FRESH FUNDING BLOW FOR CIRCUIT OF WALES
Welsh Government turns down new guarantee plan, but developers are confident
Circuit of Wales bosses are still confident of reaching a revised funding agreement with the Welsh Government, despite a second proposal being rejected last week.
The Welsh Government turned down a second funding proposal from the Heads of the Valleys Development Company, which aims to build the £371m motorsports facility in Ebbw Vale near Blaenau Gwent in South Wales.
HOTVDC is seeking further financial assurance for the project, and had previously asked the Welsh Government to underwrite £357.4m of private capital from investors, chief of which is the Aviva insurance firm.
That original proposal was rejected in April with then Welsh economy minister Edwina Hart labelling it as an “unacceptable risk” for the taxpayer. Last week the reformed Welsh Assembly gave the thumbs down to a second proposal, which asked for around 83 per cent of the private funding to be guaranteed by the government and local councils.
Hart’s successor, Ken Skates, said the plan needed further work to reduce the risk to public money, and cited the economic uncertainty brought about by Britain’s vote to leave the European Union as a further factor towards the decision.
The revised proposal asked for the government to guarantee 75 per cent of the investment, with local authorities supplying an additional eight per cent.
Skates said: “We recognise the potential positive economic impact it [Circuit of Wales] could have for Wales, and Ebbw Vale in particular.
“It is a large undertaking and we have always been clear that any support provided by the taxpayer needs to be proportionate and fair. Unfortunately despite the efforts of the project backers this leaves only 17 per cent of the risk being taken by the private sector.
“That amount of risk falling on the Welsh taxpayer – through the Government and local authority support – is unacceptable as it stands, especially when we are facing significant economic uncertainty from a UK exit from the Europe Union.”
Skates said his “door would be firmly open” to a third proposal, but stressed that the Government would only be willing to underwrite 50 per cent of the investment, with the other half needing to come entirely from private funding.
Martin Whitaker, chief executive of the Circuit of Wales project, said: “We are confident that an equitable balance of risk sharing can be delivered. The cabinet Secretary has requested we deliver the guarantee to below 50 per cent of the total project costs and we are confident we can do so.”
The Circuit of Wales holds a contract to host the British round of Motogp for five years, with an option for a further five, but currently leases the event back to Silverstone.