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State of the Region Part 2: Competitive Contents Foreword

Introduction 03 The Capital Region City Deal’s However, a competitive strategy based needed employment. Also, in addition Economic Prosperity 04 objectives are to create a local economy solely on low prices and costs is unlikely to to helping meet the Deal’s inclusiveness that is Connected, Competitive and provide lasting success in terms of higher objective, they can provide the growing Skills and Innovation 14 Resilient. This second report on the state per capita prosperity. Low wages are local customer base that is a competitive of the region offers a perspective on the precisely what we are trying to grow out of. must-have. The many public sector region’s initial competitiveness. agencies in the region are particularly The ideal is to produce things that influential customers, and can help lift The Deal is using public funds. Not all customers choose not because they are suppliers’ standards. of its aims are primarily commercial – cheap, but because they are high quality. additional growth needs to be inclusive Germany’s competitive strategy has more Skills are another competitive must- and sustainable, for example – but many to offer us than China. have. The region scores well in terms are, and if the local and national partners of the quantity, quality and commercial are to get value for money, the funds must We should not be narrowly dogmatic in relevance of its higher education, but be used efficiently. Investing in businesses thinking about specific industries, but the distribution of equally-important which are unable to stand on their own stay more open-minded, as in the broad vocational skills still varies too much for feet, or in projects which do little to help spread of priority sectors identified in comfort and needs improvement. other businesses to compete, would deliver section 2 of the report. only a temporary boost to prosperity. The competitive challenge for the Deal, Manufacturing is often where value added then is to help broaden the region’s Competitiveness has different is highest, but it comprises much more appeal beyond that of the low-cost dimensions, and regional data can be than the obvious high-tech segments. supplier. The diversity of existing patchy. A traditional view focuses on Many services can deliver higher wage businesses, and the growing customer prices and costs. Here the region is well- jobs too, and the region’s media and and skills base, are encouraging signs. placed as its competitive advantage is the professional services already compete on mirror-image of the relatively low levels of an international stage. value added when compared to the rest of the UK. Our local wages and property Foundational occupations, tourism and costs are attractive to firms looking to hire construction are perhaps less exposed and invest in the area. So too is the less to competitive pressures, and less likely tangible edge provided by the region’s also to deliver the highest value added enviable quality of life. outcomes but, they do offer much

Kevin Gardiner Economic Growth Partnership Introduction

One of the key objectives of the City Deal the level of economic output in a region is to improve the economic prosperity of and the direct labour input of those who the region. How to measure economic produced that output. This is not the prosperity is, of course, subject to case, however, for GVA per head which considerable debate and there is no one includes people not in the workforce single indicator that can do justice to the (such as children), and the output of task. This is particularly the case when commuters who do not live in the region. we recognize the limitations to a narrow The data here shows that whilst labour focus on output growth or efficiency, and productivity is relatively static for the when we want to understand how and region as a whole, the pattern of change whether prosperity is being shared. This is more variable across the different report purposely brings together a basket constituent parts of the region. of different indicators to illuminate current economic performance and key trends Variability in economic performance is across the Cardiff Capital Region (CCR). indeed a key theme that emerges from all It only scratches the surface of the sorts the data included here. Whether it is the of indicators that are meaningful in this highly variable rates of unemployment, regard, but is intended to present some the number of jobs and skill levels, there of the key data that now exists for the city is clear evidence that the CCR’s goal of region, and which can help us benchmark tackling inequalities is imperative. The the region’s performance as the City Deal continuing importance of key sectors of investment progresses over time. the economy, notably around the human foundational economy of health, social A key focus here is data on labour care and education is also apparent, productivity - the quantity of goods and whilst the variations between sectors services produced per unit of labour in terms of skill shortages provide an input. This is typically regarded as a key important strategic and long-term focus measure of the economic performance for decision-makers. of a nation or region because of its relationship to output and wages. It can be measured in a number of different ways however. The measures used here are based on Gross Value Added (GVA) per hour worked or job filled. These are increasingly preferred as measures of productivity for city regions instead of GVA per head of the population which has tended to be used in the past. This is because GVA per hour or per job filled provide a direct comparison between

Professor Gill Bristow 3 2 1 Footnotes Prosperity Economic 01.

4 — Cardiff Capital Region State of the Region Part 2: Competitive regions, 2018 (GVA) statisticsfor theUKcapital city ONS: Summary ofgross value added NUTS3 subregions, 2019 productivity indices by UKNUTS2and ONS: Subregional productivity: labour NUTS3 subregions, 2019 productivity indices by UKNUTS2and ONS: Subregional productivity: labour (numbers may(numbers not add due to rounding) Change inGVA perHour Index - Smoothed (UK=100) (88.4and Newport to 87.8). the greatest declinewas inMonmouthshire the strongest increase (85.6 to 89.1) while Bridgend andNeathPort Talbot witnessed Region asawholebetween2014 and2016. shows aslightrise for theCardiff Capital The gross value added(GVA) perhour index +0.8 +3.5 -0.4 -0.6 -0.2 +1.7 2014: 88.4 2016: 87.8 & Newport 2014: 83.8 2016: 83.6 Valleys 2014: 88.9 2016: 88.5 Cardi­ & Vale ofGlamorgan 2014: 88.1 2016: 88.5 Regional Average 2014: 92.0 2016: 93.7 Central Valleys 2014: 85.6 2016: 89.1 Bridgend & Neath 1 greatest decline(88.4 to 84.5). sawMonmouthshire the andNewport 2016. WithintheCardiff Capital Region, for region thecity between2014 and been nooverall changeintheindex In terms ofGVA perjobfilledthere has add due to rounding) GVA perJob Filled - Smoothed (UK=100) may (numbers not +0.5 -4.0 -0.6 +2.1 -1.8 0 2 and the North Walesand theNorth GrowthDeal. but lessthanSwansea Bay Region City Manchester andLiverpool Regions City of 13%. Thisisgreater thanGreater average Real GVA growthsince 2009 The Cardiff Capital Region has seen 2014: 88.4 2016: 84.5 Monmouthshire & Newport 2014: 88.8 2016: 87.0 Central Valleys 2014: 85.3 2016: 84.7 Regional Average 2014: 85.8 2016: 85.8 Cardi & Vale ofGlamorgan 2014: 79.7 2016: 80.2 Gwent Valleys 2014: 83.8 2016: 85.9 Bridgend & Summary of gross value added (GVA) statistics for select UK economic regions, 2017 3

Three-year growth Real GVA growth 2016-2017 growth in 2016-2017 growth in Capital City Region Population Total GVA (£million) in real GVA to 2017 since 2009 to 2017 total GVA (%) real GVA (%) (%) (%)

Greater London Authority 8,825,001 431,164 4.2 2.9 9.4 28.4

West Midlands CA 2,897,303 66,667 3.9 1.9 10.4 23.1

North Growth Deal 696,284 14,450 4.4 2.9 6.9 20.6

West of CA 926,957 29,295 2.2 0.8 1.9 1 7.9

Swansea Bay City Region 698,733 12,305 2.4 0 2.4 14.9

Sheffield City Region 1,393,445 25,991 2.5 2.3 6.4 14.1

Edinburgh and SE Scotland City Region 1,375,880 32,300 4.6 3.3 11 13.7

Cardiff Capital Region 1,524,557 31,807 3.4 1.8 7. 2 13

Mid Wales Growth Deal 205,591 3,626 -1.5 -2.9 0.9 12.6

Greater Manchester CA 2,798,799 66,413 3.5 1.9 7.1 12.3

Glasgow City Region 1,827,240 41,368 4.1 2.6 3.4 11.6

Leeds City Region 3,063,074 69,622 3.2 1.5 5.5 10.5

Belfast City Region 1,101,803 27,399 2.6 0.7 4.9 9.5

Liverpool City Regions CA 1,544,420 32,030 5 3.3 4.1 2.4 6 5 4 Footnotes Prosperity Economic 01.

6 — Cardiff Capital Region State of the Region Part 2: Competitive Ibid. ONS: Annual Population Survey, 2018 ONS: Claimant Count by Sex andAge, 2019 respectively). Gwent seeing thegreatest (-3.3 and -4 respectively) andBridgend andBlaenau the smallestdeclines(-0.4 and -0.6 Cynon Taf andMonmouthshire seeing the unemployment rate, withRhondda Cardiff Capital Region saw declinesin ofthe 2015Between and2018, allparts Claimant count (JSA anduniversal (Feb credit) 2019) 132 -165 99 -132 66 -99 33 -66 0 -33 Bridgend Capital Region authorities. oftheCardiffin themore urbanparts universal credit were largely concentrated Those claimingjobseekers allowance and of 7.0% inRhonddaCynon Taf. low of2.9% inMonmouthshire to ahigh remains highlyvariable in2018, from a authorities oftheCardiff Capital Region The unemployment rate across the The Vale ofGlamorgan 4 Merthyr TydlMerthyr Cardi Newport Monmouthshire Percentage point change in unemployment rate (Year ending September 2015 - September 2018) 5

0 -0.6 -0.4

-1 -1.2

-1.9 -1.9 -2 -2.1 -2.2 -2.3

-3 -3.3

-4 -4

Cardiff Torfaen Bridgend Newport Caerphilly Blaenau Gwent Monmouthshire Vale of Rhondda Cynon Taf

Percentage unemployment rate (September 2018) 6

7

5.25

3.5

1.75

0

Cardiff Torfaen Bridgend Newport Caerphilly Merthyr Tydfil Blaenau Gwent Monmouthshire Rhondda Cynon Taf 9 8 7 Footnotes Prosperity Economic 01.

8 — Cardiff Capital Region State of the Region Part 2: Competitive Ibid. Ibid. ONS: Annual Population Survey, 2018 for allauthorities. dominate asthekey employment sector Public admin,education, andhealth senior officials. and declinesinmanagers,directors, and customer across service mostauthorities also beenstrong increases insales and Based ondefinedoccupation there have banking, finance andinsurance. sharp increases inthose employed in (+26.7%) andTorfaen (+27.9%) also saw (+19.0%). Caerphilly (+32%), Newport Vale ofGlamorgan (+21.6%) andTorfaen manufacturing inCardiff (+24.5%), the is theincrease inpersons employed in between 2015 and2018. Mostnotable within theCardiff Capital Region The nature ofemployment hasshifted Rhondda Cynon Taf Percentage employed pointchangeinallpersons intwo industries (2015-2018) Vale ofGlamorgan Monmouthshire Blaenau Gwent Merthyr TydfilMerthyr Manufacturing Caerphilly Bridgend Newport Torfaen Cardiff -30 -20 Banking, finance, andinsurance -10 0 10 20 30 7 40 Change in percentage of total persons employed by occupation (2008-2018) 8

50 Managers, directors, and senior officials 37.5 Associate, professional, and technical 25 Administrative and secretarial 12.5 Sales and customer service 0 Process, plant and machine -12.5 operatives -25

-37.5 -50

Cardiff Torfaen Bridgend Newport Caerphilly Merthyr Tydfil Blaenau Gwent Monmouthshire Vale of Glamorgan Rhondda Cynon Taf

Percentage of persons employed in key industries (Jan 2018-Dec 2018) 9

Blaenau Gwent Manufacturing

Bridgend Construction

Caerphilly Distribution, hotels, and restaurants

Cardiff Transport and communications

Merthyr Tydfil Banking, finance, and insurance

Monmouthshire Public admin, education, and health

Newport

Rhondda Cynon Taf

Vale of Glamorgan

Torfaen 0% 25% 50% 75% 100% The economic activity rate in all Economic activity rate - aged 16-64 (2015-2018) 10 01. authorities in the Cardiff Capital Region apart from Bridgend has improved Rate 2015 Rate 2018 % Change Economic between 2015 and 2018. The largest improvement was in Merthyr Tydfil (+6.8). Prosperity Blaenau Gwent 71.7 71.7 0 Those unemployed with health conditions or illnesses varied from a low of 1.3% in Bridgend 7 7.4 75.3 -2.1 Newport to a high of 6.0% in Cardiff. Caerphilly 72.7 75.2 2.5 Between 2007 and 2017, the change in the number of jobs in each unitary authority Cardiff 72.9 7 7.3 saw the greatest increase of 14.5% in 4.4 Cardiff and largest decline in Blaenau Gwent of 19.1%. Merthyr Tydfil 71.7 78.5 6.8 Cardiff saw the greatest increase in the Monmouthshire 80.7 81 0.3 absolute number of jobs during the period at 30,000 while Rhondda Cynon Taf saw Newport 73.9 78 the greatest decline of 6,400. 4.1

Given the significance of non-market Rhondda Cynon Taf 74.9 75.3 0.4 Footnotes sector employment in the Cardiff Capital 10 ONS: Annual Population Survey, 2018 Region economy, table 11 indicates that Vale of Glamorgan 7 7.1 7 7.3 0.2 11 CCR: Priority Sectors, Max Munday a very large amount of private sector Report 2018 employment in the Capital Region is 12 ONS: Jobs Density, 2007-2017 Torfaen 76.3 79 2.7 13 ONS: Annual Population Survey, 2018 defined as being within Priority sectors. 14 ONS: Jobs Density, 2007-2017

The amount of employment in 2017 (000s) within the Capital Capital Region local authorities that was in identified Priority Sectors11

Energy & Food & Fin. & Prof Life Adv manu. Constr Creative ICT Tourism Total Env’ Farming Services Sciences Bridgend 4.5 4.6 3.7 5.5 * 7.0 3.5 1.5 5.0 60.7 Vale 1.4 2.9 2.2 4.0 * 2.6 1.2 * 3.8 37.8 RCT 5.6 8.3 3.0 8.8 * 6.7 * * 7.7 79.2 Merthyr 1.5 1.7 * 2.1 1.6 1.3 * * 2.0 24.5 Caerphilly 5.2 4.8 1.7 8.4 1.5 5.3 * 1.5 4.6 60.2 Blaenau G. 1.3 1.7 * 2.9 * 2.0 * * 1.0 19.9 Torfaen 4.6 3.2 1.4 4.1 1.5 3.7 1.7 * 2.6 37.2 2.1 3.3 0.9 4.6 2.7 4.2 * * 3.3 42.2 Newport 6.2 5.2 3.8 9.8 1.2 10.3 3.2 * 7.0 81.7 Cardiff 4.5 14.5 18.0 26.2 * 39.9 8.5 2.0 18.3 227.4

Cardiff Capital Region Capital Cardiff 2: Competitive Part of the Region State City Region 36.9 50.2 34.7 76.4 8.5 83.0 18.1 5.0 55.3 670.8

Wales 81.5 109.4 58.0 155.0 51.4 137.7 31.0 13.5 127.3 1,359.0 10 — Percentage change in total number of jobs (2007-2017) 12

Percentage unemployed with health conditions or illnesses lasting more than 12 Net change in total number of jobs (2007-2017) 14 13 months (Jan 2018-Dec 2018) Change 6 Blaenau Gwent -4,900

Bridgend 4,900 4.5 Caerphilly 3,100

3 Cardiff 30,000

Merthyr Tydfil 1,000 1.5 Monmouthshire 400

Newport 8,400 0 Rhondda Cynon Taf -6,400

Cardiff Torfaen Bridgend Newport Vale of Glamorgan -5,600 Caerphilly Merthyr Tydfil Blaenau Gwent Monmouthshire Torfaen Vale of Glamorgan 1,200 Rhondda Cynon Taf Private sector employment has increased Percentage point change in all persons employed in the private sector 01. between 2008 and 2018 in all authorities (Year ending June 2008-2018) 15 within the city region, growing the most in 20 Economic Cardiff (+18%) and Merthyr Tydfil (+16%). Prosperity Self-employment makes up a large portion 15 of the workforce in Monmouthshire (21%) and the Vale of Glamorgan (16%). 10 Between 2007 and 2017 there was a very strong increase in the number of enterprises being created in Rhondda 5 Cynon Taf (402 births vs 43 deaths) and Newport (276 births vs 50 deaths).

Enterprise deaths outpaces births in Blaenau 0 Gwent, Bridgend, Caerphilly, Cardiff, Monmouthshire, and the Vale of Glamorgan.

The value of outstanding small-medium Cardiff Torfaen Bridgend Newport enterprise loans declined between 2013 Caerphilly and 2018 and was largely concentrated Merthyr Tydfil Footnotes within the Vale of Glamorgan, Cardiff, Blaenau Gwent Monmouthshire Vale of Glamorgan 15 ONS: Annual Population Survey, 2018 and Monmouthshire. Rhondda Cynon Taf 16 ONS: Business Demography, 2007-2017 17 ONS: Annual Population Survey, 2018 18 UK Finance: SME lending by postcode, 16 2013 & 2018 Number of births and deaths of enterprises (2007-2017)

420

315

210

105

0 Blaenau Bridgend Caerphilly Cardiff Merthyr Monmouthshire Newport Rhondda Vale of Torfaen

Cardiff Capital Region Capital Cardiff 2: Competitive Part of the Region State Gwent Tydfil Cynon Taf Glamorgan

12 — Enterprise Births Enterprise Deaths Percentage in employment who are self-employed - aged 16+ (2018) 17

22

16.5 OVER £1.1 trillion in outstanding SME loans in the Cardiff Capital Region 11 That’s £380 million less than in 2013

5.5

0

Cardiff Torfaen Bridgend Newport Caerphilly Merthyr Tydfil Blaenau Gwent Monmouthshire Vale of Glamorgan Rhondda Cynon Taf

Value of SME lending outstanding at Q2-2018, by postcode 18

No Data £12,000,001 - £15,000,000

£0 - £9,000,000 £15,000,001+

£9,000,001 - £12,000,000 22 21 20 19 Footnotes Innovation Skills and 02.

14 — Cardiff Capital Region State of the Region Part 2: Competitive Ibid. Ibid. Ibid. ONS: Annual Population Survey, 2018 compared to Monmouthshire (5.3%) in2017. persons withnoqualifications16.4% at TydfilMerthyr stillhashighlevels of of 56%between2008 and2017. seeing thelargest percentage pointdecline people withnoqualifications, withNewport There have beendeclinesinthenumber of residents withTrade Apprenticeships. qualifications however hadhighlevels of Areas withlow levels ofLevel 4 Tydfil,Merthyr andBlaenau Gwent. and lows oflessthan33% inCaerphilly, Vale ofGlamorgan andMonmouthshire with highsofover 46%inCardiff, the considerably intheCardiff Capital Region, with qualifications atlevel 4ranges The percentage ofthepopulation (Year 2008-Dec endingDec 2017) Percentage with pointchangeofpersons noqualifications (NVQ) 16-64 - aged (Year 2017) endingDec Percentage with ofpersons noqualifications (NVQ) 16-64 - aged 13.5 -60 -30 -45 4.5 -15

Blaenau Gwent 18 Blaenau Gwent 0 0 9

Bridgend Bridgend

Caerphilly Caerphilly 20

Cardiff Cardiff

Merthyr Tydfil Merthyr Tydfil 19

Monmouthshire Monmouthshire

Rhondda CynonNewport Taf Rhondda CynonNewport Taf

Vale of Glamorgan Vale of Glamorgan

Torfaen Torfaen Percentage of usual residents aged 16 to 64 with Level 4 qualifications and Percentage of usual residents aged 16 to 64 with Trade Apprenticeship (2018) 22 above (2018) 21

Blaenau Gwent Blaenau Gwent Monmouthshire Monmouthshire Merthyr Tydl Merthyr Tydl

Torfaen Torfaen

Rhondda Cynon Taf Caerphilly Rhondda Cynon Taf Caerphilly

Newport Newport Bridgend Bridgend

Cardi Cardi 25.4% - 33.2% 1.8% - 2.8%

The Vale of Glamorgan 33.3% - 36.2% The Vale of Glamorgan 2.9% - 3.6%

36.3% - 46.1% 3.6% - 4.2%

46.2% - 55.2% 4.2% - 5.1% 25 24 23 Footnotes Innovation Skills and 02.

16 — Cardiff Capital Region State of the Region Part 2: Competitive cforic.org/pages/uk-competitiveness.php (2019) UKCompetitiveness Index, http://www. Huggins, R., Thompson, P., andProkop, D. Ibid. Employment andSkills Plan, 2017 South : Cardiff Capital Region Learning, Skills andInnovation Partnership Skills Shortage VacanciesSkills Shortage - Cardiff Capital Region Sector by (UKCESPriority 2016) count against it. relatively low wages andproductivity than future potential, andtheregion’s focuses largely onrecent outcomes rather (UKCI) shown below. Thisindex however the 2019 UKCompetitiveness ranking Cardiff Capital Region scores lowly on at 40%. construction hadthelargest percentage while vacancies (722) of skillsshortage sector however hadthelargest number In 2016thefinancialandprofessional GVA intheregion. represent thelargest sectors priority by advanced materials andmanufacturing Human foundational economy and Food andfarming Tourism Energy andenvironment industries ICT sector including creative Human foundational economy Sector manufacturing Advanced materials and Financial andprofessional Construction SSVs inCCR by SOC employee Cardiff Capital Region Sectorby Priority – GVA (UKCES 2016) Financial andprofessional manufacturing Advanced materials and Human foundational economy Sector Construction Food and farming Tourism Energy andenvironment industries ICT sector including creative 1000 1000 1600 600 800 700 100 100 Base companies with vacancies 407 425 722 614 123 177 28 31 companies SSVs 24 2013 % 30% 25% 14% 21% 21% n/a n/a 7% GVA £bn 0.6 5.0 4.8 0.2 1.8 1.2 5.1 1.1 companies SSVs 2015 % Rank by GVA 40% 22% 22% 22% 16% 18% 31% n/a 23 6 4 8 3 5 2 7 1 Business Units Increase/ decrease n/a n/a 2,545 2,435 4,755 2,210 2,210 1,970 1,455 225 UKCI by Select English Local Enterprise Partnership Areas and Scottish and Welsh City Regions (UK=100) 25

Local Enterprise Partnership Rank 2019 2019 2015 Rank 2015 UKCI Change Rank Change Area / City Region

1 London 128.5 129.1 1 -0.6 0

2 Thames Valley Berkshire 119.9 122 2 -2 0

3 Buckinghamshire Thames Valley 112.8 114.3 3 -1.4 0

4 Hertfordshire 112.4 110.9 6 1.5 2

5 Enterprise M3 110.5 111.3 5 -0.8 0

7 Oxfordshire 109.1 110.8 7 -1.7 0

11 West of England 103.7 103.3 10 0.4 -1

14 & South East Scotland City Region 100.1 100.5 14 -0.4 0

19 Greater Manchester 95.2 93.7 20 1.5 1

20 Greater Birmingham and Solihull 95 92.9 24 2 4

24 Glasgow and Clyde Valley City Region 92.9 93.5 21 -0.6 -3

28 90.4 90.8 28 -0.5 0

32 87.5 8 7.4 35 0.1 3

33 Cardiff Capital Region 87.5 87 36 0.5 3

34 Stoke-on-Trent and Staffordshire 87.3 87 37 0.3 3

39 Sheffield City Region 85.1 86.6 38 -1.5 -1

44 Bay City Region 80.5 81.2 42 -0.7 -2 28 27 26 Footnotes Innovation Skills and 02.

18 — Cardiff Capital Region State of the Region Part 2: Competitive Ibid. consumers - data chart line broadband provided to UKresidential November 2017 - Theperformance offixed- Ofcom: UK fixed-line broadband performance, November 2017 - data chart Ofcom: UKhomebroadband performance, Rhondda Cynon Taf Average download speed(Mbit/s) (2017) orultrafastsuperfast broadband availability. and RhonddaCynon Taf) have over 95% Region (Cardiff, Blaenau Gwent, Newport, Four authorities intheCardiff Capital Mbit/s and25Mbit/s) Tydfiland Merthyr have thelowest(24.4 Mbit/s respectively whileMonmouthshire UK average with57.5 Mbit/s and 52.7 Only Cardiff exceed andNewport the over halfthataverage speed. the Cardiff Capital Region only reach just Mbit/s to 46.2 Mbit/s. Mostauthorities in nearly doubled intwoyears from 28.9 The average UKbroadband speedhas Vale ofGlamorgan Monmouthshire Blaenau Gwent Merthyr TydfilMerthyr Caerphilly Bridgend Newport Torfaen Cardiff 0 Mbit/s 27 UK fixed (November broadband performance 2015- November 2017) 15 Mbit/s 30 Mbit/s Average UKbroadband speed Average UKbroadband speed 28.9Mbit/s 46.2Mbit/s 45 Mbit/s 26

60 Mbit/s 2017 2015 Superfast or greater broadband availability (% premises) 2017 28

Blaenau Gwent Monmouthshire Merthyr Tydl

Torfaen

Rhondda Cynon Taf Caerphilly

Newport Bridgend

Cardi 82.0%

The Vale of Glamorgan 82.1% - 93.0%

93.1% - 95.0%

95.1% - 97.0% Web: www.cardiffcapitalregion.wales Contact Us Email: [email protected]