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The Welsh government is very unlikely to get back £7.35m it spent on an ill-fated racetrack project, it has said.

Officials say there is "little chance" of recovering the money from the insolvent company behind Circuit of Wales.

The project fell apart in 2017 when the Welsh government rejected a request to guarantee almost half its funding.

The Welsh government said it had "taken action to secure" the cash.

The cash was provided to cover a loan guarantee, which ministers wrote off the value of in 2020.

Officials made the comments in response to a Freedom of Information (FOI) request, first reported by the website.

Welsh Secretary David TC Davies called on Labour ministers to take further legal action to get the money back.

A Senedd report in 2018 said government officials made "inexplicable decisions" about the spending of public money on the project.

Backers of the £433m project had claimed the Ebbw Vale racetrack would create thousands of jobs.

But the former Economy Minister Ken Skates said job claims had been overstated when he took the decision not to back the project further.

The £7.35m was part of £9.3m of public money provided for the project.

It was a guarantee for a loan from Santander Bank to Heads of the Valleys Development Company (HOVDC), which was called in in May 2016.

In July 2020 Mr Skates wrote off the value of the loan, its interest and fees, totalling £14.9m.

He said at the time that the "formal writing off of the debt in the Welsh government accounts does not prohibit the recovery of any monies receivable".

The FOI response now says that, as HOVDC had entered into a Company Voluntary Arrangement (CVA) in 2018, and all other associated companies are "insolvent", there is "very little chance of the monies owed to Welsh government being recovered".

The Welsh government had however served notices on HOVDC "as a precautionary measure" to secure its rights to take enforcement action.

A CVA is an insolvency process used by companies that cannot afford their debts to pay creditors over a fixed time period.

Documents relating to the insolvency say no payments have been made to the Welsh government.

'Take legal action'

Monmouth Conservative MP David TC Davies told ���˿��� Wales: "The Welsh government should take legal action to get it back, and not just write the money off."

The Welsh secretary added: "The real problem is that Welsh government don't want to remind everyone of just how incompetent they were during this period."

The Welsh government said: "Under the loan agreement, HOVDC is required to repay the debt in full to the Welsh government.

"We have taken action to secure the Welsh government's rights to recover the investment made."