Why is Cardiff still lagging behind other UK capitals?

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


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

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