The fallout from Circuit of Wales

It has seemed appropriate to dwell on the economic future of Blaenau Gwent this week - it is exactly 15 years since the steelworks closed in Ebbw Vale.

There was disappointment locally that the big plan for the area, the Circuit of Wales, did not receive backing from the Welsh Government but I did not detect major surprise.

As one senior figure in the local authority told me, a potentially positive decision kept on being pushed back past elections, and if it was going to be a yes, then ministers would have made sure it had got out there before voters went to the ballot box.

There was certainly surprise from within the Circuit of Wales camp.

One of the directors told me he received a phone call on the Saturday before the decision saying it was a done deal.

Rejection

They also insist that there were no fundamental problems raised in any of the 28 meetings they held with Welsh Government officials in the year leading up to the rejection.

This may, or may not come as a surprise to anyone, but the Circuit of Wales developers have had just one meeting with Ken Skates in the past year and it lasted no longer than a quarter of an hour.

Last week we said it is difficult to see any way back for the Circuit of Wales.

It is even more the case now. Developers believe concerns that the taxpayer is shouldering too much of the risk can be looked at again, with more private sector money.

But Ken Skates told me in an interview in Ebbw Vale that the Welsh Government had "moved on" from the circuit as he proceeded to rule out the use of any public money in any revised proposal.

Guarantee

In the discussions I had with the senior directors, there was no suggestion a new plan could be put together without the £210m of public money acting as a guarantee for the main private backer Aviva Investors if the project ran into difficulties.

It would mean any future plan would have to be radically different in its financial structure.

One of the developers' main grievances is the claim that they were strung along by the Welsh Government over a number of years.

They may have a point. In April last year after the initial rejection of a 100% guarantee, the then economy minister Edwina Hart spoke about an 80% guarantee potentially being on the cards.

The goalposts have changed in that the Welsh Government moved its position to accepting no more than a 50% guarantee.

Evidence

The developers also claim they were told verbally earlier in 2016 that a 100% guarantee was acceptable, although there is no documentary evidence of this.

It was on the assumption of there being a hefty public underwriting that the Circuit of Wales team worked up its proposal, incurring legal costs of up to £35,000 a day at one point.

There are a number of questions arising from this saga. One has to be if the developers are so sure of their business case then why is it dependant on taxpayers' cash?

Another has to be why the Welsh Government took so long to make a decision, and whether the developers were led up the garden path during that process?

The circuit's main shareholder Michael Carrick spoke openly about the money he would have received if the deal had gone through.

Perception

The sum of £1.7m will appear, as he admitted himself as "an awful lot of money", particularly in the context of Blaenau Gwent being one of the most economically deprived part of the UK.

It was calculated as the equivalent of seven years work on a salary of £240,000 a year.

Mr Carrick's defence is that he risked his time and money, and he could have earned more elsewhere. In speaking about the money, he acknowledged there had been a perception of personal financial gain.

In light of that, a question for him might be whether the project would have been better served with a more transparent account of the finances earlier in the process.

As he majority shareholder, currently standing at 88%, then Mr Carrick would also gain if the circuit is built, becomes successful and later sold at a substantial sum.

Roald Dahl

There are so many ifs and buts that it is hard to know where to start on that one.

Politically, this has been a big moment for Ken Skates.

After a spell as culture minister extolling the virtues of the year of adventure and Roald Dahl celebrations, this was the most controversial call he has had to make in his career.

The upshot of plans for a new business park is that the Welsh Government has taken the lead in economic development in the heads of the valleys, rather than taking the role of supporting plans for the circuit.

Which takes me back to where I started. Business parks in the valleys are hardly anything new, but this one really does matter because of the back-story, the depressing statistics surrounding Blaenau Gwent and how it will become a test-bed for the economic regeneration record of the Welsh Government.