Teesworks: Accountability and Scrutiny

Alex Cunningham Excerpts

Wednesday 7th June 2023 Commons Chamber

[Mr Simon Clarke (Middlesbrough South and East Cleveland) (Con)]

I am proud to speak today in support of Teesworks and our Tees Valley Mayor, Ben Houchen, as well as the process that the Government have put in place, of which more in a moment.

Teesside is being transformed, from our airport, saved after Labour let it drift to the brink of closure, to our town centres of Middlesbrough, Guisborough and Loftus benefiting from tens of millions of pounds of direct investment. We have the new mayoral development corporation to turbocharge the regeneration of Hartlepool. We have the Treasury’s northern campus in Darlington and we have the UK’s largest freeport on the Tees. Overshadowing, and indeed uniting, all of this is Teesworks, the largest brown-field remediation project in the country, and the beating heart of our industrial future. The site of the former Redcar steelworks was costing the taxpayer £1 a second as long as it stood idle. It is right that the Government and our Mayor have brought it back to life. Government investment of £246 million has been put in, but as we know, the cost of total remediation is some £482. 6 million, as independently assessed. That is the reason for the joint venture established with the private sector.

It is important to clarify exactly what has happened. The first point is that the site has never been a public asset. The private sector Teeswork partners brokered a deal to take back control of the land from the Thai banks. It brought the deal and the land to the South Tees Development Corporation, not the other way round. That is why the Opposition’s talk of no public tendering process having taken place is such a red herring.

The public-private partnership was agreed, moreover, by the TVCA cabinet, the STDC board, the Department for Business and the Treasury. Bob Cook, the Labour leader of Stockton council, voted in favour. The hon. Member for Middlesbrough (Andy McDonald) stated on the BBC’s “Sunday Politics” that he understood the reasons for a 50:50 split. A lot of revisionism is going on now.

[Alex Cunningham]

I have spoken to the leader of Stockton borough council and he has had no part in any decision relating to the transfer of those assets from the public to the private sector. He is a member of the combined authority, not a member of the STDC board. It is important that the right hon. Member recognises that.

[Mr Clarke]

The hon. Gentleman is completely wrong. Mr Cook voted for this structure and he cannot change that vote.

There is no credible suggestion that wrongdoing has occurred. Teesworks is double audited, first by Mazars and then by Azets, two separate auditors. There is then an audit committee for Teesworks. Here we come to the truly jaw-dropping fact that that audit committee is chaired by none other than Councillor Matthew Storey, the leader of Middlesbrough Council’s Labour group and the head of the parliamentary office of the hon. Member for Middlesbrough. He chairs that audit committee —what concerns has he raised? He is part of the audit structure that is now being cast into doubt.

It is noteworthy that in the speech by the shadow Secretary of State we heard nothing that amounted to a substantive allegation. We heard a series of inferences and questions that amount to nothing more than the same tittle-tattle that has characterised this process, with the exception of the allegation of industrial-scale corruption that has been made but never substantiated, because the hon. Member for Middlesbrough knows that he would be sued for libel if he repeated it.

--- Later in debate ---

[Alex Cunningham (Stockton North) (Lab)]

Secrecy is a disease that is threatening a once-in-a-lifetime opportunity for the people of Teesside—an opportunity of thousands of high-quality jobs and a share of the dividend from hundreds of millions of pounds of taxpayers’ money. It is secrecy that drives the suspicions, questions and doubts about how the Tory Tees Valley Mayor, Ministers and their cronies do business not just at the Teesworks site, but at our publicly owned Teesside International airport, which continues to lose millions of pounds and has twice been bailed out to the tune of £10 million using taxpayers’ money.

Tomorrow will be the 13th anniversary of my maiden speech in this House. I was happy that day to tell the world how proud I was to be an adopted Teessider, and that remains very much the case today. We have a wealth of resources, from our people to our amazing cultural offer. We have our beautiful countryside, our coast and our amazing industrial base, which has created so much of our country’s wealth, but we deserve so much more.

My hon. Friend the Member for Middlesbrough (Andy McDonald) and I have been consistent in demanding openness and comprehensive scrutiny of decisions and the use of hundreds of millions of pounds of taxpayers’ money by the Tees Mayor and his close-knit band of supporters and partners. The fact that several national newspapers, led by Private Eye magazine, have made front-page news of how business is done on the mayoral projects on Teesside warrants a completely independent investigation not by a group appointed and favoured by the Secretary of State, but by the National Audit Office, which has confirmed that it could do one if given the green light by Ministers. The Tees Mayor is up for it; why are the Government not?

Similarly, I hope to see Ministers withdraw their opposition to the inquiry proposed by the Select Committee on Business and Trade, which would have the power to scrutinise in a way so far denied by all those concerned. It could also summon people here to give evidence. I have had all manner of concerns over the years as the Mayor has been aided and abetted by Ministers as senior as the Prime Minister himself, hiding not just the decisions made about the airport and the Teesworks site, but how those decisions were reached, who was involved and who was excluded.

I do not know whether you have heard of the Darwin’s bark spider, Mr Deputy Speaker. It weaves the largest and most dense webs in the world. They can be as large as 28,000 sq cm, but that spider has nothing on the Tees Mayor when it comes to creating dense webs of secrecy, with organisations, companies and even charities created in an attempt to dodge full and proper scrutiny of how he and his mates do business and spend public money on what is referred to as the UK’s biggest levelling-up project.

As has been alluded to, things came to a head last year when a record posted with Companies House showed that the once public asset that is the Teesworks site is now 90% owned by a small group of local businessmen, the shares having been transferred to them by the Tees Mayor and the board of the South Tees Development Corporation, but we still do not know why such a decision was taken and who exactly was party to it. For certain, it was not taken by the Tees Valley Combined Authority, made up of the elected Mayor and the elected leaders of the five local authorities. They were not even consulted, as far as I know.

The Mayor thinks he had to do business with two men in particular, Chris Musgrave and Martin Corney, because they owned what can only be described as a ransom strip of land on the Teesworks site and they would take on the liability of the hundreds of millions still needed to remediate the site. I have an issue with both his reasons, or perhaps “excuses” is a better word. The Tees Mayor took on the might of the Thai banks, which owned most of the site after SSI walked out on Teesside and ended over 100 years of steel production. He decided he would go as far as a compulsory purchase order, and to his credit, he acquired the site for the public. Why, then, did he not take similar action against the two local businessmen who were holding the public to ransom? He will not answer that question, but perhaps the Minister can help.

The Minister may also be able to help over the costs of the remediation of the site. The Government get no accolades for allowing the steel industry to die on Teesside, but I do give them credit for agreeing to fund the remediation of the site so it could be fully developed. During his short-lived tenure as the Government investment tsar for the Tees Valley, Lord Michael Heseltine—I am quoting him directly—said:

“The money to clean up the site will be what it costs. No-one knows what the condition of the site is and although there have been estimates, they are estimates based on guess work. So it is much better to make it clear”—

and I agree that it is much better to make it clear that—

“central government will pay the clean-up costs and underwrite them whatever the bill comes to.”

Successive promises were made by Government Minsters that the Treasury would fund that work, so there was never any need to find private capital.

We have heard the Tees Mayor claim that he may have been naive in some of his dealings, but never did anything illegal. That may well be the case, but that naivety has cost our communities on Teesside the chance to share the dividends from the site and the public money invested in it. Sadly, however, we go back to the word “secrecy”. Were other companies and organisations considered for partnering with the Teesworks site? Were other offers made for the land? I have heard of one, and that was increased. What were the criteria and business case for selecting partners? It is all very much a secret, and none of the decision-making bodies is subject to the Freedom of Information Act.

I do not want to repeat all the accusations laid at the doors of the Mayor and his friends by the FT, The Times, the Daily Mirror and The Guardian, but I do hope we can get a fully independent investigation by the NAO into the wholesale transfer of assets, including the tens of millions of pounds of on-site scrap, to the private sector. That includes the Private Eye claim—a claim yet to be denied by the Mayor or anyone else—that Orion Kotrri, Mr Musgrave’s son-in-law, has been running the scrap operation. The South Tees Development Corporation has refused to say why he was selected for the role, who employs him or how he is paid. It is no secret that the business is being kept in the family.

The media and others are right that there are critical questions over how a bunch of local businessmen could already have extracted around £50 million in cash and assets from Britain’s biggest levelling-up project before a single business has begun operating on the site, and apparently without investing themselves. Perhaps all those concerned with the scrap should meet the challenge from The Northern Echo, which has said:

“There must be a ledger showing how much scrap has been sold which can put the facts in the open and enable people to judge whether there is any truth in the rumour”—

that is, the rumour of poor management.

[Mr Simon Clarke]

Will the hon. Gentleman give way?

[Alex Cunningham]

I will not.

Is the Minister aware of any such ledger of what are public assets, of where they have gone, and of what cost and value? Private Eye has established that decisions have been pushed through a board of the South Tees Development Corporation dominated by Houchen placemen and women in unrecorded discussions. Surely Ministers will recognise that they have some cleaning up to do. All we are seeking is for the truth to come to light. If the claims are not true, why is the Mayor not coming forward to publish all the relevant documents? Why is he not challenging, through the courts if necessary, all these media claims that he simply dismisses?

I would love to see the promises made by the Tees Mayor come to fruition. I want our communities to benefit from the jobs, but from much more than that too. Just as London boroughs benefit from the massive council tax base, those on Teesside could benefit from the dividends from Teesworks, and goodness knows we need it. Our community in the Tees Valley faces soaring levels of hardship compared with the national average. Research released on Monday by the End Child Poverty coalition showed that, in Stockton-on-Tees alone, over 40,000 children are living below the poverty line.

The picture is the same across all of the constituencies of Members from Teesside represented in the Chamber, but time and again we have seen the Mayor and his Government fail our area. They failed to do anything to retain steelmaking on Teesside. Despite claims of help on the way, they allowed our historic and world-leading Cleveland Bridge and Engineering Company to go to the wall, with the loss of hundreds of highly skilled jobs. When the Sirius mine got into cash-flow difficulties, the Mayor promised help, but his Government brokered a deal for a multinational company to take over, leaving thousands of local investors with very little. Many of them were former steelworkers who had invested their redundancy pay in the venture. Who knows what could have been done if business had been handled in a different way on Teesside, with public benefit being the focus.

We need assets on Teesside. We need investment. We need to know what is going on with people’s existing assets and how they are being disposed of. If there are huge profits to be made from Teesworks—the scrap alone is said to be worth £100 million—surely they should be going into our communities for development and quality services and not almost exclusively into the pockets of private companies. We need answers. We need openness and transparency. We need to see an end to this secrecy.

[Several hon. Members rose—]