REVISED proposals for the Circuit of Wales racetrack have been rejected because they do not represent "value for money", the cabinet secretary for the economy and infrastructure has announced.

The £370m scheme, which includes a 3.5-mile racetrack just north of the Rassau Industrial Estate in Ebbw Vale, was expected to create 6,000 new jobs.

However, the long-running project suffered a setback in April after the Welsh Government refused to underwrite the entire investment for the project due to the risk to taxpayers’ money.

Michael Carrick, CEO of Heads of The Valleys Development, and Martin Whitaker, CEO of the Circuit of Wales, have since come back with new proposals in order to secure crucial Welsh Government funding.

The latest proposals put forward by the Circuit of Wales asked the Welsh Government to underwrite around 75 per cent of the total cost of the project, with local authorities underwriting a further eight per cent.

Addressing the proposals today in the Senedd, Mr Skates believed they asked too much of the taxpayer - with the private sector only taking on 17 per cent of the risk.

He said: “That amount of risk falling on the Welsh taxpayer - through Welsh Government and local authority support - is unacceptable as it currently stands, especially at a time when we are facing significant economic uncertainty from a UK exit from Europe.

“In our view this project does not currently provide the level of value for money necessary for the amount of public funding being put at risk. 

“On that basis I have today told Michael Carrick and Martin Whitaker that I believe further work is needed on this proposal."

Mr Skates was keen to stress that his door remained "firmly open" for another revised proposal if the private sector took on more of the risk.

He said: “We need to see at least 50 per cent of this project funded, and 50 per cent of the risk underwritten, by the private sector to justify value for money for Welsh Government and the public purse. 

“In the meantime, we will continue to work constructively with the Circuit of Wales team to ensure this project can be successfully delivered to benefit the local economy of Ebbw Vale and Wales at large.”

Mr Whitaker, chief executive of the Circuit of Wales, revealed some of the revisions that had already been made to the proposals, including:

  • No risk of EU state aid;
  • An increase in the level of private finance that does not require support by the Welsh Government;
  • No capital funding is required from the Welsh Government for the scheme, with their support being rewarded with a guaranteed fee of £125.4 million over the next 33 years.

He said he remainded confident the project could meet Welsh Government's requirements.

He said: “The Welsh Government clearly recognises the enormous benefit the development will bring to the people of Blaenau Gwent and the profile of Wales, and in the coming days, under instruction from the cabinet secretary, we will work with his team to reach agreement and deliver a successful conclusion to discussions.

“As a predominantly privately initiated and financed partnership with government 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 over the course of the project.”

Speaking in a debate following the announcement in the Senedd, Monmouth AM Nick Ramsay said he was pleased Mr Skates’ door was “still open” to the project, but sought clarity on the Welsh Government’s exact role.

He said: “Do you accept that it’s important that we distinguish between the underwriting and the guaranteeing of risk compared to the funding of the project.

“I think a lot of people I’ve spoken to in the last few days are not clear what the Welsh Government cannot do.”

In response, the cabinet secretary for the economy and infrastructure said: “It is underwriting, it is not funding of this project.

“There are many people in our communities who believe we owe 50 per cent of underwriting would amount to the direct funding of the project to the tune of something like £185m.

“It’s about guaranteeing the funding from private capital.”

Away from the Senedd, Blaenau Gwent MP Nick Smith said he wanted to see a "fair deal" between the public and private sectors.

He said: “Like everybody else locally I want this project to be a success for Blaenau Gwent, not a burden.

“Just this week I wrote to the Welsh Government Minister Ken Skates seeking support for the project.   

“But I want to see a fair deal between the public and private sectors. It’s no surprise the Welsh Government want the developers to properly pull their weight.

“I’ve contacted Michael Carrick of the Circuit and, alongside Alun Davies AM, want to hear what he has to say about taking on a fair share of the risk for the underwriting of the project. “

Monmouthshire county council's leader, Peter Fox, said: "Blaenau Gwent and Monmouthshire councils have worked closely with the Welsh Government in its consideration of the developers’ proposals regarding the Circuit of Wales.

"We fully understand the minister’s analysis of the situation.  It is recognised that there needs to be more commercial 'at risk' investment to ensure there is a more acceptable sharing of risk between the private and public sector.

“We remain supporters of the project and we will of course continue to work closely with the Welsh Government in its assessment of any further revised proposals from the developer."

UKIP Wales leader Neil Hamilton expressed his disappointment at the "unimaginative approach" of the Welsh Government in not backing the "best guarantor for a bright future".

Plaid Cymru shadow cabinet member for finance and secretary, Adam Price, felt the Welsh Government had handled the project “very badly”.

He said: “The Welsh Government claims that it is open for business yet this project has been on the cabinet secretary’s desk for many months, and company has repeatedly been trying to engage with him on many occasions but have failed. This is no way to conduct a consultation on a large and complex project such as this.

“The minister failed to explain why he has chosen to prevent local authorities to take a financial guarantee in the project that will have such benefit for the local community above the arbitrary 50 per cent he himself has set. And why has it been changed from the 80 per cent that was initially proposed?

“This is a strong project with a strong business case, and he should get on with the job and support the proposal in an area of Wales that is crying out for leadership.”