A DAMNING report has slammed the Welsh Government for a series of failings in relation to decisions to invest public money into the long-delayed Circuit of Wales project.

The £425 million racetrack near Ebbw Vale has been in the planning stages since 2011, and in 2012 the Heads of the Valleys Development Company, which is behind the scheme, was handed a £2 million grant from the Welsh Government.

But a new report by the Wales Audit Office has said the Welsh Government's appraisal of information it based its decision to make the grant on was "flawed" and monitoring of how the cash was used fell short.

The report also raised concerns over the purchase by Heads of the Valleys of Buckinghamshire-based motorcycle chassis manufacturer FTR Moto, which it bought in 2012 using £400,000 of the Welsh Government grant.

But the Wales Audit Office report said the purchase of FTR, which went bust in November last year, was "inconsistent with the grant scheme’s purpose".

But the developer has said it has been "fully transparent, open and clear in its engagement with the Welsh Government".

In total the scheme has so far cost the Welsh taxpayer more than £9.3 million after the Welsh Government was forced to pay out more than £7.3 million to the Heads of the Valley's bank after it recalled a loan the firm was unable to repay.

Although the Welsh Government was required to cover the cost under a loan guarantee agreement, it is entitled to demand repayment, with interest, from the Heads of the Valleys.

But the report said if the project was unable to secure private investment the firm would be "unlikely to be able to repay any of it".

Auditor general Huw Vaughan Thomas said: "Using public money to support private infrastructure projects in Wales can help boost regeneration and economic development.

"In doing so, public financing needs to be managed robustly, with proper standards of scrutiny, vigilance and oversight.

"It’s unfortunate that, in the case of the Circuit of Wales, we have identified significant shortcomings and so the Welsh Government needs to learn from my report, particularly if it decides to provide any further support for the project to progress."

The scheme has been twice turned down by the Welsh Government over concerns around the amount of public funding would be required. In July last year Wales' economy and infrastructure secretary Ken Skates said the Welsh Government would not approve a scheme which was not at least 50 per cent funded by private investment.

A revised bid, which reportedly meets these requirements, was submitted in February and is currently being assessed by the Welsh Government.

Monmouth MP David Davies has repeatedly raised concerns about the use of funds invested into the project and said he was pleased many of these were vindicated in the report.

"It's going to require a lot more public investigation," he said.

"I am not finished with my investigations into this.

"I will not give up."

A spokesman said the Welsh Government was "surprised and disappointed" to see the report published during a pre-election period and that concerns raised about some claims in the report had not been addressed before it was published.

“As a government, we are routinely asked to take on higher levels of risk to support companies and projects than might be acceptable to the private sector," he said.

"The Circuit of Wales is a complex project, but we are satisfied that we have assessed risk against value for money for the taxpayer and have sought to secure the maximum security available from the developer.

“We are constantly striving to improve and as a result have already made a number of changes to our business support processes that take into account some of the WAO recommendations."

A Heads of the Valleys Development Company spokesman said the report represented "a clean bill of health for the Circuit of Wales team, our plans and the project".

He added the firm had "very carefully adhered to and implemented advice on spending eligibility" in relation to the Welsh Government loan

"The Circuit of Wales has at all times been fully transparent, open and clear in its engagement with the Welsh Government," he said.

"It has assembled a very senior management team with an impressive track record in major infrastructure, regeneration and automotive focused projects, whilst retaining the support of world class organisations to deliver what will be a vibrant location for business, sports, leisure, culture and the arts.

"With this firmly behind us, we are ready and raring to go to deliver thousands of important jobs, exciting events and valuable visitors to south Wales."

He said the Welsh Government loan was "vital during the extended development phase and played a critical role in encouraging private sector partners to invest substantially in the Circuit of Wales.

"Such supportive funding, which will be paid back with interest at financial close, has been crucial in encouraging the private sector to invest and without it our project would not be ready and able to deliver thousands of much needed jobs in the Blaenau Gwent area," he said.

The spokesman added the the completed project, which he said would benefit the Welsh economy to the tune of £50 million a year, would "inspire additional investor confidence" and result in further investment in Wales.“We have proven that the money is all in place," he said.

"We remain in confirmatory due diligence with the Welsh Government and its advisors and, once we receive a positive decision, will move forward with construction in the very near future.

"We encourage all parties to now get firmly behind the development that will provide another key building block in the resurgence of the South Wales UK automotive sector, deliver visitor numbers of 750,000 a year, create thousands of independently validated new jobs, and transform the economic future of the South Wales valleys.”

Monmouth AM and chairman of the Welsh Assembly’s Public Accounts Committee Nick Ramsay he was “concerned” by the revelations in the report.

“Once again we see an apparent lack of robust governance around the Welsh Government’s use of public money to fund private companies,” he said.

He added: “The Public Accounts Committee will want to examine all of these matters in detail in the near future."

The Wales Audit Office also dismissed concerns that payments made from Heads of the Valleys to Aventa, a separate company owned by Heads of the Valleys boss Michael Carrick, "did not constitute the use of public funds".

To view the full report visit audit.wales.