Welsh Government slammed as it faces £7.35m loss over failed Circuit of Wales project
Secretary of State for Wales David Davies has launched a scathing attack on the Welsh Government after it was confirmed there was little chance it would be able to recover a £7.35m loan guarantee called in when a motor race track project failed.
Promoters of the Circuit of Wales 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.
In 2017 the then Labour Business Minister Ken Skates, with the backing of the Welsh Cabinet, turned down a request by the company behind the project to underwrite a £210m loan.
But it has now emerged following a Freedom of Information (FoI) request that a loan by the Welsh Government to develop the Circuit of Wales in its early stages is unlikely to be repaid.
Mr Davies 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.”
The FoI request submitted by one of Mr Davies’ researchers 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, of which Mr Carrick was a director and the frontman]. 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 also asked: “Can I be told of the public money provided to Mr Carrick, how much has been retrieved, when it was retrieved, and how much, if any, is outstanding?”
The Welsh Government responded: “The Welsh Government has served notices on HOVDC of their default position as a precautionary measure to secure the Welsh Government’s rights to take enforcement action at any time if it is deemed to be appropriate.
“However, following HOVDC entering into a Company Voluntary Arrangement (CVA) in 2018 and all other associated companies being insolvent, there is very little chance of the monies owed to the Welsh Government being recovered.”
Responding to Mr Davies’ comments, a Welsh Government spokesman said: “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.”
In 2018 the Senedd’s Public Accounts Committee raised “deep concerns” over the Welsh Government’s approach to the Circuit of Wales.
While accepting that government ministers were right to consider supporting the building of a new race track near Ebbw Vale, the committee concluded that officials had made inexplicable decisions in providing funding for the project, and failed to keep Mr Skates, the then Minister for Business, Enterprise, Technology and Science up to date with latest developments.
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.
The committee found there were a number of errors in the communication from Welsh Government officials to the public over the purchase of a motorcycle company in Buckinghamshire by HOVDC.
A press release issued by a government department denied £300,000 used to buy the firm FTR Moto came from a £2m property development grant (PDG) given to HOVDC by the Welsh Government. But paperwork seen by the committee showed not only did officials know about the purchase but agreed to it.
PDGs are specifically for supporting private sector organisations in the purchase of property. FTR subsequently folded, having never relocated to Wales.
It later transpired there was no evidence of Mr Skates being informed of the agreement.
The committee could also find little evidence that the Welsh Government thoroughly scrutinised an agreement signed between HOVDC and Aventa Capital Partners, a company brought in to provide specialist services.
Both companies were headed by Mr Carrick, but officials did not check to see if the arrangement had undergone a satisfactory competitive tendering process, or what specialist services Aventa would provide.
A list of services submitted to the committee differed from the list provided to the Welsh Government, strongly suggesting the information provided to the committee was prepared retrospectively.
It also emerged that Mr Carrick and his wife Annabelle intended to benefit personally by more than £46m from the project.
A document submitted by the project team to consultants carrying out due diligence checks on behalf of the Welsh Government listed the proposed beneficiaries, who in total would have walked away with cash and shares worth more than £73m.
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That’s another one and a half posh farms Drakeford could have procured for some dippy hippy with a sketchy business plan. Tut.
Blue in the face going on about due diligence, even when one does the job for them they cannot bring themselves to acknowledge it, unless they’re wise to it but are too guilty, ashamed or just don’t care, eh VG…those in suits and bow ties always get their wack and a change of nameplate in the same London townhouse and off we go again, more dozy councils and government ministers to con…earth, water, wind and fire, Cymru used to have it all. It is time the Senedd was audited from top to bottom…
Billions wasted by the Tories on PPE contracts for their mates with no PPE experience! A bl**dy joke, a Tory critising anyone for money wasting.
So that makes it alright then- i thought Welsh labour were better than that- obviously not then
The point is that they gave £7.35M loan guarantees for a project but due diligence saved them from losing £210M thanks to Ken Skates. It was officials that made the mistake not politicians.
The government would have lost that money had Andrew RT been in charge … or Lord Buckethead… which is much the same thing..
What a 1surprise!!!
Two very basic questions. Where was the due diligence (does the Welsh government know what that is?)
Where was the opposition whose role is to question these things?
Exciting though. Can’t wait for the next big scheme that will transform the economy…
So who gets to take MD, his ministers and his party to task after all the years in power? If the Tory opposition is too despised to be given even half an ear. Or like Plaid, the kid brother, listened to but never taken much heed of. Lib Dems, she tries, but who else can speak for those of us who do not live in Metro Land…
Any waste, misuse or loss of Welsh taxpayers money by the Welsh Labour Government is unacceptable. And yes sometimes investments can become a money pit like Cardiff International Airport is. But in my eyes it’s money worth spent because a country without its own airport ceases to be a country and why the Welsh Tories favour the loss of thousands of jobs in Wales with money going to Bristol Airport and the West of England rather than Wales. Although I had to laugh out loud when little Englander David “not one penny more” TC Davies criticises waste when his idiocratic… Read more »
They rightly denounce any waste of public money but approve such waste when it’s used for coronations and portraits of Charles, not to mention the millions spent on the royal family every year.
I don’t disagree for a minute, but this has nothing to do with the German/English royals.
This was money misspent by an incompetent Welsh, Labour government which clearly knows nothing about the economy or due diligence.
And where was Master Price and friends when this clearly bonkers scheme was handed this money?
Whilst knowing nothing about this project, I do note that Councils tend to employ consultants, possibly because that is what the Government (ie. Tory Government) rules require them to do. Here in Aberystwyth consultants have been employed to write a transport plan to go with a Planning Application for one of the local schools which recruits County wide. There are three schools in the area plus a leisure centre all served off a single narrow residential road. Any winter afternoon at school run time the area locks up as the volume of traffic is so high and cars get parked… Read more »
Peter. I sympathise with your problem, but things will never improve if every dodgy decision is blamed on the Tories. The decision to employ consultants is a matter for the council (er…Plaid Cymru controlled) and the council alone – point your anger at Cyngor Ceredigion.
However, your final sentence sums up your problem and indeed the issue that began this thread. The role of opposition in a democracy is to question decisions and hold government to account.
This is simply not happening at any level in Cymru.
You appear to be intimately aware of the shortcomings of that particular piece of consultancy as evidenced in your second paragraph. Given your analysis have you been able to impress on your local councillors the need to recall the consultants and make them rework their survey to use a more relevant set of data? I suspect that you might find that a major challenge as Ceredigion Council has a recent history of using “consultants” to make a case out of next to nothing.
David Davies quiet on the billions Wales isnt getting in barnett consequential from westminster though…….
Goodness. If he is outraged by this waste of money wait till he sees how much money the Tories defrauded the taxpayer over with PPE?
First the Welsh Government, hands back 155 million to the UK Treasury, now the Circuit’s loss. Mr Davies, shall we talk about HS2, no I thought not. My point being, Welsh politics is in a mess, Why? Welsh Labour, have been in power too long, Tories, don’t make me laugh, Andrew RT Davies, FM, God help us. Plaid, the party are going backwards, at a rate of knots, under Adam Price. They are a joke. As for Lib Dems, too small. Therefore, where do we go from here? Someone come up with some ideas, please.