Everyone better off: why Cardiff Capital Region’s growth must be inclusive

As the Cardiff Capital Region Commission on Growth and Competitiveness begins a week of ‘hearings’, Victoria Winckler argues that its approach must be inclusive.

The ambition to strengthen the growth and competitiveness of Cardiff Capital Region is unarguable: there is, on the face of it, nothing to dislike. But scratch behind this aim and there are some really big issues.

Most importantly, economic growth does not mean that everyone automatically becomes better off as a result. It is entirely possible that Cardiff Capital Region’s Gross Value Added (GVA) could rocket, yet there could still be large numbers of people living in poverty.

You only have to look at London for an example.

Here, GVA per head is an astonishing two and a half times more than in Wales at £42,666 per person compared with Wales’ £17,573 per person. Wow, you might think, if only we could be more like London!

But the poverty stats tell a different story. Poverty is actually higher in London than in Wales, with 27% of the population on a household income of less than 60% of the median after housing costs compared with 23% in Wales.

So, focusing solely on raising GVA, so that Wales is more like London, is not likely to be a panacea for Cardiff City Region’s ills.

Instead, Cardiff Capital Region needs to focus on ‘inclusive growth’ – both socially and geographically. No groups of people and no communities should be left behind.  Achieving growth that is inclusive should therefore be at the centre of the capital region’s agenda.

Inclusive growth makes sound economic sense too.

Paying benefits to replace earnings or top-up low wages are a significant cost to the public purse, while the reduced spending power of people on low incomes depresses consumer demand.

In the longer term, poverty is associated with many social ills such as lower educational attainment and higher incidence of ill-health.  These are a significant burden on public spending as well as a waste of human potential. The cost of poverty to Cardiff Capital Region is likely to be at least £2.2 billion a year.[1]

Inclusive growth is much more than a valleys vs city debate.

Poverty occurs throughout the area. There are significant concentrations of disadvantage in Cardiff itself and in the Vale of Glamorgan as well as in the south Wales valleys. Nor is improved connectivity the only solution. There are different types of disconnected community which, when combined with local housing market conditions, mean that different approaches are required in different kinds of area.[2]

So what should be done?

Here’s our seven point plan:

More and Better Jobs

Central to Cardiff Capital Region’s efforts to achieve inclusive growth must be the creation of more and better jobs.

1. Increase take up of the voluntary Living Wage
2. Develop strategies for low-pay sectors
3. Strengthen local economies

More and Better Workers

A great deal of public policy in Wales to date has focused on labour supply, yet there is still more to do:

4. Develop an integrated employment and skills framework
5. Dramatically improve childcare
6. Help more young people move successfully into work
7. Ramp up anti-poverty initiatives.

 Cardiff Capital Region has ambitious employment and GVA targets. But if it is to reduce poverty at the same time, it needs to put growth that is socially and economically (as well as environmentally) sustainable at its heart.

Victoria Winckler is Director of the Bevan Foundation. Read our submission to the Cardiff Capital Region Growth and Competitiveness Commission here.

[1] Based on the Wales’ ‘Barnett share’ of the UK cost being £4.4 billion and Cardiff Capital Region’s being 50% of the Wales total.

[2] Alasdair Rae, Ruth Hamilton, Ryan Powell and Rich Crisp ­(2016) Overcoming Deprivation and Disconnection in UK Cities, Joseph Rowntree Foundation