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A government review into the controversial Teesworks regeneration project, the UK’s largest freeport, has found no evidence of corruption but said there were not sufficient guardrails in place to ensure value for money for taxpayers.
The redevelopment of the former Redcar steelworks is a flagship project of Conservative mayor Lord Ben Houchen and has come under scrutiny after ownership of much of the project was transferred to two local developers.
An independent government-appointed panel on Monday concluded there were insufficient governance arrangements or transparency in place to show that taxpayers who have funded the redevelopment were getting value for money.
But the review, ordered by levelling up secretary Michael Gove, found no evidence of corruption or illegality in the redevelopment.
“There are issues of governance and transparency that need to be addressed and a number of decisions taken by the bodies involved do not meet the standards expected when managing public funds,” the 96-page report said.
Teesworks has become increasingly controversial over the past 18 months as concerns have been raised about the role of two local developers, Chris Musgrave and Martin Corney.
In 2021, the South Tees Development Corporation, the public authority chaired by Houchen, gave the developers 90 per cent ownership of the Teesworks development vehicle for no cash consideration.
The Teesworks Ltd vehicle’s most recent accounts show that its profits tripled to £53mn in the following financial year.
The report found that, to date, the project has cost the taxpayer more than £560mn but that there had been “no private finance invested”. The private developer partners had also received £45mn in direct dividends, it found.
Last year Middlesbrough MP Andy McDonald claimed there had been “industrial-scale corruption” at Teesworks. The panel found “no evidence” to support such claims.
However, it concluded there was “no independent scrutiny” of the project and said there had been a “lack of challenge” by the board of the STDC, which includes government minister Jacob Young, Tory MP for Redcar.
The review, chaired by Lancashire County Council chief executive Angie Ridgwell, also found that conflicts of interest among officials at the public bodies with the task of overseeing Teesworks were not routinely recorded.
All but one transaction studied by the panel had been decided without “detailed commercial financial advice”, the report said.
The review added that the Tees Valley Combined Authority, the body of five local authorities which are partly funding the project, seemed unaware of the extent of the liabilities it faces.
Both STDC and TVCA, also chaired by Houchen, “do not include the expected sufficiency of transparency and oversight across the system to evidence value for money”, it added.
Gove has written to Houchen requesting details of how he intends to address the findings of the review by March 8.
In a statement, Houchen welcomed the report, calling it “thorough, wide-ranging, and detailed”.
His team was working to review its recommendations and “improve our processes and procedures in line with the report’s findings”, he said, adding that McDonald had attempted to “sabotage the opportunities we’ve worked to hard to deliver”.
The National Audit Office, which assesses the value for money of public projects at a national level but was not called in to review the project last year, said: “We will examine the detail of the government’s review to understand whether there are implications for central government and therefore the NAO’s future work programme.”
Teesworks Ltd said it was “pleased but not surprised” no evidence of corruption or criminality had been found.
The review’s findings would “send a clear signal to the business sector”, they said, adding that it was now “full steam ahead” for the project, it added.
