This is so dumb, it sounds like an attempt at making the speedlimits look like a bad thing. Obviously you can just make exceptions for a race like this. Its gonna be blocked off anyways so its not a public road at that point. Exceptions to standard rules are completely normal for events like this, i dont see why this would be any different.
This is actually a long standing rule and the reason British racing green exists.
Speed limits still apply for public roads even if closed to the public. And it used to be a local council would need to go to Westminster to make exceptions. That changed recently with more power going to local authorities, but there's still going to be some restrictions.
The lower speed limit is new and it looks like there isn't a law yet to allow this:
Richard Hopkins, the race organiser, said: "A Welsh government scheme designed to enable cycle races to manage race and public safety through 20mph zones has failed, leaving us with a major problem