Teesworks: Accountability and Scrutiny

Debate between Brendan Clarke-Smith and Lisa Nandy

Wednesday 7th June 2023 Commons Chamber

[Lisa Nandy]

There is a wider point here, which is that devolution matters but it matters for a reason. It matters because decisions taken closer to people, driven by the people of the place they call home and for the benefit of those people, have the ability to transform lives. We need and deserve proper robust scrutiny arrangements and accountability in every part of the country, not just some, in order to ensure that.

I am sick and tired of hearing Conservative Members making accusations at our doorstep about unfounded allegations and naysaying about regeneration in the north-east. They are wrong and I suspect that they know it. The Labour Front-Bench team has not made allegations against Teesworks and the development corporation, and we will not do so before any investigation reports back. What we have asked for is honesty, transparency and clarity about what appears on the face of it to be an incredibly murky situation. It is the clear breakdown of local accountability that is sufficiently alarming that an investigation by the National Audit Office is required. We want to see this resolved. Conservative Members should want to see this resolved for the benefit of people on Teesside. The South Tees Mayor believes that is the case, as do three Select Committee Chairs, the Prime Minister and the Secretary of State—if he did not, no investigation at all would be forthcoming. Let me be clear that the Humble Address today is about ensuring that a proper, full and independent investigation can take place in terms sufficient to provide the public with confidence in the process and the outcome of the investigation. In hand picking a panel and terms of reference, the Secretary of State has done a disservice to the principle of independent scrutiny and to his commitment to devolution, which until today I believed to be sincere. He has made it harder for confidence and transparency to return.

[Brendan Clarke-Smith (Bassetlaw) (Con)]

I thank the hon. Lady for giving way and for being so generous with her time. Some of the claims she makes are quite serious and in this House we always want to act in the spirit of transparency and openness, but with these very serious claims, I would ask: where is the evidence—what is the basis of this in the first place? Perhaps she could outline some of the evidence she is using as the basis for making these claims in the first place.

[Lisa Nandy]

The hon. Gentleman might want to take that up with his colleague, the Mayor in question, who has referred himself and asked for a National Audit Office investigation. I do not know why Members on the Government Benches think his judgment is so poor that he should not have done that, but we believe he is absolutely right to have done that and we stand firmly behind him in asking for a proper investigation.

Incredibly, even by the standards of this shambolic Government, the terms of reference and the names of the panel members for this inquiry were sent to me seven minutes before this debate began. That genuinely is no way to conduct government. I assume that is where the Secretary of State is right now: sitting behind his desk knocking out terms of reference on the back of a fag packet. Clearly, I have not had much time, Madam Deputy Speaker, to read them, but on first sight what he has sent me looks like a system-focused review, rather than an investigation into what has happened. Ministers have still failed to give us an explanation as to why the National Audit Office cannot conduct its own investigation, a body that has capacity, resources and expertise, and is widely respected across the political spectrum. Instead, we are having a bizarre argument about the remit of a respected organisation that is patently able to conduct the investigation required. Can the Minister not see why the public would rightly raise an eyebrow?

It is completely unacceptable for the Government to hide from proper scrutiny. I remember a time when the Secretary of State could not wait to get to his place in this House. Nowadays, we barely see him. Where is he today? There is no clear justification for not ordering a comprehensive independent investigation from the National Audit Office. It cannot be right that hundreds of millions of pounds of public money have been handed over to a company that is now 90% in private ownership, and it appears that the Department has handed over that money and then simply walked away. This is a matter that has profound implications for people on Teesside, who rightly expect this site, through which they contributed so much to our country over so many years, to continue to benefit them and their community for years to come.

There is much we do not know about what has happened—that is the reason we need an independent investigation—but here is what we do know. When the 140-year-old steel industry on Teesside collapsed in 2015, thousands of jobs were lost along with a key political, social and economic asset for the communities of the north-east of England. In 2017, the South Tees Development Corporation began to collate over 4,500 acres of industrial land, including the site of the former steelworks, off the back of a Conservative Government promising hundreds of millions of pounds in taxpayer funding for the project, something we had championed and welcomed. In the face of losing that key economic and social asset, it is absolutely right that all options were considered about how to build a wide programme of regeneration around the site and that the combined authority was given the autonomy to determine the strategy to regenerate the site. Even where we have strong disagreements about policy, strategy and direction, that point is not, and will never be, in dispute.

However, in May, an extensive report by the Financial Times detailed how the Government had spent hundreds of millions of pounds of taxpayers’ money to support a project in which two private developers now hold a 90% stake. The deal never went through a public tender process. There was no consultation. There was no announcement. It also reports that those developers have secured £45 million already in dividends, despite failing apparently to invest a single penny of their own money in the project. In return for their role in securing the site, the South Tees Development Corporation awarded companies owned by the developers a 50% stake in the joint venture that would operate the project—a share transfer that also took place without any public tender. The new operating company, eventually named Teesworks Ltd, controlled the entire 4,500-acre site and its assets, including 500,000 tonnes of scrap metal. It was also given the option to buy any parcel of land on the site at market rate.

The announcement that freeport status was being awarded led the South Tees Development Corporation to fundamentally change its business model, according to documents obtained under freedom of information laws and published by Private Eye. Following that, in a complex two-stage process, the two developers ended up with a 90% stake in the project, also without ever going through public bidding. According to emails received again under freedom of information from the Department for Business, Energy and Industrial Strategy—the Department with responsibility for the project in Government—one official only became aware of the deal via the media in January 2022 and expressed “concern” and “surprise”. The Financial Times reports that an official at the Department’s office in the north-east responded that he had received “verbal” assurance locally that the deal was value for money. Can the Minister see why such serious concerns have been raised on both sides of the House, including by respected Members such as the Chairs of the Select Committees?

It is at this point that we called for the National Audit Office to investigate this matter in its entirety, to restore confidence for investors and the public in what was an increasingly murky affair. Indeed, the former chief executive of the Audit Commission, a public body that examined local government entities before it was disbanded by the Conservative Government, says the evidence

“calls for a full and thorough investigation by the National Audit Office and the Public Accounts Committee, as the situation now appears far remote from the business case originally agreed with Government”.