Call for “full and independent” Teesworks inquiry renewed

In response, the government did not rule out an National Audit Office (NAO) investigation, while Tees Valley Conservative Mayor Ben Houchen rubbished the Middlesbrough MP, accusing him once again of having “talked down Teesside”.

In a long-ruuning saga, the Tees Valley Review was commissioned by the previous Conservative government in 2023 to look at the regeneration process of the Teesworks site near Redcar. The review followed comments made in the House of Commons where Labour MP Mr McDonald alleged “truly shocking, industrial-scale corruption” related to finances surrounding the regeneration of the site.

Lord Houchen consistently denied any corruption, illegality or wrongdoing, advocating a full investigation by the NAO in May 2023, saying: “I want this nipped in the bud once and for all.” The Teesworks report was not an NAO investigation, rather an “independent review” that found no corruption or illegality but said decisions taken by bodies involved had not met expected standards when managing public funds.

The renewed calls for an investigation come following one of last month’s editions of Private Eye, a publication that Lord Houchen has previously called a “complete comic”. Citing the work of Richard Brooks, Mr McDonald described the journalist’s findings as reading “like the screenplay of a dark political drama”. Much of Mr Brooks’ reporting was repetition of previous articles.

The Middlesbrough MP said: “Public money and public assets have been shockingly exploited and public trust has been completely eroded,” adding: “[Mr Brooks’] findings reveal a disturbing pattern: flawed and determined decision-making, channelling vast sums of public money in particular directions, resulting in colossal financial benefit for the private developer partners, whilst leaving taxpayers carrying the risk.”

The Tees Valley Review, published in January 2024, said: “There has been no private finance invested to date whilst over £560m of public funds have been spent or committed.”

Permission to create the South Tees Development Corporation (STDC) was granted by the government in 2017, for the purposes of managing the former Redcar steelworks site and keeping it safe. The STDC Board created a 50/50 joint venture (JV) agreement on February 10, 2020. In August of the following year, the JV agreement was amended to 90/10 in favour of the private developers.

Developers Chris Musgrave and Martin Corney were involved with the original 50/50 joint venture meaning that 50% of shares belonged to STDC and 50% belonged to Mr Musgrave and Mr Corney’s companies JC Musgrave Capital and Northern Land Management. From 2021, the businessmen held the 90% share.

There was no public tender process to acquire shares in Teesworks, however, Lord Houchen said the scheme would never have happened without Mr Corney and Mr Musgrave, which is why they became the development partners. The Tees Valley Review highlighted that the explanation of the joint venture partnership to the STDC Board omitted “important” details such as how the JV partners did not have to input any funding.

There were 28 recommendations from the Tees Valley Review, one of which was to renegotiate a better settlement for taxpayers under the joint venture agreement. Mr Musgrave and Mr Corney did offer some variations to the joint venture agreement, including changing time periods on options on the land, but the 90/10 split remained.

Mr McDonald described the Tees Valley Review as an “important but limited account of the governance and decision making”, but said it did not get to the bottom of the “key issues”. The current Best Value process, which the TVCA is currently under, is deemed by Mr McDonald as “valid and useful” but not the “forensic inquiry that is truly needed”.

The MP added: “There needs to be a formal, independent inquiry with the ability to compel disclosure, to take evidence under oath and follow the money wherever it leads. If that means inquiring into individuals and private sector entities, then any such inquiry will have to have that power.”

Mr McDonald went on to say: “The problems run deeper than Teesworks alone. Accountability, scrutiny and transparency around devolution funding are far too weak, particularly for combined authority mayors. Once monies are devolved, the systems of scrutiny are simply insufficient, inadequate and not fit for purpose.”

Mr McDonald’s comments were put to TVCA. Lord Houchen said: “McDonald has always talked down Teesside and has damaged jobs and opportunities for local people and it’s sad to see that he hasn’t changed.”

The government was asked if they could rule out an NAO investigation, as well as whether the government would agree to Mr McDonald’s request for a formal, independent inquiry into Teesworks that can take evidence under oath. The Ministry for Housing, Communities and Local Government (MHCLG) was also asked for an update on the Best Value Notice, which has been pinned to TVCA for over six months.

Responding, an MHCLG spokesperson focussed on the Best Value query, saying: “Government has been clear there are more questions to be answered following the Tees Valley Review. The Best Value Notice is in place to address concerns. The Authority must demonstrate clear progress and full compliance with statutory duties.”