An independent inquiry has found no evidence to support allegations of corruption or illegality linked to the finances at the controversial Teesworks development.
The review supported denials that land was sold off to developers for £1 an acre and said the scheme had already brought economic benefits while creating a potential 9,000 jobs. But the long-awaited report also made criticisms of governance and transparency, noting a “lack of transparency in the decision making and the very permissive scheme of delegation”.
Three local authority officers were appointed by Secretary of State Michael Gove to investigate claims of “industrial-scale corruption” at the UK’s largest freeport. There were 1,400 documents and 45 interviews presented to the panel which found no evidence of corruption or illegality.
The firm was previously a 50-50 public-private partnership but local developers Chris Musgrave and Martin Corney came to take a 90pc stake in Teesworks. As reported, the published accounts revealed turnover at Europe’s largest brownfield site more than doubled from £53.9m a year earlier to £142.9m with net profits of £54m.
The 96-page report from the panel says the private developers put no money into the scheme but made money on the back of public sector investment of more than £560m and the deal should have been scrutinised more by the Tees Valley Combined Authority. It also said while many decisions made by the South Tees Development Corporation (STDC) did follow due process, “most decisions are vested in a small number of individuals”.
In conclusion, the panel said systems of governance and finance in place within TVCA and STDC “at present” do not include the “expected sufficiency of transparency and oversight across the system to evidence value for money.” It made 28 recommendations, including more oversight by the TVCA.
In response to the report, Labour’s candidate for Tees Valley said it showed “serious failings in transparency and accountability and value for money” for people in the Tees Valley. “It is absolutely vital that Lord Houchen adopt what recommendations are made by the report,” he added.
The investigation was launched after Labour Middlesbrough MP Andy McDonald, citing a Private Eye article in Parliament last year, said the only economic growth being delivered at Teesworks “is into the accounts of Ben Houchen’s pals, Messrs Musgrave and Corney”.
Tees Valley Mayor Ben Houchen who leads the STDC, told the Local Democracy Reporting Service: “The thing that people care about most is there was no corruption.” He said the processes they followed were “in line with the constitution and in line with the law” and insisted the scheme brings “huge value to Teesside”.
“It explicitly recognises that the Teesworks Joint Venture was ‘critical’ in reaching an agreement with the Thai banks and resolving the CPO and that without them the progress we have seen would not have been possible,” he said. “Without this partnership, the former steelworks would still be sat idle, costing the taxpayer £20m a year to stand still, with no investment and not a single job in sight.
“It also dispels the myth that we sold the land for just £1, with the panel confirming the deal was actually worth £39m to the taxpayer.” Regarding the findings around governance and transparency, he said: “We have to goldplate it and make it more robust going forward. We can always improve – nobody’s perfect.”
Levelling Up secretary Michael Gove appointed the panel to consider the allegations in June. Calls had been made for the investigation to be led by the National Audit Office (NAO), but Mr Gove rejected this in favour of appointing his own inquiry.
Housing Minister Lee Rowley made a parliamentary statement on Monday afternoon shortly after the review was published. Calls were again sounded in Parliament for a “full National Audit Office report” following the publication of the independent inquiry’s findings.
Speaking in Parliament on Monday, MP for Middlesbrough and East Cleveland Simon Clarke said Mr McDonald and other Labour MPs had made the allegations for “overtly political” reasons, accusing them of “wanting Teesworks to fail”. MP for Stockton North Alex Cunningham told the House of Commons the allegation was “nonsense”.
Tees Valley Combined Authority Group CEO Julie Gilhespie said some of the allegations have caused “considerable upset” within her team and “had an impact on the mental health of numerous officials who are honest, diligent and who have the best interests of Teesside in their hearts.”