Welsh Affairs

Part of International Women’S Day – in the House of Commons at 3:13 pm on 2nd March 2017.

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Photo of David Davies David Davies Chair, Welsh Affairs Committee 3:13 pm, 2nd March 2017

Members will be aware of the plan by the Heads of the Valleys Development Company, led by Mr Michael Carrick, to build a racetrack at Ebbw Vale. Mr Carrick persuaded the Welsh Government to put £9 million into his company, Heads of the Valleys, in order to develop this, but has so far been unable to get the private sector to back the scheme without an assurance from the Welsh Government that they will provide over £200 million as a loan guarantee.

Mr Carrick claims to be an expert in building infrastructure. He has been involved in attempts to set up infrastructure projects in the Shetland islands and the Port of Ardersier in Scotland, as well two biomass projects in Africa and another in Ireland, and a river barrage scheme at Fleetwood. None of these projects has been successful. I have spoken to many involved who say that they feel let down, misled, and in more than one case owed money. I could give some examples, but do not have the time. One that has been in the press, however, involved Mr Bob Long from Fleetwood, who tried to set up a river barrage. Mr Carrick told him that he had the funds available to develop the project, but the money never arrived, and Mr Long claims the project has been almost ruined as a result.

Aventa’s website, which Members can look at if they wish to, implies that it is responsible for managing a fund worth £350 million to build UK infrastructure, but Companies House records suggest that it has just £500 in the bank. However, with his £9 million of public money, Mr Carrick decided to buy a specialist motorcycle company based in Buckinghamshire. It was shown in the records as a dormant company until August 2012, after which it sprang into life. By August 2013, it was showing liabilities of £350,000. The losses grew, but when I met Mr Carrick in July last year, he told me that he would soon turn it around, that it would be an anchor business for his site and that it would lead to a Welsh rider winning a Welsh grand prix. A few months later, it was in administration, owing more than £500,000. If Mr Carrick cannot make a success of a small company turning over a few hundred thousand pounds, should the taxpayer be backing him in a venture worth several hundred million?

Mr Carrick’s publicly funded company has also bought the rights to hold the MotoGP championships at Silverstone, but so far he has made a loss on that of around £1 million. Many companies, including some local ones, have done work for the project but have not been paid—they have all done it at risk—but luckily, one supplier has been paid in full, again out of public funds. Mr Carrick decided to appoint a financial consultant to give advice to the scheme, and the company he appointed was Aventa, a company that he 100% owns and controls. In effect, he paid himself nearly £l million of public money to give himself advice. Civil servants in the Welsh Assembly raised concerns about this but were overruled. I have some written material to back all this up, by the way; I have the invoices. Among other things, Aventa spent £35,000 on landscape gardening. Those invoices were made out to the Heads of the Valleys Development Company, but Mr Carrick says that they were paid by Aventa. He also spent thousands of pounds on political events for the Labour party and, he tells me, for the Conservative party, although I do not have those invoices.

When I raised my concerns with Mr Carrick, he told me that he was entitled to spend Aventa money as he pleased and that it had sources of income other than from the public money from the Heads of the Valleys Development Company. I asked for examples and he cited GE. I asked him whether he meant General Electric, and he said yes. I then contacted General Electric, who told me that he had asked for money but had not had any from the company. At the same meeting, one of Mr Carrick’s associates told me that BMW was planning to build a BMW world theme park at the site. I checked with BMW, who told me that that was absolutely ludicrous and that it had no plans to do so. Again, I have all this in writing.

Mr Carrick’s lawyers, who are in touch with me frequently, claimed that I had made all this up, but, fortunately for all concerned, I have a high-quality recording of the meeting, and they have now had to accept that all those comments were indeed made. I can share the transcript of the meeting with anyone who is interested, although I cannot share the recording without Mr Carrick’s permission, which he does not seem very willing to give. I asked him about the business plan, and I was told that he would be able to rent out the race track for between £18,000 and £35,000 a day. Industry experts tell me that that is absolutely ludicrous. But even if he did manage to do that, he would be pulling in revenue of only about £13 million a year on a project that is going to cost £430 million to build. I am intrigued as to why the project keeps increasing in cost, from £200 million in 2011 to £250 million in 2012 and to £380 million when I met Mr Carrick in July. Seven months later, it has risen again to £430 million.

I have two other documents of interest. The first is a quote from a construction company, FC, for £180 million for building the track—a project we are told is worth £430 million. Even with a few hotels chucked in, that would take a bit of explaining. The second is a business plan showing a developer’s profit of £13 million.