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Gove orders inquiry into Teesside revelations

25 May 23 The government has launched an investigation into “industrial-scale corruption” on Teesside.

Ben Houchen, mayor of Teesside and chair of South Tees Development Corporation
Ben Houchen, mayor of Teesside and chair of South Tees Development Corporation

Teesside mayor Ben Houchen stands accused of selling the country’s biggest brownfield development site to private developers for a song.

Private Eye magazine has exposed the financial details of the transactions between South Tees Development Corporation (STDC), chaired by Ben Houchen, and local businessmen Chris Musgrave and Martin Corney.

It was not until Middlesbrough MP Andy McDonald last month took advantage of Parliamentary privilege to repeat the allegations that the wider press started to get interested.

Andy McDonald said in the House of Commons on 20th April: “Yesterday Private Eye revealed truly shocking, industrial-scale corruption on Teesside. A huge site acquired by the public body South Tees Developments Limited for £12m in 2019 subsequently received hundreds of millions of pounds of taxpayer investment. Any future sale had to be on market terms, but we now know that private developers exercised their option to purchase for a mere £1 an acre plus inflation, paying £96.79 in December 2022. I have the transfer. The only economic growth that is being delivered is being delivered to the accounts of Ben Houchen’s pals Messrs Musgrave and Corney, who, for a bargain £100, will benefit to the tune of £100m – and all the while the state remains on the hook for the ongoing environmental costs.”

The Financial Times got interested and reported last week that “companies controlled by Corney and Musgrave have earned at least £45m in dividends from the project in the past three years” despite there being “no evidence they have invested in it to date”. 

That clearly rattled Ben Houchen, prompting him to call for an official investigation so that he could clear his name

Ben Houchen told The Daily Telegraph this week that he may be guilty of naivety but denied corruption or criminality.

At Houchen’s request, Michael Gove, secretary of state for levelling up, housing & communities, has now ordered an independent review into what has been going on with the site of the old Teesside steelworks.

He said that the review was not because he suspected anything dodgy had been going on but because he wanted to help Houchen lay the matter to rest and quell anything that might deter future investors.

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Houchen actually asked the National Audit Office (NAO) to investigate but Gove said that it was not the NAO’s role to audit or examine local government bodies. There used to be the Audit Commission for that job, but it was shut down in 2015. The NAO just does central governemnt bodies.

In a letter to Ben Houchen, made public by the government, Gove writes: “Given the importance to you and to Teesside of addressing this matter, I have taken the exceptional decision to support the commissioning of an independent review to consider the specific allegations made and Tees Valley Combined Authority’s oversight of the STDC and Teesworks joint venture.”

He adds: “Since serious allegations of corruption, wrongdoing and illegality have been made, I will ask the panel to address these accusations directly, and to report on the governance arrangements at STDC including how decisions are made, as well as looking at the value achieved for the investment of public money on the site. I will publish detailed terms of reference shortly. I will invite any interested party, including Members of Parliament, to make representations to the panel as part of their evidence gathering. The report and any recommendations will of course be published in line with usual practice.”

Ben Houchen said last week in calling for an inquiry: “For too long people have been making allegations against STDC and its joint venture partners. This site was valued independently for minus £482m, the former MP for Redcar and trade unions at the time said the clear up would cost the taxpayer £1bn. Fast forward a few years and we’re seeing construction of a new quay, the world’s largest monopile facility and thousands of jobs being created. It’s a stark contrast to where we were even a few years ago.

“Ever since the claims were made in Parliament, we’ve been constantly reassuring our investors, as well as those bringing the claims and the local people of Teesside that we are doing everything that is appropriate and expected of a public body. I want this nipped in the bud once and for all.

“Without a swift, decisive conclusion to this situation, Teesside will miss out on thousands of jobs and billions of pounds of foreign direct investment. These are the jobs of the future, sustaining future generations, which are sorely needed by people of an area desperately in need of investment after decades of neglect by governments of both colours.

“Teesworks is a project of national importance and it’s right that it gets national scrutiny but there is a difference between sensible debate and spurious allegations.”

Chris Musgrave said: “We welcome the mayor’s support for a full investigation into Teesworks. We are delivering something special that will deliver jobs and international investment to an area that so desperately needs it following the closure of the steelworks in 2015. I have repeatedly said that we have absolutely nothing to hide and look forward to this investigation clearing this up once and for all so that we can deliver what we promised to do.”

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