Circuit Breakers

So, last week the Welsh Government finally decided that they were unwilling to guarantee any losses culminating from the proposed Circuit of Wales up to a value of £200 million. The ground for refusal was based around two main factors;

1. That HM Treasury would add the figure to the Welsh Government's debt and subsequently make adjustments to the block grant, reducing capital funding for projects such as new hospitals, schools and houses. 
2. That the promise of 6,000 jobs was vastly overstated and that the likely number of direct jobs culminating from the project would be as little as 100. I think it is fair to say that the Welsh Government made the right decision.

There is no reasonable way that the Welsh Government could have agreed to taking on such a large liability without being able to leverage it against an asset. Anyone who says differently just does not understand public finance (or any other kind of finance for that matter). However, the Welsh Government have also announced a package of £100 million to create an automotive business park in Ebbw Vale. I’d like to hear a lot more about the detail. There are two other circuits in Wales, one at Pembrey, Carmarthenshire and another in Ynys Môn which have been operating successfully. I’m sure that they would welcome some investment. I’m sure there would also be significant opportunities to link up Swansea University’s College of Engineering to create some automotive research centre.

However, they have been rightly criticised for taking seven years and spending £9 million in making this decision, the latter derided in a report authored by the Wales Audit Office. Massive amounts of time and money have been expended to give advice to ministers which was largely common sense. Another issue that has been raised - the ‘if it was in Cardiff the Welsh Government would have paid the money’ - type argument. I don’t agree with this. I think that if the business plan was more robust and the risk to the government was less, it would have been given the go-ahead, regardless of location.

There are two concerns I have about this moving forward.

1. The Welsh Government's approach to this project had been largely incompetent. Civil servants are out of their depths when it comes to major projects and (now retired) Welsh Ministers (Edwina Hart) were more interested in milking the headlines from the project. There are glimmers of hope. Civil servants should learn very harsh lessons from this experience. Also, Economy Secretary Ken Skates should be commended for finally concluding this issue. Let's hope that the Welsh Government's reputation hasn't been too badly bruised.
2. Plaid Cymru's response to the matter has been utterly pathetic. Honestly. Adam Price has had the appearance of a small child throwing his toys out of his pram. I can understand why Plaid are angry that Labour have held the prospect of the circuit over the electorate and subsequently marginally losing the Blaenau Gwent seat at the assembly general election. While the ethics are 'proper dodgy' (to use the proper technical term), any other political party (including Plaid) would have done the same thing. Adam Price's decision to actually suggest that the government should also have put up the guarantee is also worrying not only for those of us hoping that Adam has at least some common sense, but also Plaid's ability to have an economic policy that makes any sense.