Government issues statement supporting Teesworks land transfer deals

Controversy surrounds the transfer of land to private businesses as part of the creation of the UK’s first freeport, with critics arguing for great scrutiny of the bidding process.

The National Audit Office has said that a full investigation into Teesworks is outside of its remit after calls from Labour’s Shadow Levelling Up Secretary Lisa Nandy for it to launch an inquiry were echoed by Tory Tees Valley Mayor Ben Houchen.

The scheme, a cornerstone of Prime Minister Rishi Sunak’s pledge to ‘level up’ the region, which has become mired in allegations of corruption, has been defended by the Government and prominent North East Tory MPs.

Read more: Cross-party calls for a review into Teesworks finances 

Rishi Sunak with Ben Houchen at Teesworks (Image: Northern Echo)

The Department for Levelling Up, Housing and Communities, headed by Michael Gove, said decisions on land ownership and joint venture arrangements were made by the South Tees Development Corporation (STDC) and Tees Valley Combined Authority (TCVA).

A spokesperson said: “Private sector investment and a joint venture was always a core part of the approved business case and public funding rationale for the site, and a National Audit Office’s review found that government funding has been used as intended and the changed arrangements with the joint venture has not altered the case for this funding.

“We continue to monitor spend and delivery of the site.

“Tees Valley Combined Authority has judged that the transfer presented value for money.

“Independent audits of the STDC’s accounts have not raised any concerns around that judgement, or the management of the organisation.”

The Government said land transfers by South Tees Development Corporation are based on market value at the time, and do not take into account the wider investment required to support economic activity on that land.

The National Audit Office (NAO) said its statutory audit remit does not extend to examining the decisions or actions of the Tees Valley Combined Authority or the South Tees Development Corporation.

However, it is understood that the NAO is seeking to review relevant documents and on Monday it said if public funding was to continue next year it would contact government departments and look to review documents.

But it added it would not make a decision on whether to conduct a detailed audit until those steps were completed.

The Government has said Tees Valley Combined Authority is not currently subject to any statutory ‘Best Value’ intervention - however, Middlesbrough MP Andy McDonald said the Government should be compelled to act, given the widespread concerns raised.

Andy McDonald

He said: “Whilst the NAO say an inquiry is not within their remit, it is incumbent on the Government to make the necessary changes so they can investigate.

“The fact that they are saying this just shows how lacking the whole external audit and scrutiny of Combined Authorities is.

“It’s common ground that there needs to be an inquiry and it’s up to the Government to deliver on that.”

Concerns were raised about Teesworks after a share transfer saw companies owned by Martin Corney and Chris Musgrave, JC Musgrave Capital, Northern Land Management Ltd, and DCS Industrial Limited, increase their Teesworks Ltd shares from 50 per cent to 90 per cent, leaving the STDC with ten per cent, rather than the 50 per cent it had held before.

Alex Cunningham

At the time, Stockton North MP Alex Cunningham said the area was “seeing waste and dodgy deals on a concerning and escalating scale”.

However, Mr Houchen said the deal removed the liabilities - a valuation suggests it will cost £482.6m to remediate - for the site from the taxpayer and allowed the freeport to secure private cash running into the hundreds of millions of pounds.

Read more: Ben Houchen responds to questions over Teesworks site

During Prime Minister's Questions today (Wednesday), Simon Clarke, MP for Middlesbrough South, said: “We have seen a shameful attempt to smear the amazing Teesworks project, led by the Honourable Member for Middlesbrough, who I have given advanced notice to.

"Will he (Deputy Prime Minister Oliver Dowden) confirm that it was always an integral part of the business case that the private sector should co-invest alongside Government, and that the Teesworks arrangements themselves have been checked and approved by the Government?

"And will he reconfirm his full support for the Teesworks project, reassure investors, and join me in calling for the Labour Party to apologise for talking down Teesside?"

Replying, Mr Dowden said the freeport is attracting ‘billions of pounds’ of private sector investment, creating jobs and supporting the local economy.

He said: “I think the whole House will see through the inexcusable attempts by the Labour Party to talk down those successes on Teesside where local leaders are working tirelessly to improve that region for the first time in a generation."

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Dehenna Davison (Image: Contributor)

Meanwhile Bishop Auckland MP Dehenna Davison MP, Parliamentary Under-Secretary of State for Levelling Up, wrote to Mr McDonald in response to his claims of corruption and illegality. 

She said: "There is an inevitable risk that continued unfounded questions serves to dampen investment in the area, including at the freeport, threatening job creation, and damaging levelling up.

"I would be happy to meet you, alongside my officials and other ministerial colleagues, to discuss how the Government funding has been used to support the development of the South Tees Development Corporation site, and to review any evidence you would like to present as to date we have not been provided nor are we aware that you have produced any evidence since making your claims."

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Mr McDonald insisted his concerns were bona fide and rejected suggestions they were party political, reiterating his calls for an inquiry.

He said: “As for the Tories blaming Labour, which is totally ridiculous, they simply have to accept there are very serious and legitimate concerns about how business has been conducted.

“Those issues aren’t going away and they need to be addressed in an open and transparent process to set out a future path for the project in which we can all have confidence.”