A leading economist and advisor to the Welsh Government has branded the £425million Circuit of Wales project as ‘highly risky’ in an article for WalesOnline.com.
Professor Gerry Holtham, who advises the Welsh Government on strategic infrastructure investment, said that the project was ‘highly risky at best’ and concluded that the only reasoning behind investing in the Ebbw Vale circuit would be ‘to lose money.’
The Circuit of Wales project first came into being back in 2011, with construction expected to begin sometime in 2013. MotoGP World Championship owners Dorna Sports signed a deal in 2014 with CoW to host the British Grand Prix in 2016, with the circuit organising the 2015 event at Silverstone.
However, ongoing delays in securing government backing has seen the project fail to get off the ground and the race is still taking place at Silverstone. The group behind the project, Heads of the Valleys Development Company, are still hoping for construction to begin in Spring of this year after their latest funding plan was put under a process of due diligence.
It is hoped that the £425m project will bring over 6000 jobs to the area and attract 750,000 visitors annually. But Holtham isn’t convinced that the circuit will be of benefit to the Welsh taxpayer, highlighting Britain’s established race tracks’ rareness in turning a profit.
“The estimated costs of this Circuit of Wales have tended to rise and are currently over £400m. The Welsh Government could be on the hook for £200m if the project goes ahead and fails,” he wrote.
“To outsiders, with no particular expertise in the motor racing business, this project has some very odd features.
“Firstly, it is apparently the case that no established motor racing facility in the UK reliably makes money. For that reason they are not expensive to buy. I am told that Silverstone, the premier location which hosts Formula One, could be bought for somewhere around £50m.
“Now it is common sense that if you can buy an asset for £50m you should do so rather than build a similar asset from scratch for more than £50m. Yet here we have a proposal to build from scratch a second class asset (it won’t have Formula 1) at nine times the cost of an existing first-class asset.
A decision on the whether the Welsh Government will underwrite half of the Circuit of Wales’ budget will be taken sometime in the next four to six weeks, but a recent development threatens to derail the project once more.
Conservative MP David Davies acquired documents under the Freedom of Information Act which reveal almost £1m from the Government went to a private company headed by HoVDC director Michael Carrick.
Mr Davies described the situation as ‘absolutely appalling’, while Mr Carrick’s solicitor stated the total sum of £969,000 ‘was neither awarded nor paid for from funds received under the £2m grant’ (from the Welsh Government).
This isn’t the first time Mr Carrick has come under fire for financial reasons related to the circuit. Last year it was revealed that a bill for £35,578 for gardening work at Mr Carrick’s mansion had been addressed to HoVDC for two years, with a spokesperson putting this down as an ‘unfortunate’ error.
The British Grand Prix will once again run at Silverstone this season from August 25-27, with it being highly likely the Northamptonshire circuit will play host in 2018 as well.
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