Teesworks: £560m of public money spent and issues of 'governance and transparency' remain

Considering whether the National Audit Office need to be sent in to examine what's happening at one of the UK's largest brownfield redevelopment sites

Because the Tories lost the election and were forced into opposition last July, it’s reduced the number of Conservative faces we’ve seen on our TVs. More than two-thirds of Tories lost their seats in the election, and many old hands stepped down.

The media’s focus has generally been on the new Labour government, but as the Conservative Party recalibrate and do some soul-searching, one elected Tory has probably become more familiar on our screens - Tees Valley mayor Ben Houchen.

The only Tory elected to a senior post on a huge personal mandate, he’s currently serving his third term as head of the Tees Valley Combined Authority (TVCA), which covers Teesside, Darlington and Hartlepool, in the north east of England.

Any mention of the “north east” usually conjures images of Geordies to those from further afield, but some 40 miles to the south it’s home to the Smoggies, whose period of deindustrialisation in the twentieth century saw the recession of industries like chemical production and steelmaking.

These industries and the expertise of their workers remain in pockets in the region, but on a much smaller scale than in the past. The last steelworks shut in 2015, ending over a century of steelmaking, and putting over 2,000 people out of work.

With the establishment of TVCA in 2017 it provided an opportunity for its new mayor to help re-train those who had lost work, and to redevelop the enormous (it’s nearly 6km long and 2km wide) brownfield site the former steelworks occupied.

The regeneration project, led by the Houchen-chaired South Tees Development Corporation (STDC) - the first mayoral development corporation outside of London - would be known as “Teesworks”. The project has since been subject to enormous controversy, with £560m of public money spent to remediate the land, and two local businessmen making around £130m without investing a penny.

Lord Ben Houchen pictured at the Teesworks site Pic: Sopa Images

A year ago this week came the publication of one of the most important documents in the whole saga.

We had an idea it was coming on that day, but no clue of when. It was published on the government’s website at around 4.20pm, leaving me with just over an hour to read and digest a 96-page report and then write a cover story in time for the next day’s paper going to press.

Since the Tees Valley Review’s publication, it’s still one of the only “sacred texts” covering events at Teesworks.

The review was set up by secretary of state Michael Gove to rebuff accusations of “industrial-scale corruption” at Teesworks, made by Labour MP Andy McDonald in reference to reports in Private Eye magazine in May 2023.

Those accusations formed the basis of calls to send the National Audit Office (NAO) to investigate whether or not value for money had been achieved, something which was backed at the time by Lord Houchen.

After the announcement of the panel, led by Lancashire Council chief Angie Ridgwell, in early June 2023, it was initially thought it would probably report back by the time Parliament rose for its summer break at the end of July.

When it was published on 29 January 2024, the review said it “found no evidence to support allegations of corruption or illegality”. Lord Houchen would repeat this line on his many press interviews which followed, also quoting the paragraph number, 1.7.

What he always failed to quote was the very next sentence in that paragraph: “However, there are issues of governance and transparency that need to be addressed and a number of decisions taken by the bodies involved do not meet the standards expected when managing public funds.”

The review set out 28 recommendations. A year later, have those issues of governance and transparency been addressed?

According to TVCA, the public body with overall control of the scheme, the answer is “yes”. Its chief legal officer reported to a meeting last week that of the 26 recommendations which were applicable to TVCA, 25 were “complete” and the 26th was “partially complete”.

That “partially complete” recommendation is that conflict of interest training has not yet been arranged for members. Staff at the authority had their training earlier this month. Outgoing CEO Julie Gilhespie, who’s set to leave the authority in April, was heavily criticised in the review for not only failing to declare conflicts of interest, but for failing to even recognise they existed.

Her daughter, Caitlin, has been employed at TVCA since September 2023 - in the middle of the review conducting its investigation - but in October 2023, Julie Gilhespie signed a conflict of interest form declaring she had no “close relatives or associates [who] have an interest in any actual or potential contract with any TVCA Group entity”.

This wasn’t picked up by the review, but by me for The Yorkshire Post last year.

The most important recommendation, which gets to the nub of why the entire review took place, is 22. It said: “[South Tees Development Corporation] should explore opportunities to influence when and how land is drawn down and developed and if possible, renegotiate a better settlement for taxpayers under the [joint venture] agreement.”

The review had been critical of the way the businessmen involved in the scheme, Chris Musgrave and Martin Corney, were able to choose to buy land at £1 per acre after extensive remediation costs from the public sector. It stated how the businessmen were under no obligation to buy land after the public sector had paid to remediate it, allowing the duo to “cherry pick” the more valuable land, and leaving enormous liabilities on the public’s balance sheet.

In August, Gilhespie met with Corney and Musgrave, who agreed to “reluctantly consider renegotiation on some matters”, according to the meeting’s minutes, in order “to avoid any further negative publicity directed towards the site.”

However, they have refused to renegotiate the 90-10 equity split which granted them control and the bulk of profits from a joint venture which was originally 50-50 with the public sector. They were given their additional 40% ownership for free by STDC.

In their formal response to the request to renegotiate, sent to STDC on 17 September last year, Corney and Musgrave said “the return to the private sector partners is a fraction of that to the public sector partners.”

Teesworks Ltd, the company they own 90% of, is allowed to draw down any part of the former steelworks site that’s remediated over the next 30 years, however the businessmen have offered to halve the period to 15 years and provide six-monthly progress updates to the development corporation’s board.

The fate of this offer, and that of TVCA’s official response to the Tees Valley Review, is in the hands of secretary of state Angela Rayner. She has had it on her desk since the end of September, and was advised before Christmas by civil servants to send the National Audit Office to investigate.

Which brings us back to exactly the same place we were in May 2023. However in that time, Lord Houchen has changed his mind, saying there’s no need for the NAO because the review has cleared the project of any wrongdoing (although it was clear in its limitations and in what it didn’t investigate).

As a Parliamentary body, the NAO can only legally investigate money spent by central government. However, it can investigate local authorities (which includes TVCA) if two conditions are met: the secretary of state approves it, and so does the authority in question.

Lord Houchen will no doubt argue attempts to send the NAO in are political attempts to punish the only Conservative metro mayor in the country. Time will tell if that argument holds up against the increasing political pressure to open the books that will come in 2025.

About the author: Leigh Jones is an investigative journalist based in Teesside, he is editor of The Teesside Lead and also reports for the BBC in the Tees Valley. He was previously an investigative reporter at The Yorkshire Post. He has written extensively on Teesworks.

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