Labour's Regional Economic Policy Faces Challenges in Welsh Valleys Amid Funding Cuts
The Welsh valleys, including Abertillery, Maesteg, and Merthyr Tydfil, are experiencing significant economic hardship, with about a quarter of the working-age population out of employment due to long-term ill health. A report by Steve Fothergill of the Industrial Communities Alliance highlights a decade-long, unintentional dismantling of regional policy by successive Conservative and Labour governments. Following Brexit, the abolition of assisted areas status removed preferential support for distressed regions, exemplified by Jaguar Land Rover's choice of Somerset over Wales for a battery plant.
The UK Shared Prosperity Fund, designed to aid economically struggling areas, lasted only three years before ending in 2024-25. Under Labour, the fund's allocation for 2025-26 was reduced by 40%, from £1.5bn to £900m. This fund was replaced by local growth funds, with projected 2026 allocations declining by 76% in England and Scotland, and 50% in Wales compared to 2024-25. Although Labour opposed the abolition of assisted areas, it has not reinstated them, and regional economic spending has seen sharp cuts under its governance.
Some mitigation arises from more generous local authority funding, but this is expected primarily to support adult social care and children's services rather than job creation initiatives. Additionally, the Pride in Place program is considered too limited to serve as a substitute for a comprehensive regional policy. Post-Brexit, there remains an opportunity for a broader regional strategy; experts suggest Labour should restore assisted areas status and expand its regional policy framework to support struggling regions. The persistent north–south economic divide remains a key issue, with upcoming elections in Scotland and Wales likely to test Labour's standing in traditional industrial heartlands.
