Nine Teesworks questions that the inquiry has to answer

THE Redcar steelworks, then owned by the Thai company SSI, closed in 2015. After a century of industrial usage, the site at the mouth of the Tees requires extensive cleaning up.

In 2017, Ben Houchen was surprisingly elected as the Tees Valley’s first mayor, heading the economic development arms of the five councils: Darlington, Stockton, Middlesbrough, Redcar and Hartlepool. He promised that his organisation, the Tees Valley Combined Authority, would create 20,000 jobs on what was Europe’s largest brownfield site.

His first move was to gain ownership of the land from the Thai banks which had taken over SSI’s assets. He was assisted in this by developers Chris Musgrave and Martin Corney, who in 2019 had acquired a portion of the site.

Mr Musgrave was awarded an OBE in 2019 for his services to business for creating the Wynyard Business Park, having left school at 16 with no academic qualifications to become a fruit and veg market trader.

Mr Corney has been a house-builder and property developer in the North East for the last 30 years and is the stepson of Ian Waller, of Egglescliffe, who made his name with the Dollery Waller estate agents in Darlington. Mr Waller is one of the biggest local donors to the Conservative Party, including to Mr Houchen and Bishop Auckland’s Dehenna Davison, who as a levelling up minister has had a role in Teesworks, and Middlesbrough South’s Simon Clarke, who is a stalwart defender of the project. All donations have been properly declared.

To assist in the development of the site, Mr Houchen created the South Tees Development Corporation, a public-private organisation overseen by the combined authority.

In turn, the development corporation created Teesworks to run the site.

The Government, seeing this as levelling up in action, gave more than £200m to start the remediation of the site, which will cost £483m in total. 

In March 2021, the then Chancellor Rishi Sunak announced the creation of a freeport – a low tax enterprise zone – on the site, but gave five years for it to be up-and-running. This put immense time pressure on such a huge clean-up project.

Mr Houchen was re-elected as mayor in May 2021 with 73 per cent of the vote, and that December there were major Conservative victories in seats from Redcar to Darlington and beyond.

The demolition of the blast furnace in November 2022 changed the Teesside skyline and was a very visible sign of rapid progress, but questions were already being raised, especially about how Messrs Musgrave and Corney (M&C) had come to own 90 per cent of Teesworks, and had taken out a dividend of £45m, when the taxpayer was the only investor in the site.

In April, Middlesbrough MP Andy McDonald alleged in the House of Commons that there had been “industrial scale corruption” and he has been increasingly backed by his fellow Labour MPs, but the Conservatives from Prime Minister Sunak down have been very public in their support of Mr Houchen as the man who is making big change happen.

Mr Houchen maintains that Teesworks has saved the taxpayer £1-a-second since 2015.

With all sides demanding an inquiry to prove that they are right, and with potential investors asking questions as well, the Government has now stepped in. If the inquiry is to get to the truth of Teesworks, these are some of the questions it needs to find answers to:

Ben Houchen with Chris Musgrave

• The central allegation is that Musgrave & Corney (M&C) have made £45m from Teesworks in three years without investing any of their own money. By contrast, the taxpayer has put in £260m plus a £107m loan. However, Teesworks says it has acquired a site which requires £483m of remediation work and so is a huge liability. Can the inquiry explain how much have M&C invested in the site, how much will they be required to invest in the site, and what is Teesworks’ business case for raising the £200m+ that is required to complete the remediation?
• M&C’s entry point into the development was through their acquisition of part of the bulk terminal site in 2019. Can the inquiry explain how these two private investors came to acquire this key site when the combined authority was pressing for a Compulsory Purchase Order to buy the entire site?
• M&C’s involvement has never been tested on the open market: should there have been a public tendering process to find investors or to find firms to provide security for the site?
• There is said to be 500,000 tonnes of scrap metal on the site. Sales of it so far have raised £90m, with £45m going to M&C. Does this represent good value for the taxpayer, which only three years ago owned all of the scrap? What is happening to the rest of the scrap on the site, estimated at up to £120m?
• In August 2019, M&C’s stake in Teesworks was increased from 50pc to 90pc, apparently to speed up work so the site could take advantage of time-limited taxbreaks to create a freeport. Why, given the huge amount of publicity surrounding Teesworks, did their increased ownership not become public knowledge until December 2019 when there was a filing at Companies House?
• Is the inquiry satisfied that this increase in ownership was fully discussed at development corporation board meetings, and were the combined authority members given the right opportunities to scrutinise the deal? Given that development corporations are now being set up in Middlesbrough and Hartlepool, and one was promised for Darlington had the Conservatives won the local elections, are there lessons about local transparency that need to be learned?
• How much did Teesworks pay to buy publicly owned land from the development corporation? The filings says it bought 90 acres at £1-an-acre, but the mayor says that when SeAH took on those 90 acres- to build a £450m wind turbine factory, a £15m payment to the combined authority was triggered. Can the inquiry explain this and is £15m a fair outcome for the taxpayer?
• An extremely complicated package means that SeAH has agreed to lease those 90 acres for £4.3m over 40 years, but an Australian developer, Macquarie, is to pay Teesworks £75m upfront so it can collect that money over the next 40 years. Mr Houchen says that the combined authority will get £650,000-a-year from the deal plus £7m-a-year in business rates, but critics say M&C are entitled to 90pc of that £75m. Can the inquiry discover if this represents good value for the taxpayer?
• Given the way the questions over the integrity of Teesworks have developed, what does the inquiry make of M&C’s involvements in other key TVCA developments, such as Teesside Airport and the Skerningham garden village in Darlington, and their closeness to a party donor?