The Auditor General for Wales has strongly criticised the Welsh Government’s handling of £9.3m in taxpayers’ money given to the Circuit of Wales project.
The financial watchdog expressed serious concerns about the “limited understanding” of the companies involved in the project to build a £425m racetrack in Ebbw Vale, one of the most deprived parts of Wales.
It also questioned why the Welsh Government allowed money to be used for projects that weren’t in line with the aims of the grant.
In particular it questioned why:
- £300,000 of public funds had been used to acquire a motorbike firm in Buckinghamshire that later went bust;
- Payments of almost £1m were allowed to another firm run by the Circuit of Wales’ director Michael Carrick “without enough evidence [they] represented value for money”;
- The Welsh Government did not have any evidence of the firm buying in services “in a competitive and sustainable way” as required in the £2m grant offer letter;
- Further, the Auditor General said “nearly half of the total value of payments to suppliers” was conducted “with or through related parties” and invoices were approved “without evidence of value for money”.
Altogether the project has received from the Welsh Government a grant of £2m and a loan underwriting facility of £7.33m, which had to be paid to the project’s bank in full in April 2016 when the company was unable to pay the loan.
Economy Secretary Ken Skates is currently deciding whether to provide a further loan guarantee of £210m from public funds, without which the project will not proceed.
Those behind the project claim that together with adjacent developments like hotels and leisure facilities it will create up to 6,000 jobs in one of the poorest parts of Wales, but critics – including Monmouth MP David Davies – doubt its viability.
The inquiry that led to the report was prompted by concerns raised with the Auditor General by Mr Davies.
The use of public funds from the initial £2m grant to buy motorcycle firm FTR Moto in Buckinghamshire came in for particular scrutiny in the report.
In April 2016 the Welsh Government issued an “incorrect and misleading” press statement to the Western Mail claiming no public money was involved in the purchase.
However the report confirms for the first time that nearly £300,000 of public funds was used to buy the firm, which later went into administration with debts of £500,000.
Full report can be found here