FROM the moment Prime Minister Margaret Thatcher carried out her famous "walk in the wilderness" along the industrial wasteland on the banks of the River Tees, in 1987, it was clear that the Teesside Development Corporation (TDC) would be controversial.
Unelected officials were drafted in, bypassing elected councillors, as part of an urban development corporation (UDC) that had powers over land use, planning permission and a position of glory over any jobs created.
The TDC was the largest of 12 development corporations set up to regenerate more than 12,000 acres of areas in industrial decline.
Over its lifetime, the corporation helped attract £1.1bn of private sector investment, created more than 12,000 jobs and brought 1,300 acres of derelict land back into use.
But it has been revealed over the past few months, first with the damning National Audit Office report, and now with the House of Commons Committee of Public Accounts, that redevelopment came with a huge multi-million pound price tag to the tax payer.
One of the heavily criticised aspects to come out of the House of Commons report was the practice of "forward funding arrangements".
It involved developers taking over sites in exchange for initial payments. If there were difficulties, such as planning wrangles and the development was aborted, then the TDC would have to return the initial payment and pay penalties.
In the case of two sites, the TDC had to buy them back from the developers for the original sums paid, plus interest and other costs, totalling £1.6m.
Many of the deals done were simply appalling value for money, with land being sold at well below its regeneration value. Selling or "gifting" land cheaply, forward funding arrangements and abortive projects, added to shortfalls of £13m.
Risk-taking was considered to be an inevitable element of regeneration, but the risks the TDC took resulted in projects with potential losses of £7.4m. It included spending £4m on the pre-development of the 39-acre Middlehaven site, near Middlesbrough, and entering into lease agreements on office buildings for well beyond the corporation's lifetime and at twice the average market value for rents in the area. The lease agreements have resulted in losses of £2.6m.
In yesterday's report, the TDC's chief executive, Duncan Hall, who gave evidence to the House of Commons committee, also came in for fierce criticism.
In the week prior to wind-up in March 1998, he gave a mortgage to a site buyer, breaking strict guidelines, and would often take the lead in negotiations, reporting back to the board and recommending they accept.
Mr Hall received his full bonus, up to ten per cent of his salary, every year during the lifetime of the corporation - despite the Environment Department being aware of "serious shortcomings in financial management and in the proper conduct of public business".
In the last few weeks of life, corporations were supposed to be tidying their affairs and paving the way for the Commission for the New Towns to take over. Instead, the TDC was still striking deals committing payments of £5.1m without prior approval of the commission or the Environment Department.
Key files detailing regeneration deals and who sanctioned them went missing - either shredded or lost - after the corporation wound up.
But perhaps the most disturbing aspect surrounding the public money that was wasted, was the way the Tory Environment Department knew that the TDC was grappling with financial difficulties two years before it was wound up. It failed to act - despite warning signals from the TDC's external auditors and creditors - fearing it would undermine local confidence in the corporation.
The report stated that the department accepted "too readily" the explanations of Mr Hall and failed to use some of its powers to strip the corporation of its authority or make changes to the board.
Even when the department considered commissioning an independent audit of the corporation's finances in July 1996, it was more concerned over the threats by Chairman Sir Ron Norman to resign, than why the chairman was resisting such an audit.
As it was wound up, the TDC estimated a surplus of £14.5m, which included uncertain receipts of £16.25m. In February, the deficit was placed at £23m and could rise to £40m.
Yesterday's report outlined lessons to be learnt from the scandal, including closer scrutiny of financial management and deals, taking action to manage any risks and ensuring the relevant Government department intervenes quickly if there are concerns. Departments should also carry out periodic risk assessments on those that pose the greatest risk.
At the end of its life, in March 1998, the TDC left a lasting legacy of regeneration across huge swathes of the North-East. For the people of Teesside and surrounding areas, it is likely to leave the bitter taste of a missing £40m
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