The controversial regeneration of Teesside Steelworks

The development has descended into polarised political controversy with allegations of cronyism and backroom deals

Ben Houchen
Ben Houchen, the Conservative mayor of Tees Valley, has overseen the regeneration project in his capacity as chair of the South Tees Development Corporation
(Image credit: Illustrated/Getty Images)

Teesside is at the centre of a growing political row between Labour and Conservatives over the regeneration of a former steelworks site.

The Teesworks project is the renovation of the largest brownfield site in Europe – 4,500 acres near Middlesbrough in northeast England. It has been seen as a major part of the Conservative government’s levelling up agenda, but has been marred in recent months by allegations of “cronyism and backroom deals”, Sky News reported.

What is the regeneration process?

The Teesworks project has been touted by the government as an ambitious plan to transform a former industrial site into a net zero manufacturing hub as part of the government’s pledge to create up to ten freeports around the UK.

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After the old steelworks closed in 2015 – leaving “a toxic wasteland” that is “the size of Gibraltar”, said The Telegraph – £250 million in government grants was made available to rejuvenate the site. “Thereafter the private sector would step in,” said the paper.

Work has begun on a new factory on the site in which South Korean firm SeAH will manufacture offshore wind turbine monopiles. The £450 million project is expected to create 750 jobs at the site. But, said The Telegraph, “the problem was and remains that until a colossal cleanup is completed, the entire development is effectively worthless”. That “cleanup” will cost an estimated £500 million, according to a report seen by The Telegraph.

What are the allegations?

Ben Houchen, the Conservative mayor of Tees Valley, has overseen the regeneration project in his capacity as chair of the South Tees Development Corporation. But Houchen, 36, a rising star of the Tory party, has come in for criticism over the way the public-private partnership he promised has panned out.

“The mayor’s political opponents have accused him of cronyism,” said the Financial Times, “after a 90 per cent stake in the company operating the vacant steel site was transferred to two local developers… without any public tender process”.

Companies owned by the two developers, Chris Musgrave and Martin Corney, “have earned at least £45mn in dividends from the project in the past three years”, said the FT. But “there is no evidence they have invested in it to date”.

According to The Yorkshire Post, Musgrave and Corney not only profit from lease agreements, they “also get half the money made from scrap metal sale – more than £93m so far”.

What has the Labour Party said?

Shadow Levelling Up Secretary Lisa Nandy has called for an official inquiry by the National Audit Office (NAO) to answer “important questions about the transfer of a vital public asset into private ownership”, said Sky News.

And fellow Labour MP Meg Hillier, who chairs the Public Accounts Committee, urged Levelling Up Secretary Michael Gove to order an investigation, telling the FT “that the existing financial oversight system for England’s directly elected mayors was not ‘robust’”.

However, the matter reached a head when Labour MP for Middlesbrough Andy McDonald used parliamentary privilege in the House of Commons to allege “truly shocking, industrial-scale corruption” within the regeneration project.

A Teesworks spokesperson told Teesside Live that McDonald should contact the police if he believed offences had been committed.

What has the Conservative Party said?

Houchen strongly refuted the allegations of “sweetheart deals” and hit hit back at McDonald’s comments in Parliament, “daring the Labour MP to repeat his claims in public and face being sued for defamation”, reported the Express.

Speaking to BBC Newsnight, Houchen argued the Labour Party has manufactured the row, maintaining it is “embarrassed” at the progress being made under the Tories in what is traditionally a Labour stronghold.

But while the mayor dismissed the criticism, he has now backed calls for a review, said LGC Plus, writing to the NAO to request a “full investigation” into the project. He describes this as an attempt to provide a “swift, decisive conclusion” in the interest of transparency.

His statements have been backed by Musgrave, one of the project’s developers, who said such a review would establish the truth of the matter “once and for all”.

Previously, the NAO has reviewed the business case for the taxpayer-funded project, but has been unable to commence a detailed audit without the process being approved by Gove, the secretary of state. This is because the project is being run by the Tees Valley Combined Authority, rather than central government.

The government has said it has seen “no evidence of corruption, wrongdoing or illegality” and is “carefully considering” requests for an NAO review.

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