On Wednesday, the government defeated a Labour measure in the House of Commons, which would have seen the release of documents relating to the decision-making process on the controversial Teesworks investigation. Instead of an enquiry by the National Audit Office (NAO), as called for by Labour and some Tory MPs, the government has tasked, what the Opposition termed, a ‘handpicked’ panel to examine the Teesworks site controversy.
Chief executive of Lancashire County Council and former director general at the Department for Business, Energy and Industrial Strategy Angie Ridgwell will head up the panel as lead reviewer. To support her work, the government has selected solicitor and director of law and governance at Hertfordshire County Council Quentin Baker, alongside Richard Paver, the former first treasurer of the Greater Manchester Combined Authority.
For months, the Teesworks development has been steeped in controversy, even among Tory MPs, with Middlesbrough MP Andy McDonald referring to Teeside funding in the Commons as tainted by “truly shocking, industrial-scale corruption.”
The Labour Party wants to know “why NAO was excluded from investigating” the project. Shadow Communities secretary Lisa Nandy said:
“The steelworks are part of the civic inheritance for people on Teesside, and those people deserve answers.
“There was cross-party support, including from the Conservative mayor (Ben Houchen), for an NAO investigation into the serious allegations of misuse of hundreds of millions of pounds of public money and assets.
“But for some reason, ministers – who are responsible for the flawed system of accountability that has partly led to this situation – have chosen to set up a review where they will handpick the panel and terms.”
Before yesterday’s vote, a government spokesperson said:
“We have no seen evidence of corruption, wrongdoing or illegality in relation to Teesworks, but these allegations are risking delivery of much-needed jobs and economic growth in Teesside.
“The Government is appointing an independent panel to establish the facts, in line with usual practice for reviewing local government.
“It is not the NAO’s role to audit or examine individual local government bodies, and it is not appropriate to so significantly expand the role of the NAO by asking them to lead any review.”
Teesworks controversy explainer
Teesworks is the name given to the redevelopment of the Teeside industrial site, which includes the former Redcar steelworks. The operation and ownership of the project have been contentious. The bulk of the controversy centres around the transfer of a sizeable publicly owned proportion of a company developing the site from the Tees Valley Combined Authority (TVCA) into private hands.
Conservative mayor of the Tees Valley, Ben Houchen, has faced a barrage of questions on the project. He is the TVCA leader and chair of South Tees Development Company, charged with developing the site. Over the last few months, it transpired that 90% of the company is now in private hands rather than 50-50 public-private ownership. Most of the equity is under the control of local developers Chris Musgrave and Martin Corney.
It has been reported that they made over £45m selling scrap during the demolition of the steelworks without investing any money themselves. The Financial Times raised questions about Houchen’s involvement in spring, thus putting the Teesworks controversy in the wider public domain.
Referring to the FT report in a letter to the NAO, Lisa Nandy stressed the need to “answer important questions about the transfer of a vital public asset into private ownership, the potential loss to the public from these transactions, and the almost total absence of sufficiently robust oversight or accountability at national, regional or local level”.
Currently, millions of taxpayer money are footing the bill for clearing the Redcar steelworks site in preparation for development. But there is now concern that the bulk of future profits from leases to investors will end up with Corey and Musgrave-controlled companies.
Levelling Up Secretary Mr Gove’s “external assurance review” will focus on governance and finance. The panel will provide answers to 7 core questions and include an examination of the sale and transfer of shares and the governance arrangements between the TVCA and the South Tees Development Corporation.
Meanwhile, the Financial Times continues its investigation of the Teesworks controversy and issues surrounding mayoral development corporations (MDCs) in general. The concept emerged in the 1980s to streamline the regeneration of deprived areas. MDCs are statutory bodies chaired by mayors. They purchase and develop land and infrastructure and may take charge of public assets, buy property under compulsory purchase orders, build roads, and make planning decisions. Legislation to underpin MDCs came into force in 2011.
The Teesworks controversy has forced the government to re-examine the MDC model and question its ethics and workability. The panel investigation will likely highlight weaknesses and establish whether MDCs are here to stay.