Given the on-going debate about the economic status of Wales, particularly when using traditional but narrow measures such as Gross Value Added (GVA), the recent publication of the UK Prosperity Index by the Legatum Institute makes for compelling reading.
Defining prosperity as both wealth and wellbeing, the think-tank has developed a multi-dimensional measure of the determinants of a good life. It goes beyond GDP as a measure of national success to capture human flourishing.
Whilst appreciating the importance of wealth creation, the index recognises that many of the enablers of, or obstacles to prosperity occur at a far more local and personal level.
Using a broad set of metrics including economic quality, business environment, education, health, safety and security, social capital, and natural environment, it therefore takes a more holistic view of prosperity across 389 local authority areas in the UK.
By region, the South East of England is top of the prosperity index whilst the North East of England is at the bottom. Surprisingly perhaps, Wales is ranked 8th which is higher than Scotland but below Northern Ireland. Indeed, Wales does well on measures such as education and quality of life but poorly on economic quality and business environment.
Within Wales itself, Monmouthshire is the most prosperous county (62nd in UK) whilst next door neighbour Blaenau Gwent (383rd in the UK) is the least prosperous.
But the main finding of the report is the failure of urban parts of the UK to deliver prosperity with the index showing that only 34 of the UK’s 138 urban areas are delivering more prosperity than their wealth would suggest.
For Wales’ three main cities, there are a number of interesting results that should concern the leaders and policymakers in each of these urban strongholds. Overall, Swansea is ranked 192nd, Cardiff 270th and Newport 277th but the more detailed indices show a more complex picture of what is happening.
For example, in terms of business environment – which is measured in terms of variables such as entrepreneurship rate, business survival, broadband speed and superfast broadband access – Cardiff is ranked 43rd in the UK and Newport is ranked 94th.
However, when it comes to economic quality – which measures variables such as unemployment, child poverty, feelings about household income, job satisfaction and median earnings, both cities do far worse with Newport ranked 342nd and Cardiff 354th in the UK. Swansea, which is 216th for business environment is ranked 326th for economic quality.
Indeed, people’s perceptions of these key factors in determining life chances are all important in predicting the prosperity gap within cities. In contrast, rural areas are far better at securing life chances for their citizens, leading to high levels of prosperity even where wealth is sometimes lacking.
Whilst Swansea is ranked 89th for education - which measures attainment at 16, truancy and qualifications - Cardiff and Newport are ranked 252nd and 301st respectively. With respect to health - which measures factors such life expectancy, anxiety, wellbeing, mortality, obesity and health satisfaction – all three cities do badly with Cardiff 242nd, Swansea, 330th and Newport 334th.
The saving grace though, and something which could be a driving force in the future, is the performance on social capital which includes measures such as recycling, volunteering, voter turnout, trust, housing affordability, friendship support and family support.
Swansea is ranked 57th in the UK, Cardiff 95th and Newport 117th, emphasising the sense of community that is found within Wales. Indeed, the report argues that such high levels of social capital (when community-focused) has the potential to be a potent driver of prosperity through real localism
So there are some key challenges from the Legatum Institute study for the three cities in Wales if they are to climb up the prosperity league table in the next few years.
Certainly, it is a mixed picture but perhaps the main lesson is that prosperity is not just about the business environment alone, which both Cardiff and Newport excel in. Whilst that remains important, policymakers in our cities also need to focus their efforts in areas such as education, health and the quality of the local economy to create a more prosperous future for their citizens.