It was once a feared posting for British Steel managers, confronted with a workforce who not only epitomised Welsh traditions of voluble industrial stroppiness, but did so in a language their bosses did not understand.

Steel has gone but rugby remains, along with a population that is 46 per cent Welsh-speaking in some districts. Now Llanelli is taking on a new identity, having been chosen as the pioneer “Learning Town” by Education and Learning Wales (ELWa) and the Welsh Assembly.

It is being used as a test-bed to examine the benefits of providing anyone who does not have at least a level 3 qualification with free tuition, examination and assessment for any training up to that level.

Second-year funding has still to be agreed, but the budget for the first year is pound;800,000, divided equally between the funding body, ELWa, and the assembly.

John Pontin, learning policy manager for ELWa, said: “Previous programmes of this sort in Wales have concentrated on the unemployed. This is the first to target the workforce.

“Llanelli was chosen because it is medium-sized, with about 20,000 people in the workforce, and representative of Wales and the issues it faces in a number of ways.”

It is hoped the project will help to regenerate the area, but it is essentially experimental. “It is not driven by targets,” said Mr Pontin.

“We want to see what will happen on the ground, how workers and employers respond, and how they interact with the learning providers. Evaluation will be vital. That involves determining the impact the project has, where workers and employers see their returns, their perception and participation.”

Six similar projects in England have focused on people below NVQ level 2, equivalent to GCSE grade C and above. But Wales has different priorities which have been identified by a taskforce set up by the Welsh Assembly.

Progression to NVQ level-3 (A-level equivalent) was identified as a particular weakness.

As industries grow, employees are often left to develop in the job without structured training. There are signs that Welsh employers want a more structured approach. Employers must countersign applications for the programme and are responsible for funding time off work.

Duncan Kiley, general manager of local haulier firm Owens, said: “I’d become aware of a danger that our growth might outstrip knowledge and experience in key areas.” Mr Kiley identified 18 of his 250 staff whose skills needed improving and asked them to go on courses.

Among them is team leader Allan Evans, 56, who said: “I’m sure it will be beneficial. Even at my age, it might just lead to a little advancement.

There’s a lot of interest, which I doubt would be there if there were any costs involved. The company is doing well to set this up for us.”

Mr Kiley said: “We’ve got a lot of people who’ve learned as they’ve gone along and I wanted them to broaden their perceptions of our industry and of themselves.”

The town is served by Coleg Sir Gar (Carmarthenshire College), which has formed close links with a group of engineering employers.

“The great potential benefit is that it can join up the needs of businesses and individual employees,” said Cledwyn Davies, enterprise development manager at the college. “If employers are prepared to work with their staff, it could do a great deal of good in Llanelli.”