Local Regeneration: Industrial Areas

Baroness Chapman of Darlington Excerpts

Thursday 7th March 2024 Lords Chamber

[Baroness Chapman of Darlington (Lab)]

It is a pleasure to follow the noble Baroness, Lady Bennett of Manor Castle. I did not agree with absolutely everything she said but I welcome the fact that she has recently visited the north-east. I am glad that she gets the positive impression of the place that she has rightly conveyed to the Chamber this afternoon.

I congratulate my noble friend Lady Armstrong of Hill Top. She was possibly the first woman politician who I ever heard speak in real life and it is a privilege to join her debate today. I remember that one of the things she talked about—I hesitate to say that she repeated herself today and, rather than talking about men in the steel industry, she was talking about politicians—was how, as a young woman growing up, it was the men who did the standing up and talking and the woman who made the tea. That stuck with me and probably acted as a bit of a spur—and I do not make the tea, as my husband will tell you.

Like my noble friend, my family worked in steel at ICI on Teesside. My great uncle Ken sold veg door to door in South Bank. I have lived in what we now call the Tees Valley for 43 years. My dad was born in Pym Street in South Bank. The noble Baroness, Lady Bennett, spoke about health, and as well she might because our health indicators in this part of the world have not been great over the years.

However, I reject the noble Baroness’s swipe at the previous Labour Government over this. My dad died aged 48 of a heart condition in 1994. Had he lived for maybe another five years to see the election of the Labour Government, when investment and reforms were put into the health service, there was a very good chance he would have lived. There were people dying on waiting lists in 1994, waiting for more than a year and a half for heart treatment. That stopped with the Labour Government. I am very proud of what we delivered, not just in health, but in education and in joining up public services, and in our regional development agency in the north-east during our period in government.

My children were born in Darlington, which is part of what we are now calling Tees Valley. My nana thought that moving to Darlington was the ultimate in going up in the world. That was only until she moved into sheltered accommodation in Marske, because then she had really made it. It is a great place to be from, with a globally significant contribution to the industries of the past and the potential to be the same again today.

Our devolution settlement and the election of the first Tees Valley Mayor was an opportunity to grow our local economy and invest in our people in a joined-up way. Some good things have happened. Our airport is secure, for the time being at least, and our university is thriving. But many are wondering, after six years, where the money has gone and when they and their families will begin to feel the benefit. After decades of industrial decline, unemployment rates on Teesside are among the highest in the country at 4.2%, compared with the national average of 3.7%. Child poverty is at 36%, compared with the national average of 29%. The case for regeneration of this former industrial heartland is overwhelming.

I will not go over everything my noble friend Lady Armstrong said, but we now find that we have a mayoralty—and sadly, by extension, on the world stage, the Tees Valley—that is mired in controversy. At the heart of the accusations lies the deal which saw the creation of an entity called Teesworks in July 2020. It was nominally a 50/50 joint venture partnership. You can argue about whether 50/50 was fair or right at the time the joint venture was established, but you can certainly ask questions about what happened subsequently.

This controversy will never hit our pride in our area—no political shenanigans could do that—but it harms the potential for future investment. That is why I, my noble friend, and others around this House have been repeatedly trying to get answers from Ministers about what has gone on and what the Government intend to do about it.

As my noble friend explained, the 50/50 stake in the joint venture became a 90/10 stake in favour of the businessmen investors. The Government seemed to accept that there was a case worth investigating and Michael Gove commissioned a report. It had some quite worrying findings. It found that it was clear that the Tees Valley Combined Authority had “no sight” of decisions around the joint venture,

“other than specific deals where they may act to provide financial covenants or instruments”.

According to Private Eye, the arrangement for Teesworks to buy land was also changed, and the land purchase cost was reduced by £1 per acre from the previous market value. Why did this happen? There followed a land purchasing at £1 per acre for the freehold at South Bank Quay, and preparation for this land was financed by the public, with a £107 million loan from the UK Infrastructure Bank. Other land was purchased by the developers for less—£100, with complex lease and sale arrangements. Given the complexity of all these deals, the lack of transparency, the apparent advantage shown to a handful of preferred developers and the substantial profits made, without any investment in a site of such public importance, it is absolutely right that the concerns were raised and the inquiry was called.

We find ourselves at the end of that inquiry and reading the report, with so many questions left outstanding. We are concerned about a lack of transparency, inadequate governance and financial mismanagement, as found by the report—not a good deal for the taxpayer, in my opinion. We must make sure that we get to the bottom of all this. It is only fair for the reputation of Tees Valley and for the need for taxpayers locally and nationally to get the best value for their investment. That is why we continue to call for a comprehensive and independent investigation by the National Audit Office to restore public trust and confidence in the project.

I appreciate that some of our questions are a bit technical and detailed. We may have asked them of this Minister; we have certainly asked other Ministers. My noble friend has asked to have a response in a letter, and I add to that a request for a meeting with officials so that we can understand the Government’s reluctance to allow the NAO to investigate. My understanding is that that could be done incredibly quickly—in a matter of days, not weeks or months. It is necessary to have that investigation and a clean bill of health from the NAO so that investors can have the confidence that they need. They will be looking at reputational risk, and they need to know that their investments will be sound.

Tees Valley is a treasured home to us and a place of invention and innovation. Yes we have our challenges, but if our brightest days are to lie ahead we need to lift the lid on this. We need to find out what has happened, remove any stain of suspicion of impropriety and allow ourselves to move forward as the strong community that we are.

--- Later in debate ---

[Baroness Swinburne (Con)]

I give the noble Baroness that assurance: I will take that back to the department. It is my first week in the department, so I do not have an answer for her now, but I will speak to the civil servants and my Secretary of State.

I will continue. The settlement includes additional measures for local authorities in England, announced on 24 January, which will be worth an additional £600 million. We are trying to provide local authorities with as much bespoke support as possible, knowing that they have more jobs to do to deliver some of these programmes.

The work that we have done to create a climate for investment through the development of our freeports and investment zones programmes will drive up living standards and regenerate selected areas. Unlike the noble Baroness, Lady Bennett, and some others, I think that the freeport initiative will be a source of jobs and investment. So far, we have created 12 freeports, eight of which are in former industrial areas—including in Teesside, the east Midlands, the Humber, Plymouth and the Solent—two are green freeports in Scotland and two are in Wales. All are now open for business and creating jobs.

Freeports are all about securing economic futures, and that of the UK as a whole, by reorienting regional economies towards innovative, low-carbon sectors such as renewables and advanced manufacturing. I believe that we are already seeing some movement here, with 6,000 jobs expected to be created and £2.9 billion of investment promised. They are also creating high-quality jobs across the UK, right in the communities where they are needed most.

Meanwhile, our investment zones programme recognises that the UK has underperformed in leveraging the success of key industries and certain research strengths, so they will be established in places with significant unmet productivity potential, many of which have a rich industrial history. For example, the zones in South Yorkshire, Greater Manchester and the north-east of England are focusing on clusters associated with advanced manufacturing, nodding to their industrial heritage while investing further in high-potential industries of the present and the future.

The Government recognise the crucial role played by the private sector in the levelling-up agenda through schemes such as investment zones and freeports. We aim to enable and empower the private sector to increase investment, jobs and growth at a local level. Good quality, self-sustaining growth will be delivered through capitalising on the growing industries of the future. That includes manufacturing, where our funding is targeted to ensure that UK industry copes with the fundamental changes to remain at the forefront of the global transition to net zero. We are committed to growing the economy and ensuring that funding does not focus solely on the most successful sectors today but looks ahead as we keep pace internationally and build the UK’s expertise for the industries of the future.

In acknowledging many noble Lords’ close ties to the north-east region, I am delighted to draw attention to the recent announcement of a £40 million funding package to accelerate Teesside regeneration. Middlesbrough, alongside Redcar and Cleveland, will receive £20 million each—a total of £40 million—to help ramp up improvements, with targeted projects planned to revitalise high streets, healthcare, transport and education, and to create more affordable housing.

Finally, in County Durham, where I understand that the noble Baroness, Lady Armstrong, served as Member of Parliament, the market town of Bishop Auckland, which expanded to serve the coal industry, has been awarded £53 million from the Government’s future high streets fund and towns fund to support its development as a visitor destination of national significance. I look forward to visiting, given that my grandparents come from there. This investment will help diversify and enhance the town centre, improve transport connectivity and provide new skills and enterprise opportunities for young people. I hope noble Lords will acknowledge that that is a fitting response to celebrate the town’s proud industrial heritage.

I have a very large number of questions that I will try to zip through. My handwriting is appalling, so please forgive me if I stumble. I really empathise with the pride that the noble Baroness, Lady Chapman, has in her home area. It certainly made me think about my upbringing in my area. To date, approximately £1.4 billion in levelling-up funding has been allocated to projects in the north-east and Tees Valley. This funding covers a range of regeneration priorities, including addressing the local skills gap and developing emerging sectors in former industrial areas. Across all three rounds of the levelling up fund, the north-east has received more per capita than any other English region, alongside wider programmes including devolution deals, levelling-up partnerships and our long-term plan for towns. This shows our commitment to level up the region.

I turn to some of the remarks that many noble Baronesses and noble Lords made with respect to the Teesworks controversy. Following the concerns raised about Teesworks and the actions of the Tees Valley Combined Authority, we commissioned an independent external review, which was published on Monday 29 January. This found no evidence of corruption or illegality but made a series of constructive recommendations regarding the governance and transparency of the project. For the two recommendations relevant to central government, we will carefully consider how to support the continued success of the mayoral development corporation across the country and the recommendations regarding the landfill tax. The Secretary of State made a written request to the Tees Valley mayor, asking him to set out how he intends to respond to the panel’s recommendations by 8 March. This has already been done, and we hope to publish all this in a very short time.

I have been asked why the National Audit Office should not examine this. I have a note here to tell me that the NAO’s role is not to audit or examine individual local authorities, and its powers would not normally be used for that purpose. It would therefore be inappropriate to expand its role so significantly by asking it to lead this inquiry.

The panel that did this investigation was made up of individuals with significant experience in assurance and local government. The panel spent months investigating thoroughly, and found no evidence of corruption or fraud. Its report has been published; I am sure noble Lords have all read it, as they have alluded to. It was published a week after we received it. We welcome the constructive recommendations and are actively considering the way in which these relate to central government.

[Baroness Chapman of Darlington (Lab)]

I in no way wish to besmirch those on the panel that conducted the report—they did what they were asked to do—but the report has raised more questions than it has answered and leaves an awful lot still in doubt. It says that

“the governance and financial management arrangements are not of themselves sufficiently robust or transparent to evidence value for money”.

I completely accept what the Minister says about corruption—I have never made an allegation of corruption—but we deserve better in Teesside than, “At least it’s not corrupt”. We wanted an NAO investigation; my understanding is that the NAO has offered to conduct such a review, so I am slightly confused about what the Minister just said, which she has obviously been advised to say. Can she confirm that she will write to us with detailed responses to the questions we have raised? Can we please have a meeting with her or an appropriate Minister and officials?

[Baroness Swinburne (Con)]

I will certainly commit to making sure we follow up on this in detail to the noble Baroness. Given that publication is imminent, I hope we can follow up as and when that happens.