Circuit of Wales payment backed 'against advice'

Major events such as the British MotoGP motorcycling Grand Prix are set to be

Ministers have been asked why they went against civil servants' advice in guaranteeing a loan by the firm behind the £425m Circuit of Wales to pay a company owned by its chief executive.

Welsh Tory leader Andrew RT Davies said Michael Carrick's Aventa firm was paid nearly £1m for consultancy services.

Mr Davies said backers of the Ebbw Vale motor racing project were effectively "paying themselves" for advice.

First Minister Carwyn Jones defended support for project development.

The Circuit of Wales promises to create up to 6,000 jobs in the south Wales unemployment blackspot of Blaenau Gwent by building a motor racing track with hotels and industrial units.

Although insurers Aviva have been named as the scheme's likely financial backers, the Heads of the Valleys Development Company (HOVDC) has been in negotiations with ministers over the taxpayer shouldering some of the risk.

In April, former Economy Minister Edwina Hart rejected a request that the taxpayer underwrite the entire project.

Her successor - Economy Secretary Ken Skates - said in July he wanted the firm to find at least 50% of the budget and underwriting from private sources.

The Welsh Conservatives have questioned the extent to which the Welsh Government has already been covering development costs by the firm.

Michael Carrick is chief executive of both HOVDC and Aventa

In an email obtained by the Tories under Freedom of Information law, senior civil servant James Price states that "it appears that our loan guarantee will facilitate a very substantial payment from one company in which Michael Carrick has a significant interest (HOVDC) to another wholly under his control.

"Consequently I have been resisting allowing these payments to be funded from the guaranteed loan," the email continued.

Raising the issue during First Minister's Questions on Tuesday, Mr Davies said HOVDC was "effectively paying themselves to advise themselves".

"That clearly cannot be right, especially if there hasn't been a robust tendering process and indeed when the civil servants themselves, the director general, is offering such advice to ministers.

"Why would ministers go against that advice and approve such a transaction?"

'Prudence'

Mr Jones responded by saying it was a matter for the minister concerned - Mrs Hart - who was no longer a member of the assembly.

But he added: "We will seek to ensure - as she did - that there is prudence in terms of money that's accessed from the public purse."

Raising other issues including £9m paid in bank loan guarantees, Mr Davies said the Circuit of Wales project offered "great opportunity" but he was concerned about the "execution".

Responding again, the first minister said Mr Davies "can't have his cake and eat it".

"He can't say on the one hand this is a good project, and on the other hand say, well, this project shouldn't have been financed in its initial stages," Mr Jones said.

"As a government, we will provide amounts of money for business in order to take them to the next stage of business development.

"But there comes a point where it's absolutely right to say to any business we will not finance the project unless you find enough private backing that will take the project ahead without there being a 100% guarantee from the taxpayer."