Ben Houchen and Andy McDonald clash over Teesworks

Middlesbrough MP Andy McDonald and Tees Valley Mayor Ben Houchen have verbally sparred over Teesworks at the former Redcar steelworks site. The regeneration project has promised thousands of jobs on projects covering 4,500 acres of land south of the Tees.

Teesworks Ltd is owned in a 90-10 split in favour of private firms. Officials at the National Audit Office took a closer look at government arrangements with the Department for Business, Energy and Industrial Strategy (BEIS) also monitoring the project.

However, NAO officials said this was not an audit or review of the Tees Valley Combined Authority (TVCA), the development corporation or Teesworks itself – but a review of the memorandum of understanding, business case, and quarterly monitoring reports at the Teesworks redevelopment.

The NAO found monitoring reports had indicated government funding had been used as intended and steered the “correspondent” towards the relevant BEIS unit – which is responsible for monitoring the project. Now Mr McDonald has said he strongly suspected the correspondence referred to was his with the NAO earlier this year.

He told the Local Democracy Reporting Service the NAO certainly didn’t say it had given Teesworks a “full clean bill of health”, as TVCA officials claimed earlier this month. The Labour MP added he’d asked to meet the watchdog following his own “very serious concerns” about use of public funds in the venture.

He was told the NAO didn’t perform audits of local bodies – and it was up to the external auditors – Mazars – to offer its qualification. Given the government money given to the project, the watchdog took a look.

Mr McDonald said the NAO referred him to quarterly monitoring reports – and claimed they indicated the government was happy with private partners being enriched “at the public’s expense” by taking their stake from 50% to 90%.

JC Musgrave Capital, Northern Land Management Ltd and DCS Industrial Limited hold 90% of the shares in Teesworks while the South Tees Development Corporation (STDC) keeps 10% after an agreement reached in 2021.

Mr Houchen said the agreement allowed the development corporation to “have its cake and eat it” – arguing private sector investment was “essential” to the future of the former steelworks site – and a public body would still control it”. But Stockton North MP Alex Cunningham accused the mayor of “selling the people of Teesside down the river” over the deal.

He later accused the mayor of “dodgy deals” during an opposition day debate in the House of Commons – before referring to the shares deal. The Labour MP added: “The same Northern Land Management where one of the directors has donated not only to the political funds of the Tees Valley Mayor, but also the funds of North-east Tory MPs.

“And Joseph Christopher Musgrave who gives his name to JC Musgrave Capital has also donated to the Conservative Party. The whole thing smacks of cronyism, but as our debate here today has shown it is no surprise.”

Mr Houchen responded in the aftermath – fiercely denying the accusations, and saying the developers had been vital in the compulsory purchase proceedings which secured a deal with Thai banks to bring the land under public control.

Now Mr McDonald has labelled the shares deal “outrageous and corporate welfare on an industrial scale” – adding people were sick and tired of being “ripped off” and their money “being used to benefit companies and individuals”.

He was also unimpressed by the “spin” on the NAO’s verdict. The MP said: “There is a real question mark over value for money but there are deeper concerns about how this business has been conducted and the bad smell lingers.

“But for the moment, far from providing “vindication” or a “clean bill of health” as Houchen and his officials respectively claim, the NAO have said nothing of the sort.”

Discussion of Teesworks arrangements arose at the TVCA’s latest overview and scrutiny board this month after Middlesbrough councillor David Branson wanted assurances about Middlesbrough and Hartlepool’s upcoming development corporations.

Cllr Branson said he read Private Eye regularly – although he “didn’t always believe everything they said”. However, the Labour member wanted evidence there would be transparency after reading concerns.

Mr Houchen claimed Teesworks had seen “more eyes looking over it than anything we’ve ever done”. “Much more than the airport,” he added.

“We had to take it to the combined authority cabinet. Not just the leaders but all the councils looked over it, and all the deals, with a fine-tooth comb.

“It’s been through external auditors over the last couple of years, the Treasury, and BEIS have looked at it three or four times each. You’ve got to remember there is public money going into it so the government legally is not allowed to put money into something which doesn’t comply with good process, due diligence and transparency.”

The Conservative mayor told the committee Teesworks was a “really good example of public-private partnership”. Mr Houchen said: “Let’s not forget the Teesworks site when it closed was apparently going to cost over £1bn to knock down and remediate and cost local authorities a fortune.

“All of a sudden, the same people complaining are saying it’s the jewel in the crown and we’re doing something we shouldn’t have done. We’ve worked with an incredible private sector partner – we take a lot of credit for what goes on – but I’m pleased with the role we’ve played in it but I guarantee we wouldn’t have touched a single asset or knocked down a single thing or have started a single square metre of remediation if it wasn’t for the expertise of our private sector partners.

“I can guarantee that. They deserve a huge amount of credit that they don’t get.”

The mayor went on to say that the public sector played a role in “pump priming” while the private sector could provide the expertise. He claimed people were “trying to pull down what they were doing”.

Mr Houchen added: “I can say we’ve done everything appropriately. If people think I’m the kind of guy who goes around doing deals and signing pieces of paper – I’m not allowed to do that.

“I’ve got Julie (Gilhespie – chief executive) and an incredible officer team who show everything is done appropriately, and processes are gone through. Because it’s all publicly funded, Julie has to spend hours and hours on a phone with BEIS, local government officials and every bugger else as well.

“There are a huge number of people who deserve a huge amount of credit for it.” When it came to Mr McDonald’s comments and concerns – Mr Houchen claimed Mr McDonald was “foaming at the mouth” with the progress at Teesworks and accused him of “spending far too much time in Westminster” and playing political games.

Mr Houchen said: “Whilst we try to build a better future for Teesside, Darlington and Hartlepool he is trying to do all he can to stop it. We are in the middle of a cost-of-living crisis that we haven’t seen in generations.

“We’ve had the announcement that the price cap will increase by 80% making the average energy bill more than £3,500 a year. People are worried.

“They’re scared about what this could mean for them and their family in the months ahead.” He went on to accuse Mr McDonald of “making up wild allegations and conspiracy theories” in the wake of these pressures – “instead of concentrating on what matters”.

This week’s TVCA audit and governance committee heard external auditors Mazars had completed their external audit of financial statements for 2020/21, and intended to issue an “unmodified opinion”. Mr McDonald has said he will continue his investigations.