The Welsh Government has refused to provide financial guarantees for the planned Circuit of Wales
The planned Circuit of Wales project has been dealt a blow after the Welsh Government refused to guarantee funding for the project – but the government has committed £100m to developing a new automotive business park.
The project to build an international standard race circuit on 336 hectares of land to the north of Ebbw Vale has been dogged by difficulties since it was unveiled in 2011.
The firm behind the project, the Heads of the Valleys Development Company, had initially wanted the Welsh Government to underwrite 80% of the cost, saying the project would create up to 6000 jobs, and bring in around 750,000 visitors and £50m to the economy each year. The firm had originally secured a deal to host Britain's MotoGP event from 2015 until 2019, but the delay in construction led to them striking a deal for the event to be held at Silverstone.
Circuit bosses lowered their request to 50% of the funding after the Welsh Government objected, and in April this year submitted a formal application that the government guarantee a £210m loan. Economy minister Ken Skates said the Cabinet had now refused that deal, after what he termed an “extensive period of due diligence.”
In a statement, Skates said underwriting the loan would carry too high a risk than other parts of the finance package, which would lead to “a very significant risk that the full £373m debt of the entire Circuit of Wales project would be classified against Welsh Government capital spending”. Skates said that could limit the government’s ability to improve Welsh infrastructure, including schools and hospitals.
Skates said: “Cabinet therefore decided that the potential impact on the public finances of the current proposal before them was too great, when considering the many other priorities for the public purse, and decided that the Welsh Government is unable to offer the financial guarantee requested on this proposal.”
Skates also said that the government felt the company’s estimate of 6000 potential jobs being created was “significantly overstated” – with the bulk of those jobs coming not at the circuit, but in an automotive technology park to be built alongside.
As a result, the Welsh Government has committed £100m over the next 10 years to building a new automotive technology business park in Ebbw Vale, which it says could support 1500 new jobs. The site will include 40,000 square feet of manufacturing space on land currently in public ownership.
That £100m investment could help ensure that companies drawn to the area by the planned development will remain. Several automotive firms are in the process of moving to the region in anticipation of the new circuit, including TVR. Aston Martin has also recently opened a new plant at St Athan in Wales.
More news and reaction to follow.