Why is Cardiff still lagging behind other UK capitals?

Cardiff and the surrounding areas were devastated by the decline of coalmining

cardiff bay


This week marked the 60th anniversary of Cardiff becoming the capital of Wales. However, despite great efforts by the last Labour government and the current Labour Cardiff council, the young city lags behind other UK cities economically and in terms of the wellbeing of its residents. The government must concentrate on key areas to incentivise business to invest and innovate in Cardiff.

The Legatum Institute’s Prosperity Index recently released an analysis of prosperity in the UK. It showed that Wales is the least prosperous nation in the UK and that Cardiff is the least prosperous city. In terms of GDP per capita Cardiff comes 49th, ranking well behind London (1st), Belfast (14th) and Edinburgh (38th).

In terms of Life Satisfaction Cardiff comes 118th, falling behind Edinburgh (90th) and Belfast (64th) – beating only London (124th). Nationally, Cardiff is by far the richest area of Wales but has the second lowest level of Life Satisfaction – ranking only in front of the Gwent Valleys (158th).  

Perhaps this is not surprising in such a small, young city surrounded by some of the most deprived areas in Britain. Cardiff only became a city in 1905 and a capital in 1955 and its population, at about 350 000, is much smaller than the other UK capitals.

Moreover, the areas surrounding it were devastated by the decline of coalmining. There was a time in the 20th Century when Cardiff was the largest coal exporting port in the world; however with the rise of oil came the steady decline of an industry employing tens of thousands of the South Wales population.

Margret Thatcher’s government is seen as the final nail in the coffin, and some have argued that successive governments have failed to encourage regeneration. The implications of this were devastating; the Coalfield Task Force in 1998 found ‘deprivation and decline’ in ex-coalfields and a ‘unique combination of concentrated joblessness, physical isolation, poor infrastructure and severe health problems’.

When it came to power in 1997, the Labour government worked with the Cardiff council to improve the city through ‘excellent city centre design guidance’ and developmental planning. Devolution also provided jobs for Cardiff, far more people are employed in the public sector (30.4 per cent) than is usually in a city of its size and large investments have been made in BBC Wales.

The Cardiff Council is working hard to encourage business to invest and improve the city. For example, the £150 million project to regenerate the Interchange at Cardiff’s Central Square (which was won by the architectural firm Foster and Partners) and the £100 million housing development project in the industrial derelict site – ‘The Mill’ – with Tirion Homes have the potential to provide jobs, houses and community space for people of Cardiff and attract more investment.

The ten local councils in Cardiff have also proposed the £1.2 billion City Deal Cardiff Capital Region to boost the economic competitiveness of the region. George Osborne recently agreed to invest in this ‘in principle’ in his Autumn Statement.

There are, however, some key problems that need to be addressed to incentivise business to invest and innovate. First, there are a number of barriers and restrictions that make setting up a business slow and costly.

One area is open data; Bristol has a much more relaxed approach to data sharing which has allowed software companies to flourish. Another problem is decision making; this must be accelerated and streamlined to enable projects to progress quicker.

Furthermore, as Tech City UK recently found, access to funding is a problem for young businesses in Cardiff. Jason Smith, co-founder of Cwmbran-based social media analytics company Blurrt, notes, ‘if money’s not available, you won’t get far. And if its startups never mature, Wales will be stuck with a bunch of businesses that aren’t going anywhere’.

Finally, the council must ‘be brave enough to build space and infrastructure. In Manchester local authorities worked to attract business by creating new business districts in and around the city.

Mark Ridley, chairman and CEO of Savills UK and Europe, argued that there is a perfect storm in Cardiff for a booming economy, withgraduates from a great university, a blossoming IT sector (the number of ICT businesses in Wales grew by 7 per cent between 2013 and 2014, compared to 2.8 per cent in other sectors) and affordable rents.

Moreover, because of its size ideas can be tested in Cardiff with more ease and less cost than in London.

The next 60 years will be the making of Cardiff. Despite being the least prosperous capital the future is bright; if the problems outlined above are tackled then Cardiff will become business-friendly and in turn wealthier, happier and more prosperous.

Abigail Watson is a research intern at the Legatum Institute

12 Responses to “Why is Cardiff still lagging behind other UK capitals?”

  1. treborc

    Well with the London Bubble and now the Cardiff Bubble growing, I expect they will spend a few million/billion to make the capital better for AM’s .

    Many other parts of Wales are struggling even more take Llanelli, Cararthenshire and Pembrokeshire with the Oil Industry leaving the Welsh deep sea port of Milford with Pembroke Dock now looking like an area in serious decline .

    We get this article about Cardiif, the Cardiff political bubble what next Cardiff should have a higher Living wage.

  2. Brad JJ

    The once industrial working classes are suffering from a plague of anxiety and depression manifested in alcohol, drug and substance abuse, obesity and self and other abuse.

    All measures aimed at treating this problem symptomatically will fail. People need purpose and meaning.
    That means decent jobs for all.

  3. Richard Puller

    because decades of socialist policies in local and national government have, as usual, failed.

  4. treborc

    Three terms of a right wing New labour party which followed the teachings and policies of Thatcher , the vast majority of the rest was controlled by Thatcher and the Tory party. spec savers are pretty good.

  5. Thanks Tank

    The Tories see the Welsh as a kind of animal ( there is a special animus towards Welsh in the Public School world) and Labour saw them as a solid block vote that were always in the bag so not to be focused on.

  6. Intolerant_Liberal

    And, you are saying that Tory policies are working now??? Please explain to all the people in low paid, zero hours insecure unemployment how the Tories are benefitting the majority of us??? I’m all ears…

  7. Intolerant_Liberal

    Yes. The Labour party abandoned the working class heartlands to focus on middle England, as if affluent middle England needed any more help. It is the way things are at the moment. Focus on the important and wealthy and let the poor die off or drink themselves to death and etc. This isn’t just political anymore, it’s a change of ideology on a global scale. Get used to it. The same people who pretend to be concerned about the starving in Africa and the migrants from Syria show their real colours towards the poor in their own towns, cities and on their own doorstep.
    Good old English hypocrisy at its finest. Dickens would have a field day today.

  8. Intolerant_Liberal

    Bang on the money, old sport. This is a middle class site and they are really only concerned with the left leaning middle classes who might suffer along with the great unwashed. So when they have established their careers pretending to care for the poor and marginalised, the politics are forgotten and they become just another cog in the well oiled machine, creating wealth for a relative minority and basically accepting the harsh reality that most who prosper in wealthy countries do so by exploiting the poor, directly or indirectly, or by turning a blind eye to it or refusing to accept it, in time honoured fashion.

  9. Intolerant_Liberal

    It also means that we need to fully look at the deeply unjust political and social and economic system in the UK, too, and not nice meaning soundbites that appeal to left leaning liberals pretending to care for the poor when they really don’t care.

  10. Richard Puller

    “New figures for national wealth show Wales lingering stubbornly at the bottom of the UK league table with its share actually slipping back last year.”
    “Wales recorded the lowest GVA per head of any UK nation in 2014 at just £17,573 – 71.4% of the UK average and more than £1,100 lower than the next worst nation, Northern Ireland.”

  11. Intolerant_Liberal

    Then it seems that both Labour and Tories have absolutely failed the Welsh, then.

  12. Intolerant_Liberal

    The great problem is selfishness, to a very unhealthy degree amongst some people, and base human nature. And you cannot legislate against that.

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