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Welsh Government reject Circuit of Wales finance bid

Credit: Circuit of Wales

The Welsh Government cabinet has decided not to financially back the proposed Circuit of Wales racetrack at Ebbw Vale.

The company behind the project wanted the Welsh Government to provide a £210 million taxpayer-funded guarantee.

But in a statement, the Welsh Government said it "is unable to offer the financial guarantee requested on this proposal."

The current proposal would see the Welsh Government exposed to more than 50% of the risk.

This is because the £210m underwriting element would carry a higher risk than other parts of the financing package. As a result, following discussions with ONS and HM Treasury during the due diligence process, it is assessed that there is a very significant risk that the full £373million debt of the entire Circuit of Wales project would be classified against Welsh Government capital spending. Cabinet therefore today decided that the potential impact on the public finances of the current proposal before them was too great.

– Ken Skates, AM, Cabinet Secretary for Economy and Infrastructure

As part of the same statement, the Welsh Government did say it would be "committing to building a new automotive technology business park in Ebbw Vale, with funding of £100million over 10 years."

It said this would create 1,500 new jobs.

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Developers for the Circuit of Wales, meanwhile, claimed the £425m project near Ebbw Vale in Blaenau Gwent could create 6,000 jobs in one of Wales' most deprived areas. The Welsh Government said it thought that figure would be 'little over 100'.

Artist's impression. Credit: Circuit of Wales

The Welsh Government has already provided over £9.3 million of taxpayers money to support the development of the motor racing circuit.

In April 2017, the Auditor General for Wales criticised the Welsh Government for 'significant shortcomings' in the way it has managed the multi-million project.

The Welsh Government said it was disappointed by the findings of the report.

A decision from the Welsh Government as to whether it would financially back the project was expected to be made earlier this year however the deadline was extended.

Economy Secretary Ken Skates said the government needed an additional 'few weeks' after they identified 'material gaps and inaccuracies' in the Circuit of Wales application.

Martin Whitaker, chief executive of The Circuit of Wales, said he was "disappointed and saddened" the Welsh Government "failed to support what would be a game changing development for Wales."

We strongly disagree with the decision and the rationale behind it.

We have always believed passionately, and continue to do so, in this project’s ability to transform and provide opportunities and hope to one of the poorest parts of the UK, not just Wales.

The project is totally defined, finance is in place, and construction and hiring could start immediately.

My team and I will now analyse the Welsh Government’s reasons not to support the development and are actively seeking additional clarification from them.

We will then very shortly issue a detailed response before deciding on our next course of action.”

– Martin Whitaker, Chief Executive, The Circuit of Wales

While this will be disappointing news for Ebbw Vale, we must recognise the difficult situation that the Welsh Government is in.

Going forward, we need a strategic approach to development in the Cardiff Capital Region, particularly focussing on how the Valleys can attract and benefit from investment.

Communities in the South Wales Valleys have great potential to bring forward home grown businesses and attract investment, but they need the right business environment to flourish.

The Welsh Government needs to press on with the Metro and other transport improvements and ensure that businesses in the Valleys can access the skills and support they need.

– Liz Maher, president of the South and Mid Wales Chambers of Commerce

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