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The Teesworks Scandal Exposes Britain’s Crony Economy

The Teesport Freeport promised to reinvigorate a region ravaged by Thatcherism — instead, it is little more than a taxpayer-funded cash cow for private developers associated with Tory politicians.

The launch of the Teesside Freeport. (Photo by Ian Forsyth/Getty Images)

For those of us working to expose the scandals surrounding the regeneration of the former steelworks site on the River Tees’ south bank, known as Teesworks, the last month has been eventful. Touted as the UK’s ‘largest freeport’ and ‘most agile and innovative industrial zone’, in reality — thanks to the oversight of Tory Tees Valley Mayor, Ben Houchen — the project has proven little more than a cash cow for private developers closely associated with Conservative politicians in the region. 

A set of recently published reports, accounts, and High Court judgments have confirmed where things stand. A handful of businessmen have been given the green light to extract upwards of £124 million, while the taxpayer has covered the costs, taken on the risk, and paid the price — around half a billion pounds, so far.

These revelations about the mismanagement of public money are not just a damning indictment of the dealings of the mayor, who was given a peerage in Boris Johnson’s shameless resignation honours list for his role in the Teesworks project. That Lord Houchen of High Leven even had the chance to act in such a calamitous manner, without proper scrutiny, and was cheered along the way by fellow Conservative politicians, is indicative of much wider, systemic failures.

It will be incumbent on the next Labour administration — hopefully soon to come in both Westminster and the Tees Valley Mayor’s office — to right the wrongs of those now at the helm. As the great Michael Marmot once said in a meeting of Labour’s Shadow Cabinet at which I was present, it’s up to politicians to ‘tell the truth about what’s gone wrong, and be bold about how to fix it.’ With respect to the Teesworks scandal, that must begin by getting the facts straight about exactly what unfolded on Ben Houchen’s watch.

Concerns about Teesworks — including over how shares in the company responsible for the regeneration were shifted at no expense from a 50:50 private-public split to 90:10 in favour of private developers, and how private developers were granted the rights to income off the scrap — first surfaced over two years ago in the pages of Private Eye. In response, I stood up in the House of Commons chamber and demanded an independent investigation into Ben Houchen’s governance. Sadly, despite my interventions in Parliament and months of detailed reporting by Private Eye and others in the press, the government ignored our pleas.

More than a year later, after I spoke in the Commons to raise reports of publicly-owned land on the Teesworks site being sold off for £1 an acre, the story picked up steam. Labour’s frontbench got behind my demands, and then-Shadow Levelling Up Secretary Lisa Nandy wrote to the National Audit Office (NAO) to ask that an inquiry be launched. The next day, she was followed in the same request by Ben Houchen himself. In turn, the Chairs of the Commons Business and Trade Committee and Public Accounts Committee added their voices to the call.

Yet, in response to my questions, then-Levelling Up Minister Dehenna Davison wrote to me explaining the government had ‘seen no evidence of corruption, wrongdoing, or illegality.’ She failed to mention in her letter that she had received a donation of £2,500 from a shareholder in the project.

It was only after Rishi Sunak blurted out at PMQs, seemingly by mistake, that the Levelling Up Secretary had ‘already announced an investigation’ that the government was forced to do just that. However, rather than initiate an independent NAO inquiry with full investigatory powers, including assessment of the Teesworks project’s value for money, we got an Independent Assurance Review. Michael Gove appointed the Chief Executive of Lancashire County Council, Angie Ridgwell, to lead a panel investigating within the tight parameters set by Gove himself. 

Having then been told the panel would report at the end of summer 2023, we had to wait until 29 January 2024 for the government’s publication of the Tees Valley Review Report. That publication came two months after it was first received by officials, and a week after ministers (and, as it would seem, other Tory MPs) had sight of it.

In short, it has been one hell of a task getting even a modicum of accountability over the Teesworks scandal. In the meantime, on 4 January 2024, the full accounts for the joint venture Teesworks Ltd were made public, showing that the company’s net profits rose to £54 million in an ‘exceptional’ 2022/2023 financial year, with millions extracted in dividend payments by the private partners. The accounts also confirmed reports, denied by Ben Houchen, that the developers had made £68 million from a plot of land the company had bought from the public sector for £1 an acre.

These revelations were only compounded by the contents of the Tees Valley Review Report. It is the most damning report about the conduct of a public body I have read in all my 45 years of involvement in politics and public service. 

Across 96 pages, the panel sets out a long string of criticisms about the project’s failings in terms of governance, finance, and transparency. It makes 28 recommendations, to which Ben Houchen and his team have until 8 March to respond. The final sentence of the report reads: ‘The governance and financial management arrangements are not of themselves sufficiently robust or transparent to evidence value for money.’ It is clear that this matter must now be passed on to the NAO for investigation in full. 

Any such NAO inquiry would be wise to take into consideration the High Court judgement that was handed down on 5 February, which ruled against the South Tees Development Corporation after it had suedPD Ports, one of the largest investors in the region, in a dispute over right of access. It appears that this lawsuit is set to cost the taxpayer many, many millions, having achieved absolutely nothing in the process.

Instead of holding Ben Houchen accountable throughout this process, Conservative politicians have kept cheering him on. Just the other day, rather than accept the clear case for an NAO inquiry into his conduct, Penny Mordaunt, the Leader of the House of Commons, was lauding his achievements. We can only assume that they know any scrutiny of the value for money of Teesworks will confirm that the project, much like the PPE debacle, has effectively functioned as a scheme for the industrial transfer of public resources into private hands. 

Teesworks, with its flogging-off of public assets to a group of small-time oligarchs, represents the culmination of decades of neoliberal economics in our de-industrialised heartlands. It epitomises broken post-Brexit Tory Britain in the dying days of this government. Generations to come will lament the missed opportunity to create a sovereign wealth fund for the benefit of the people of Teesside out of the ashes of our once proud steel-making industry. 

When, as I hope and pray, Ben Houchen and the Tory government in Westminster are all voted out of office later this year, it is this that will be their legacy on Teesside and beyond.