'Better' Circuit of Wales deal faces examination

Financial plans for a £425m Circuit of Wales at Ebbw Vale are to be looked at in detail before ministers make a final decision on whether to give it backing.

The developers said they "look forward to beginning construction by the spring of this year".

Economy Secretary Ken Skates said due diligence would include "rigorous value for money testing".

But he said the deal on the table was "certainly better" than the one last July.

Mr Skates confirmed that the developers had given names of the private investors.

He said he would also assess how the project would be delivered and it would include a fit and proper person test of the directors.

"We will seek clarity on the types and number of jobs directly and indirectly resulting from the project," said Mr Skates in his statement.

He said he wants to know "how those job numbers compare to the initially reported figure of 6,000, as well as the likely number of jobs that would be filled by local people".

The latest developments, while they might seem just bureaucratic, are a significant step for the project.

Nearly 12 months ago the Circuit of Wales plans were kicked into the long grass precisely because the Welsh Government and the company behind the circuit could not agree terms.

A process of due diligence will now begin by independent assessors.

It is a financial process for checking the assets and liabilities of the companies involved. That is expected to take about six to eight weeks.

That needs to happen before any work can begin on the ground.

The Circuit of Wales was at one time claimed to eventually result in 6,000 jobs in the unemployment blackspot of Blaenau Gwent by building a track with hotels and business units.

It has the rights to MotoGP until 2024.

In response to a question from Neil Hamilton AM, Mr Skates said the "deal on the table was certainly better than the one that was presented back in July".

He added: "It justified the position taken back then when we were presented with guarantees amounting to 83% - which is £100m more in guarantees than what we've been able to drive through with this deal.

"However, due diligence is required, as normal, as in every project of this type, to give us confidence that the investment, the potential guarantee draw-down is something the tax payer is comfortable with, something that we are comfortable with, and no investor should fear the due diligence process."

In the last year the project has attracted two new important partners.

In October 2016, the private bank Kleinwort Benson joined Circuit of Wales as its corporate advisor.

The developers then recently teamed up with the Extreme company - which has an online sports channel - with the proposals now including mountain bike trails, a BMX park, stages for live concerts and indoor skiing, a skate park and virtual reality zone.

That development reduced the risk of the project as it would be expected to attract a range of adventure sports and visitors all year round.

The partners claim the development could attract 750,000 visitors a year and inject an estimated £50m into the Welsh economy annually.

The project has hinged on financial guarantees from the Welsh Government.

Last April, the then Economy Secretary Edwina Hart said there was an "unacceptable risk" in guaranteeing it all, 100%. But the company was asked to come back with alternatives.

It was then suggested that after the circuit is built, the Welsh Government would underwrite half the cost the project - and be paid more than £125m over 33 years.

Mrs Hart's successor Ken Skates, keen for "faster progress", finally gave the developers a two-week deadline to produce details of its financial backers.

The plans were first unveiled more than five years ago and included a public inquiry over common land.

A spokesman for the Heads of the Valleys Development Company said: "We are working to a proactive timeline and look forward to beginning construction by the spring of this year."

Analysis by Nick Servini, BBC Wales political editor

A striking feature of the story so far has been the mismatch between the rhetoric from those behind the Circuit of Wales and eventual decisions made by the Welsh Government.

Both previous attempts to get ministers to commit public money to underwrite the cost ended up being rejected despite the build-up dominated by bullish comments from directors.

This time they appear to be getting closer, although there is still a gap.

The statement from the Circuit of Wales gives an overwhelming impression of T's being crossed and I's being dotted.

It describes the due diligence as "confirmatory", while in contrast the Welsh Government statement includes a list of "rigorous" checks and poses the fundamental question of whether it is a project that can benefit the people of Blaenau Gwent and Wales.