Teesworks inquiry has found 'No evidence of corruption'
The long awaited inquiry into corruption over the controversial Teesworks development has found no evidence of corruption or illegality
Last updated 29th Jan 2024
The long awaited inquiry into corruption over the controversial Teesworks development has found no evidence to support claims of corruption or illegality at the Teesworks development, but criticises its governance and transparency.
The development scheme, driven by Tees Valley's Conservative mayor Ben Houchen, has been subject to an inquiry led by three senior local authority officers, ordered by Levelling Up Secretary Michael Gove last year.
The 97-page report by an independent panel, published on Monday, stated: "Based on the information shared with the panel, 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 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 (the Tees Valley Combined Authority) and STDC (the South Tees Development Corporation) at present do not include the expected sufficiency of transparency and oversight across the system to evidence value for money."
It is also supported the mayor's denials that land was sold to developers for as little as £1 an acre, and back his claims that the scheme has already brought in economic benefits.
Mr Houchen, who chairs the South Tees Development Corporation which oversaw the Teesworks site and who originally requested the inquiry, has always denied allegations of corruption.
Concerns about the Teesworks project were previously raised by Middlesbrough's Labour MP Andy McDonald in the Commons, who alleged "truly shocking, industrial-scale corruption" related to funding in Teesside.
He said the site acquired by the public body South Tees Development Corporation for £12 million in 2019 subsequently received hundreds of millions of pounds of taxpayer investment, but "private developers exercised their option to purchase for a mere £1 an acre plus inflation, paying £96.79 in December 2022".
The panel investigating claims of illegality linked to Teesworks said they had faced "challenges" in accessing information and that the level of transparency had not always met the standard appropriate for a publicly funded project of this scale.
Their report said: "Consistently throughout the review, the panel received concerns about openness and transparency.
"This extended to eternal stakeholders and FOI (freedom of information) requests.
"The panel themselves experienced some of the challenges in terms of securing the necessary information in an accessible way that contextualised the story of Teesworks, much of which is a positive story."
The inquiry also noted that "the limited access to information is a key factor in driving the concerns about the decision-making process".
The panel concluded that the level and nature of the transparency and accountability associated with the Teesworks project "hasn't always met the standard which they would consider appropriate for a publicly funded project of this scale and nature".
There were areas of "weak governance" when significant decisions about the Teesworks project were made, the inquiry found.
The report said the complexity of the project and the joint venture between the public and private sectors "brings the inevitable cultural tensions between the desire to move at pace unencumbered by bureaucracy as opposed to the expectations of accountability and transparency due to the fact that it is the recipient of considerable amounts of public funding".
The panel criticised the absence of a detailed joint venture agreement and "of any referral decisions or evidence of any consents being sought".
They said there was a "paucity of detail" in some reports to the Tees Valley Combined Authority and South Tees Development Corporation board, as well as an "absence of the source of legal and other professional advice and the absence of full and clear explanations of the consequences arising from decisions".
"Some of the more significant decisions were taken at short notice leaving little time for decision-makers to fully digest matters.
"Although it isn't possible to conclude that any decisions would have been decided differently, it is appropriate to recognise the risk and highlight these areas of weak governance for future improvement."
The reviewers concluded that "the level and nature of the transparency and accountability associated with this project hasn't always met the standard which they would consider appropriate for a publicly funded project of this scale and nature".
The Tees Valley mayor Ben Houchen responded to the inquiry's report, saying: "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.
"It explicitly recognises that the Teesworks Joint Venture was 'critical' in reaching an agreement with the Thai banks and resolving the CPO, and that without them the progress we have seen would not have been possible.
"Without this partnership, the former steelworks would still be sat idle, costing the taxpayer £20m a year to stand still, with no investment and not a single job in sight."
Tory peer Lord Houchen added: "It also dispels the myth that we sold the land for just £1, with the panel confirming the deal was actually worth £39m to the taxpayer.
"Let's be absolutely clear, Andy McDonald MP lied in Parliament in an attempt to sabotage the opportunities we've worked to hard to deliver, which has caused significant damage to investment, me personally, my organisation, and most importantly Teesside, and the opportunities of hard-working local people.
"However, we are now in a position where a huge demolition programme has been completed, construction is under way on major projects and we are building a new future in industries such as steel, green energy and carbon capture.
"I will continue to focus all of my efforts on delivering investment, creating jobs for local people and creating opportunities for our community - and I'll continue to build on the 9,000 jobs that we've already created to keep moving forward with transforming our region for generations to come."
During a visit to Darlington earlier on Monday, the Prime Minister defended the "rigorous process" of the inquiry.
Tory former minister Sir Simon Clarke also predicted the report will clear the flagship regeneration project of any impropriety.
"I am 100% confident that the substantive allegation of corruption will be proved to be false," the Middlesbrough South and East Cleveland MP told the BBC last week.
"Actually I'm willing to say more broadly than that, the report will clear Teesworks and Ben Houchen of any impropriety."
The Teesworks and freeport project aims to redevelop Redcar's former steelworks in the north east of England for green industry.
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.
Profits tripled to £54 million in the year to March 2023 after the private sector companies increased their stake to 90%, the Financial Times reported earlier this month.
In a statement we were sent on Saturday from Middlesbrough MP Andy McDonald, he said;
“This is interesting. Firstly, Simon Clarke is suggesting he has the inside track on the imminent release of the withheld Independent Assurance Review into Teesworks.
"Surprising that he should be told, given he’s hardly flavour of the month with his former Cabinet colleagues. Perhaps we can expect a statement from a Minister in Parliament in the coming week?
"Secondly, Clarke was Secretary of State for DLUHC for six weeks and that was six months before I raised the issue in the Commons.
"Thirdly, despite the comment of the BBC presenter, Houchen did not ask for this report. He went into denial and resistance when these matters surfaced.
"He eventually followed then Shadow DLUHC Secretary Lisa Nandy, in her call for a NAO Inquiry and at no time did he call for this Independent Assurance Review. It was Michael Gove who commissioned it."