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Home » Teesworks Finds No Illegality Or Corruption But Criticises Scheme For Value For Money

Teesworks Finds No Illegality Or Corruption But Criticises Scheme For Value For Money

An independent inquiry into the North East’s largest regeneration scheme has found no corruption or illegality but has criticised governance and transparency at the project.

The Teesworks scheme, which has been led by Tees Valley’s Conservative mayor Ben Houchen, has been subject to an inquiry led by three senior local authority officers, which was ordered by Levelling Up Secretary Michael Gove last year. The report has found no evidence of any allegations of illegality or corruption and has supported the mayor’s denials that land was sold to developers for as little as £1 an acre. It also backs his claims that the scheme has already brought in economic benefits.

But the inquiry panel has found that the handling of the project by the Tees Valley Combined Authority and the South Tees Development had not always been robust enough to provide evidence of value for money and made a series of 28 recommendations for Mr Houchen and the Government to improve handling of the scheme.

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The panel said they were “surprised” that a report ahead of the 50-50 venture’s establishment in 2020 contained “so little detailed explanation and implies that there aren’t any material implications directly arising from this change in approach”, even though the result of the venture was “that two or three privately owned companies would likely receive significant financial returns”. It added that a high level of confidentiality around the subsequent transfer of the ownership to a 90-10 division of shares in favour of the private sector partners in late 2021 “may be seen as an omission which has exacerbated the extent of public scepticism about the value for money of the project”.

The panel said: “We have found no evidence to support allegations of corruption or illegality. However, there are issues of governance and transparency that need to be addressed and a number of decisions taken by the bodies and management evidence received involved do not meet the standards expected when managing public funds. The panel have therefore concluded that the systems of governance and finance in place within TVCA and STDC at present do not include the expected sufficiency of transparency and oversight across the system to evidence value for money.

“It is important that local leaders work together to secure the much needed regeneration of the site. Securing permanent local jobs, economic growth and opportunity, as well as increased tax income for the local area that can be reinvested in local services and continued growth is a priority and shared endeavour. To this end we have made a number of recommendations for the Secretary of State, TVCA and STDC to consider.”

Government Minister Lee Rowley said that Teesworks was the UK’s largest remediation zone, and should not be used as a political football. He said there was “no corruption, no illegality”.

But Shadow Minister Justin Madders said the report was “damning” and that the Government could not show that the scheme offered value for money to the taxpayer. He asked for the development to be sent to the National Audit Office for further investigation.

The Teesworks and freeport project aims to redevelop Redcar’s former steelworks. It was set up as a joint venture between Mr Houchen’s public body – the South Tees Development Corporation – and companies run by two local developers, but was then transferred to majority private ownership in late 2021.

Accounts published earlier this month for Teesworks Limited showed that its turnover last year more than doubled, going from £53.9m a year earlier to £142.9m. Over the same period, operating profit more than tripled, going from £18.9m to £66.9m.

After the publication of the panel report, Mr Houchen said: “The people of Teesside, Darlington and Hartlepool can welcome this investigation, which sets out in black and white that there is no corruption or illegality at Teesworks. The investigation was thorough, wide-ranging, and detailed. It assessed more than 1,400 documents, tens of thousands of pages of material and conducted 45 interviews and I’d like to thank the panel for their hard work and diligence.

“I welcome the recommendations of the panel and my team and I are already working to review the recommendations to improve our processes and procedures in line with the report’s findings.”

Tees Valley Combined Authority chief executive Julie Gilhespie said: “The panel has shared valuable feedback from which we can learn lessons.”

Teesworks Limited said: “The publication of the Teesworks review will now send a clear signal to the business sector. We can now focus all of our attention on bringing the much-needed jobs and investment to the site for the benefit of the people of Teesside. It is now full steam ahead, with no obstacles in our way to create this once in a lifetime opportunity – Teesworks.”

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