Former Welsh welfare centre in a colourful setting (5)
I believe the answer is:
dyfed
'a colourful setting' is the definition.
The definition suggests a singular noun which matches the answer.
'former welsh welfare centre in' is the wordplay.
'former welsh' becomes 'dyed' (I am not sure about this - if you are sure you should believe this answer much more).
'centre' means to look at the middle letters.
'in' is an insertion indicator.
The central letter of 'welfare' is 'f'.
'dyed' enclosing 'f' is 'DYFED'.
Can you help me to learn more?
(Other definitions for dyfed that I've seen before include "part of Wales" , "Region of SW Wales" , "Old Welsh county" , "Carmarthen area?" , "Area of Wales" .)