© Blackwell Publishing Ltd 2004. Published by Blackwell Publishing Ltd, 9600 Garsington Road, Oxford OX4 2DQ, UK and 350 Main Street, Malden, MA 02148, USA. The Skills Economy and Workforce Development: a regional approach to policy intervention ROBERT HUGGINS & STUART HARRIES Introduction The aim of this article is to provide an understanding of policy approaches towards tackling the barriers and improving the rates of return associated with lifelong learning trends within a context of regional workforce development. It focuses on a case-study within the region of Wales in the UK, and new experimental policy intervention within the region relating to shifting the cost burden of workforce training and skills development from workforce learners and their employers. The article is set within an approach drawing on the conceptual framework of a skills economy model (Huggins, 2001a), and utilises empirical evidence collected from both learners and employers that have been involved with policy action examin- ing the effect on workforce participation of cost-based interventions. The context of the intervention is very much one of stimulating cultural changes to workforce development within a region which lags behind most other UK regions and Western Europe in terms of the skills levels, as well as its overall economic competitiveness. Such competitiveness being defined as the capability of an economy to attract and maintain firms with stable or rising market shares in an activity, while maintaining stable or increasing standards of living for those who participate in it (Huggins, 2003). In Wales, this lack of competitiveness is manifested by below average per capita Gross Domestic Product, high rates of economic inactivity, and low productivity and earnings. Approximately two thirds of the region currently receives European Union (EU) Objective 1 Structural Funding, the main priority of the EU’s cohesion policy, and administered to regions where the gross domestic product (GDP) is below 75% of the Commu- nity average. Wales is also in the process of restructuring from an economy his- torically dependent on heavy industry, and the skill levels of the region’s workforce is a key element in enabling this process to be undertaken effectively. The policy initiative we focus on in this article is known as the Learning Workers Pilot (LWP) programme for Wales, which seeks to alleviate some of the training market failures identified by Finegold (1996) and others, through the removal of the direct costs of training to both employers and employees.The ini- tiative is funded by the National Council for Education and Learning in Wales and the Welsh Assembly Government, and is initially operational between 2002 and 2004. The programme’s geographic focus is the industrial area of Llanelli, which covers a residential population area of approximately 80,000. The pro- gramme provides free learning for qualifications up to a maximum of level 3 to European Journal of Education, Vol. 39, No. 1, 2004