes for many families. After that, other policies pull in the opposite direction. Freezes to housing support and the benefit cap will continue to bite.
Even with the projected fall, poverty rates in Wales remain slightly higher than England, and much higher than in Scotland, where the Scottish Child Payment makes a real difference to low-income families.
A common response to child poverty is to call for more parents to do paid work, or to have them work more hours.
Of course, these changes have been happening anyway. One of the biggest social changes in the past thirty years has been the rise in parental employment. That shift has changed the nature of poverty. As worklessness has fallen, in-work poverty has risen. That doesn’t mean that we can’t increase parental employment further. But as employment rates rise, the group left out of work tends to face more serious barriers. Among families with no paid work, around half have a pre-school child. Around half include an adult with a health problem. These are not small hurdles.
But what about progression? Sometimes politicians and policy makers seem to reach for employment progression as a magic – and low-cost – way to improve family incomes but without thinking through what it takes to make a reality for parents.
From qualitative research that we and others have done, I would draw out three themes.
First, survival mode. Living in poverty drains financial and emotional reserves. When families are focused on keeping the lights on and the rent paid, long-term planning can feel out of reach. Some parents become understandably cautious, or fatalistic about their prospects. For these people, ‘progression’ just isn’t on their agenda.
Second, practical constraints. Parents’ working patterns need to fit around school hours, childcare, perhaps a partner’s job routines, and transport. Switching jobs can feel too risky, especially in sectors without stable contracts. Increasing hours can be impossible if shifts are unpredictable, or don’t fit with bus timetables or childcare availability.
Third, weak incentives. For some families, the financial gains from extra hours or a promotion are modest once reduced Universal Credit is taken into account. The extra stress from a promotion may not seem worth it.
If that diagnosis is right, then a serious strategy on progression cannot rely on exhortation alone. It needs to tackle the underlying barriers and be broad-based.
Childcare is important, even if it will not be transformational. That includes provision for school-aged children outside term time, and support for parents who want to retrain. Transport matters too: reliable and affordable public transport widens the range of jobs families can realistically take. Employment rights are part of the picture. Greater security and predictability at work can reduce the risks associated with changing roles or increasing hours. Skills policy also has a role. Parents need real opportunities to move into better-paid sectors, not just encouragement to work longer in low-paid ones.
None of this is simple. But if Wales wants child poverty to fall not just next year, but for the long term, it will need a broad-based approach, with action taken by local authorities and the Welsh Government.
Mike Brewer, Deputy Chief Executive of the Resolution Foundation, was one of our guest speakers at our webinar Turning the tide on child poverty, part of our series Ways forward: Insights and evidence for the next Welsh Government held by the Institute of Welsh Affairs.
