FRESH FUND­ING BLOW FOR CIR­CUIT OF WALES

Welsh Gov­ern­ment turns down new guar­an­tee plan, but de­vel­op­ers are con­fi­dent

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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.

Cir­cuit of Wales has yet more dif­fi­culty

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