Something from Nothing: The Economic Spark

Source: Moving to Blaenau Gwent

Every election season, candidates make promises to reduce unemployment and tackle the issue of the lack of jobs within their county, state or country. This isn’t unique to any single nation, city or village and we notice it everywhere. Yet, there seems to be no unified model of development or examples that can be truly applicable across the board on where to start. Politicians make grand promises every year and even start huge projects that are meant to bring economic growth and employment opportunities to a region that historically has struggled since de-industrialisation and the transition to a tertiary economy. Massive information technology projects bring in investment and resources from private sector firms that theoretically should benefit the people of the local area and increase the overall wealth of the region. 

While such projects are great at increasing the GDP per capita of a specific region, it often does not address directly the challenges of a transition for the people of the region from their past as an industrial town to a post-industrial town. There are certain characteristics that are possessed by a post-industrial economy. These are its transition into a service-based economy, decline of blue-collar jobs, professionalisation and formation of an information society. In this week’s post, we shall try to understand this transition more deeply from the perspective of the Blaenau Gwent - a principality in southeast Wales. 

There are a few reasons to choose Blaenau Gwent. Firstly, this principality is small and is in a valley. Secondly, it is less than an hours drive (without taking traffic into consideration) from three port cities that significantly more attractive than itself to investment from companies - namely Cardiff, Swansea and Newport (all due to them being port cities and their proximity to the major financial artery - the M4 motorway). The purpose of this and upcoming posts is to explore viable economic sparks for principalities such as Blaenau Gwent and similar small towns across the world that struggle to transition from their industrial past due to not having any natural resources of their own, low human capital and low council budgets. How can a town that is doomed to people having to live on welfare programs and high levels of economic inactivity turn things around over time when the odds are stacked against them? While there are many large scale attempts bring jobs into such regions, what would impact peoples lives in the short term and improve it to a degree where people can afford to live healthier, happier lives and seek higher paying jobs over time? Are there means to decrease economic inactivity and make people more receptive to jobs or even prepare them for careers that they otherwise would not have access to? These are all questions to be answered over the following weeks through the case study. 

Unemployment is a major issue in Blaenau Gwent. Around 1,300 people aged 16 and over in the principality were unemployed at the end of 2023. This has meant an increase in the share of unemployment within the group from 2.9% the previous year (2022) to 4.1% by 2023. But, an increasing rate of unemployment alone does not make this principality a tough location to generate an economic spark. The number of “economically inactive” people also increased during the same period (December 2022-December 2023) from 10,700 (24.7%) to 11,500 people (26.4%). 

The fundamental distinction between unemployment and economic inactivity is that the former refers to workers who are still actively searching for employment and the latter is the terminology for those who have reasons besides not receiving the opportunity to work to not be employed. These reasons can include people who chose an early retirement, is a student in a full-time course, people who stay at home to care for members of family or the home, workers who have given up on job hunting after years of discouragement, people suffering from long-term sickness or disability, and people who choose to have alternative lifestyles that make them self-sufficient but do not hold an official job title. An important consideration that we have to make here is that a person may want to work but their situation (like having to take care of the elderly parent or having a disability or long term sickness) makes them unable to accept a job if offered. They are still counted as economically inactive.

With that understanding, let us look at the previously looked at requirements for the transition towards a successful post-industrial economy and how Blaenau Gwent fared within them.

The Transition

The principality historically depended on coal mining, steelmaking around towns like Ebbw Vale and Tredegar. In 2002, the closure of the Ebbw Vale Steelworks brought about an end to the area’s industrial era. The works had employed thousands of locals and shaped the regions labour market through the generations. Its closure marked the beginning of an era of lost identity and lost livelihoods for the borough.

Decline of Blue Collar Jobs

A transition into a successful post-industrial economy starts with a decline in blue-collar jobs due to factors like automation and globalisation which leads to a decrease in the need for traditional unionised labour. Across Wales and the United Kingdom, the manufacturing employment declined sharply from the 1980s. The impact however was particularly acute in the valleys like Blaenau Gwent where industrial work was highly concentrated and was the backbone of the region. According to the Office for National Statistics’ Business Register and Employment Survey-by the 21st century, the largest employment sectors in Blaenau Gwent were health, retail, education and public administration and not manufacturing.

Service-based Economy

This transition towards services (health, education, finance, IT) rather than factories is an important feature of a transition into a post-industrial economy. Blaenau Gwent also went through the move to a service economy but not to the same level of past industrial cities like Manchester or Leeds. Instead of growth in employment sectors like finance, legal services, tech and advanced professional services, Blaenau Gwent saw stronger growth in social-care, NHS-related employment, supermarkets and retail, local government, hospitality and warehousing/logistics to a limited extent. This distinction is impossible to ignore because these sectors tend to generate lower productivity and lower wages than tradable knowledge sectors. This leads to average weekly earnings in Blaenau Gwent to remain below the Welsh and UK averages according to the Annual Survey of Hours and Earnings data.

Attempts to Rebuild

The Welsh government has made efforts towards towards trying to engineer a new economy. The vision for the new Tech Valleys was released in December 2017. This was a long-term project that aimed to attract advanced manufacturing, defence electronics and digital industries. This brought the Thales group (a French multinational company specialising in defense, aerospace, security, space, and digital identity technologies) into the region. The projected impact of the £100 million project was 1,500 jobs by 2027 directly and 2,748 jobs with £16 million of net benefits through indirect benefits of the investment. Further investments were made into regeneration and skills through colleges, business parks and road/rail improvements in the regions. 

The effects of the project on employment rate will be a core indicator of its success so far as explored in table 1.1. 

Before vs after Tech Valleys (2017 - 2024/25)

Indicator	2017	2024/25	Change
Employment rate	~65%	~66–67%	+1–2%
Economic inactivity	~31–32%	~30–31%	~No real change
Claimant count	~3.5%	~4–4.5%	Slight increase (post-COVID)
Weekly earnings	~£430	~£520–540	Nominal gain

Table 1.1

The dominant sectors of employment still remain health & social care, public administration and retail with no major structural shift towards a tech economy. 

Employment recovery and public sector dependance

As we have seen, the transition has left a labour-market scar. The employment rates have only seen a nominal gain. Over time, the principality has been victim to the same issues of lower employment rates, high economic inactivity, health-related inactivity and in summation, pockets of long-term deprivation. According to the Welsh Government’s Welsh Index of Multiple Deprivation 2025, 76% of Blaenau Gwent’s small areas were in the most deprived half of Wales. This is the highest share of any local authority. 

One of the features of the post-industrial transition is the growing role of the state in sustaining the people. This is something we can see illustrated in the current council spending. The 2025/26 budget allocations go towards three main sectors:

• Education: £81.3 million

• Social Services: £56.2 million

• Environment: £34.5 million

The standalone budget allocation for economic development is only £1.26 million. This suggests a local economy that is increasingly shaped by welfare, care and service provision rather than by production-led growth.

Rise of Knowledge Capital

As we have seen, there have been attempts to address the lack of employment opportunities by the Welsh government in the region and yet it has not led to major changes in levels of unemployment within the region. A valid question would be whether or not information, technology and theoretical knowledge have surpassed raw materials as the primary resource. 

Blaenau Gwent’s knowledge capital has risen substantially in absolute terms since the early 2000’s. But we have to take into account that this rise is from a very low base and that it still remains weak relative to rest of Wales. This could be a contributing factor to why jobs generated by the Tech Valleys initiative do not seem to reflect on unemployment numbers within the region. 

To explore this further, lets look at the share of working-age adults in the region with no qualifications. The levels fell from 34% in 2001 to 15.5% in 2013. Over the same period, the share of adults with NQF Level 4 (Above A-levels but below first year bachelors degree) and above rose from 11% to 17-18%. That improvement continued into the 2020’s. According to the Welsh government, Blaenau Gwent’s Level 4+ share was 29.2% in 2020, 26.8% in 2022 and 31.1% in 2024. However, the share of the population with no qualifications was 11.1% in 2020, 15.5% in 2022 and 13.8% in 2024. 

From these figures we can see the trajectory clearly. The borough has built more formal human capital than it had twenty years ago for certain. But relative to its neighbouring regions, it lags behind with Blaenau Gwent having the lowest proportion of working-age adults qualified to Level 4+ (31.1%) and the highest proportion for the same with no qualifications (13.8%) in all of Wales as of 2024.

Conclusion

We have seen how Blaenau Gwent has struggled to successfully navigate from an industrial economy into a tertiary economy. We have explored the challenges the borough currently faces and it is evident that it isn’t because of a lack of attention or awareness of the problem due to the attempts by the government to fix them. However, we have also seen inconsistencies and a general lack of impactful solutions to meet the needs of the local people. The programs meant to lift the borough out of poverty are not in line with the available skillsets within the region. This can only mean that the meaningful economic SPARK cannot be the Tech Valleys program that exists currently and that more viable pathways need to be explored in order to ensure meaningful change for the people of the region.

In the following weeks we shall look at different possibilities that the council can explore to enable a meaningful change in employment statistics with an eye being kept on the limitations in budget, attractiveness to business, mentality of its residents, infrastructure and human capital. The objective for such an exploration with this specific case study will be to develop a basic principle for post-industrial towns in order to be able to help lift themselves out of dire financial straits and improve their own quality of life with limited external help. As illustrated above, this area just like many others across the world suffers from taking away their economic heart. For the borough to be able to contribute to economy and not to be a liability to the state, we shall explore means by which the local council can create systems in order to generate jobs and income for its upcoming generations, no matter how radical or ‘wacky’ the ideas may be.