The Welsh government is unlikely ever to recover more than £7m it gave to a racetrack project was was never delivered. The ill-fated Circuit of Wales, planned for Ebbw Vale, failed in 2017 when the Welsh government rejected a request to guarantee almost half its funding.
The government in Cardiff Bay provided £7.35m in the form of a loan to the Heads of the Valleys Development Company Ltd to enable the company to develop the project. The company - headed by Michael Carrick - claimed that 6,000 jobs would be created if the track was built on moorland above Ebbw Vale. But due diligence investigations concluded there would only be around 115 jobs if the first phase went ahead.
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Now, a Freedom of Information (FOI) request, first reported by the Nation.Cymru website, has revealed that the money is never likely to be repaid. The Welsh government, which wrote off the value of the loan guarantee in 2020, said it had "taken action to secure" the cash.
The FOI request was submitted by a researcher for the Secretary of State for Wales David Davies and asked the Welsh Government: “Can I receive a breakdown of the sums of public money provided by the Welsh Government between 2011 and 2017 to Michael Carrick in connection to the Circuit of Wales project.”
The Welsh Government responded: “The Welsh Government support of the Circuit of Wales project was provided to the Heads of the Valleys Development Company Ltd [HOVDC]. Michael Carrick did not receive any funding from the Welsh Government.
“In 2014, a £7.35m loan guarantee was granted to a commercial bank to enable the HOVDC to further develop its project so they could take it to market with a view to securing necessary private investment. This guarantee was called in in May 2016.
“Under the loan agreement, HOVDC is required to repay the debt in full to the Welsh Government when the Circuit of Wales project reaches financial close or on demand in default.”
Mr Davies said it was an "absolute scandal" that the Welsh taxpayer was going to lose out. He said: "The Circuit of Wales was billed to the people of Wales as a transformational regenerative project and, as a result, millions of pounds of taxpayers’ hard-earned cash was pumped into it.
“But it very quickly transpired that the lavish claims surrounding the project were demonstrably untrue – and thankfully it never bore fruition. Almost a decade later, the whereabouts of the millions of pounds frittered away by the Labour-run Welsh Government into the project’s initial stages is still unknown, according to this shocking FOI.
“It is an absolute scandal that the Labour-run Welsh Government will be unable to retrieve this sum of taxpayers’ cash, where it will continue to languish in a blackhole. Sadly, this isn’t the first occasion where the Welsh taxpayer has been short-changed by the Labour-run Welsh Government."
Responding to Mr Davies’ comments, a Welsh Government spokesman told NationCymru: “Under the loan agreement, HOVDC is required to repay the debt in full to the Welsh Government. We have taken action to secure the Welsh Government’s rights to recover the investment made.”
The track was billed as "the biggest white elephant the Valleys have ever seen" by a Formula Three racing boss in 2017 and the following year the Senedd’s Public Accounts Committee raised “deep concerns” over the Welsh Government’s approach to the Circuit of Wales. In total, more than £9m of public money was spent on the Circuit of Wales by the Welsh Government before it ended its involvement with the project.
Mr Davies, who is the Monmouth Conservative MP, added: "The Welsh government should take legal action to get it back, and not just write the money off. The real problem is that Welsh government don't want to remind everyone of just how incompetent they were during this period."
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