'Sensible decision' to reject racetrack, says CBI Wales
The decision to reject the Circuit of Wales project by the Welsh Government was sensible, CBI Wales has said.
The business body said refusing to underwrite £210m investment in the racetrack had been a "very, very difficult decision" for ministers.
It follows claims that Circuit of Wales investors were told by government officials that there were no "showstoppers" facing the project.
Plaid Cymru said an email was sent two weeks before the bid was turned down.
A senior official emailed Aviva Investors on 14 June saying they had spoken to lawyers about complying with EU state aid rules.
He wrote: "The good news is that at the moment there does not appear to be any showstoppers but there is one point that I would like to discuss with you in relation to deal structure."
The Welsh Government was asked to underwrite £210m of Aviva's investment in the Circuit of Wales, which meant the taxpayer would pick up the bill if the project failed.
But Welsh Government officials said it became apparent "in the last couple of weeks" that the true cost could be far higher.
Based on advice from the Treasury and Office for National Statistics, the Welsh Government said there was a "very significant risk" that all the £373m of the project's debt would be classed as capital spending.
That would be removed from the budget over three years - funding that could otherwise be spent on schools, homes or hospitals.
Ministers said a £100m automotive business park would be built instead.
Ian Price, director of CBI Wales, said it the move did not send out a message that Wales was not a place to do business in.
"To be fair to the Welsh Government it was a very, very difficult decision they made yesterday," he said.
"The easy decision would have been to wave through the Circuit of Wales. They've obviously considered all the options and decided it doesn't stack up for the Welsh taxpayer."
He said it was now important that key projects like the M4 relief road needed to proceed to send out a message to the further UK economy. He said the "plan B" automotive business park idea made sense and had potential.
Chartered surveyor Chris Sutton, director of JLL property consultants said it was time to move on and that Circuit of Wales was proof that the Welsh Government had taken its time and was taking "sensible financial decisions".
"The issue now is what is the plan B? How do we facilitate economic growth in the heads of the Valleys.
"The Brexit vote shone a light on the Valleys in the round and it's now a case of trying to implement measures to try to generate that growth, prosperity and jobs."
But speaking in the Senedd on Tuesday, Plaid AM Adam Price, questioned the Welsh Governments decision: "Are we really led to believe that the government was not aware of the balance sheet issue on 14 June, but that became the mother of all showstoppers just 13 days later?"
The move by the cabinet followed scrutiny of the plans as part of a due diligence process which started in February.
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Replying to Mr Price, Economy Secretary Ken Skates said it was only through due diligence "that we were able to then go to [the Office for National Statistics] and Her Majesty's Treasury and be able to assess the risk in the way that it's weighted and the likelihood of it being on balance".
"In terms of the note that he mentions concerning Aviva and the way that there appears to be at the moment 'no showstoppers', well the whole point of due diligence is that you strip away all of what appears to be the case and you actually get to the facts and then the facts are scrutinised accordingly."
Civil servants had held weekly meetings with the Heads of the Valleys Development Company "to ensure that every opportunity is given to make this project workable", he added.
But Labour's Blaenau Gwent AM Alun Davies said while there was a "great deal of disappointment... if the sums don't add up, they don't add up".
He told BBC Radio Wales investment in the £100m business park was needed straight away.
"It's crucial we create jobs and an economy where local people can benefit from these opportunities," Mr Davies added.
"This can't be a promise made to be fulfilled in another decade."
Welsh Conservative leader Andrew RT Davies has separately demanded a public inquiry into the project.
Mr Davies said: "The Circuit of Wales project is a Welsh Government branded bungling of historic proportions."
He added: "The people of Wales, particularly the forlorn citizens of Ebbw Vale, deserve answers after so many years of clinging to hope where there was none.
"Serious questions remain and only an independent public inquiry can bring satisfactory answers."
Martin Whitaker, the Circuit of Wales' chief executive he was "hugely disappointed and saddened" by the Welsh Government decision.
"We strongly disagree with the decision and the rationale behind it," he said in a statement.
The Circuit of Wales team said they are still studying the details of the announcement "before deciding on our next course of action".