Teesworks Joint Venture

Lee Rowley Excerpts

Monday 29th January 2024 Commons Chamber

[The Minister for Housing, Planning and Building Safety (Lee Rowley)]

With permission, I would like to update the House on the independent review into the South Tees Development Corporation and the Teesworks joint venture, which the Government are publishing today, having received the final report last week.

Before turning to the specifics of the report, it is important that I remind the House of the significance and sheer scale of this project. Teesworks, in north-east England, is the United Kingdom’s largest industrial zone. Remediating and regenerating the former Redcar steelworks is a highly complex brownfield regeneration opportunity, the alternative to which is a massive liability to taxpayers in clean-up costs and an annual multimillion pound bill just to maintain a highly contaminated site. Most importantly, as Michael Heseltine said in his 2016 landmark report on the Tees valley, the site is also part of “a much bigger picture”, and one that provides an opportunity for regeneration that is unrivalled not only in size and scale, but in potential opportunity, as we are seeing with the development of the freeport. That is why it is too important to the communities of the north-east for Teesworks to be used as a political football.

Over the course of the last year, using parliamentary privilege, the hon. Member for Middlesbrough (Andy McDonald), who is not in his place, has made a series of allegations about Teesworks. This culminated in April and May 2023, when the hon. Member spoke, and I quote for the record, of the existence of “industrial-level corruption” and “dubious dealings”. These accusations are about the most serious that can be made. If true, they would almost certainly be criminal.

[Ian Lavery (Wansbeck) (Lab)]

On a point of order, Madam Deputy Speaker. The Minister has just said that my hon. Friend the Member for Middlesbrough (Andy McDonald) is not in his place. He should recognise that my hon. Friend has been through some serious surgery and has a proxy vote for the foreseeable future. Will he acknowledge that that is the case, instead of having a snide go at my hon. Friend?

[Madam Deputy Speaker (Dame Rosie Winterton)]

I thank the hon. Gentleman for his point of order. I had assumed that the Minister had informed the hon. Member for Middlesbrough (Andy McDonald) that he was going to refer to him, so I had also assumed that the Minister will have known of the circumstances.

[Lee Rowley]

indicated assent.

[Madam Deputy Speaker]

In that case, yes, the Minister might like to acknowledge that he recognises there is a reason why the Member is not in his place.

[Lee Rowley]

I am absolutely happy to acknowledge to all Members that the Member is not in his place for a reason. Equally, however, the Member made a series of statements previously and I am seeking to respond to those.

[Madam Deputy Speaker]

Order. That is not really—[Interruption.] Excuse me, but I can handle this, thank you. That is not really what I was referring to. I was just referring to the fact that there is a reason why the Member is not in his place, not the other points the Minister is making. Minister, do carry on.

[Lee Rowley]

These accusations are about the most serious that can be made. If true, they would almost certainly be criminal, and their mere existence threatens confidence in this immensely important, complicated and challenging project. At the request of the Tees Valley Mayor, an extraordinary independent review was launched by my right hon. Friend the Secretary of State for Levelling Up, Housing and Communities, to consider the allegations as well as the combined authority’s oversight role. Today we have the answers to the primary question about the extremely serious charges of corruption and illegality—they are not correct; they are untrue. For the avoidance of doubt, let me repeat that: no corruption, no illegality. There is no evidence to back up the worst of the allegations repeatedly thrown at the local parties managing the project, no referrals onwards to other bodies for further review, and no substance to the most serious of allegations.

In addition, and at the Secretary of State’s request, the panel has also made a series of constructive recommendations, including strengthening governance and increasing transparency. We welcome that oversight, as does the Mayor of the Tees Valley, who has confirmed that he intends, in principle, to accept all the recommendations relevant to him and his authority. For the two recommendations relevant to central Government, the Department will carefully consider how to support the continued success of mayoral development corporations across the country.

I know that colleagues in the Department for Environment, Food and Rural Affairs and His Majesty’s Treasury will also consider the recommendation regarding landfill tax. My right hon. Friend the Secretary of State has today written to the Tees Valley Mayor, asking that he responds to the panel’s recommendations, with an initial response within six weeks. My right hon. Friend will of course wait to review those proposals before deciding on further action, but the central point bears repeating: nothing was found by the reviewers to support the very serious allegations made.

This report has been a detailed and thorough piece of work, and I place on the record my great thanks to the three-strong panel for their thorough and well informed work over recent months. I thank Angie Ridgwell, chief executive of Lancashire County Council; Richard Paver, previously first treasurer of the Greater Manchester Combined Authority; and Quentin Baker, director of law and governance at Hertfordshire County Council. Copies of the review, and my right hon. Friend the Secretary of State’s subsequent correspondence with the Mayor and the panel, will be placed in the Library of the House.

Finally, I wish to remind right hon. and hon. Members about the rich heritage of Tees Valley. It has a proud industrial history and this Government are committed to giving it the proudest possible future, putting it front and centre of our mission to level up the country, and supporting all our regions to prosper and flourish by making sure that local people have projects they can champion. The independent review has cleared the Tees Valley Mayor and the combined authority of lurid allegations of corruption and illegality, and it has recommended improvements that I am confident will be driven by local stakeholders. We are delighted to support a project that is bringing huge benefits to the people of Teesside and the rest of the UK, and for all those reasons I commend this statement to the House.

[Justin Madders (Ellesmere Port and Neston) (Lab)]

I thank the Minister for an advance copy of the statement, but we know that a draft of this report has been floating around the Department since November, so why has it only surfaced today? How is it that the media were reporting the outcome of the report this morning, when it was only released by the Department at 4.20 this afternoon? Although we have only been given just over an hour to consider the 75-page report before coming to the Dispatch Box, it is immediately clear why the Government waited until the last possible minute to release it, because it is damning.

The issue has always been one of value for money, and on that the report shows that taxpayers’ money was not being spent in the way the public should expect. Let me quote directly from the report:

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

On transparency it states:

“We found evidence of inaccuracies and omissions in reports which undermines decisions”,

and

“We did not see sufficient information provided to the Board to allow them to provide effective challenge and undertake the level of due diligence expected of a commercial Board.”

It also states:

“There is no oversight of Teesworks Ltd, despite requests from various combined authority members and Committees”.

Finally it states that

“there is not a robustness within the system. Inappropriate decisions and a lack of transparency which fail to guard against allegations of wrongdoing are occurring, and the principles of spending public money are not being consistently observed.”

Those are not minor, trifling concerns; they reveal a systemic and flawed decision-making process that hinders transparency and fails to show value for money. This scandal has exposed gaps in accountability, and serious questions remain about the lack of local democratic scrutiny throughout the process. It is now clearer than ever that that needs to be investigated by the National Audit Office.

It was an astonishing decision in the first place for the Government to ignore the calls for a fully independent investigation into the serious allegations that have arisen, not just from Labour Members but from the Tees Valley Mayor in question, three Select Committee Chairs and Members across the House. Even the NAO said that it was “willing and able” to carry out the probe. Instead, the Government hand-picked a panel to investigate only the most serious allegations.

I will ask the Minister three questions, in the hope that we can finally begin to uncover the answers necessary to draw this saga to a close. First, will he now refer the situation to the National Audit Office, not only to give the people of Teesside answers but to give the public confidence that it will never be repeated again? Secondly, will he assure the House that no one was prevented from providing evidence to the inquiry as a result of non-disclosure agreements? Finally, can he tell the House with confidence that the Teesworks project represents value for money?

Earlier this month, the Secretary of State, in evidence to the Business and Trade Committee, said that he wanted people

“to make a judgment on the basis of the facts.”

Well, these are the facts: a publicly owned asset has been turned into a cash machine for private investors, earning them at least £124 million so far. That eye-watering return required no investment and involved no risk on the part of private investors, and nobody else was given the opportunity to participate in the venture. The report does not change those facts—indeed, it confirms them—and no amount of spin from Government Members will change that, no amount of bluster will make this a good deal for the taxpayer, and nothing said today will change the view still held by many that something is seriously wrong in the Tees Valley.

[Lee Rowley]

I am grateful to the hon. Gentleman for his valiant attempt to try to move the discussion on. The basic facts are that Opposition Front-Bench Members asked for a review, and they got a review. They inferred that there were significant problems, and it has been proven comprehensively through an independent review that there was no corruption and there was no illegality.

The hon. Gentleman asked why the report only surfaced today. We received the final report last week. To support the transparency that hon. Members in the House seek, and the comprehensiveness they wish for, we have sought to get the report out as quickly as possible, and it is here today for people to comment on and to misrepresent if they so choose. It appears that some may choose to do so.

The hon. Gentleman quoted from the report. I am also happy to quote from the report. As I indicated in my statement, the serious allegations that were the genesis of the report have been proven to be incorrect. Where there are things that can be improved, that will happen, and the Mayor of Tees Valley has already indicated that he will do that. But it is important that we put this in context. The hon. Gentleman talked about governance, and at paragraph 22.3 the report says:

“The Board largely feel engaged and make unanimous decisions.”

At paragraph 11.3, it says:

“The Panel noted the largely positive assurances provided by internal audit.”

Paragraph 22.3 says that

“there is much that does follow due process”.

Most crucially, given that the whole challenge was about ensuring that the benefits of Teesworks come to the people of the north-east at the earliest possible opportunity, the report says clearly at paragraph 22.1 that

“much has been achieved in a relatively short space of time”.

That is thanks to the Mayor of the Tees Valley and the Conservatives in the north-east.

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

I am pleased that the report has been published today and thank the Minister for his statement. Teesworks is critical for my constituents and the whole of Teesside, and the report confirms that for every £1 of public money that has been invested, the taxpayer will receive £9.50 back, and that is on the basis that only 17% of the site has been developed.

As my hon. Friend the Minister said, the hon. Member for Middlesbrough (Andy McDonald) alleged “industrial-scale corruption” in the House. He did so for overtly political reasons, which sadly Opposition Front-Bench Members have repeated today. Labour wants Teesworks to fail.

[Sir Simon Clarke]

Labour puts politics before people, and the furious denials of the hon. Member for Stockton North (Alex Cunningham) do nothing to disguise the fact that he and his colleagues have connived in making malicious allegations that this afternoon have been fundamentally proven to be false. The independent review confirmed that no illegality occurred. Does my hon. Friend agree that the hon. Member for Middlesbrough ought to apologise to the House, and to all those who were named in the report and falsely accused by him? Does he also agree that the hon. Member for Middlesbrough should resign for acting against the interests of the constituency that he serves and, indeed, against the interest of the whole Tees Valley?

[Lee Rowley]

My right hon. Friend speaks loudly for Teesside and his constituency. I will take the steer of Madam Deputy Speaker and keep my remarks solely to the statements made previously. The hon. Member for Middlesbrough stated clearly, on 20 April in this place, that there had been

“truly shocking, industrial-scale corruption on Teesside.”—[Official Report, 20 April 2023; Vol. 731, c. 383.]

In the same business questions session, he repeated “industrial-scale corruption”. A few days later, in another business questions, he referred to “dubious dealings”. Those remarks have proven to be incorrect, and I hope that he withdraws them as soon as he is able to do so.

[Alex Cunningham]

I apologise for my outburst, Madam Deputy Speaker.

Will the Minister join me in congratulating Mayor Houchen’s partners, Musgrave and Corney, for pulling off the business coup of the 21st century? Without spending a penny, they secretly acquired 90% of the shares in Teesworks, which has had hundreds of millions of pounds of taxpayers’ money invested in it. They have done multi-million-pound deals to lease it to others, including the combined authority, have made over £100 million in profit in just one year, and have secured control of the business development at Teesside airport when no one else got a look in.

That is all in the gift of Mayor Houchen, who, the report says very clearly, has failed on both governance and transparency—something I have said time and again. That is the accusation that I have made. Does the Minister accept that this is a terrible deal for the taxpayer and the people of Teesside? Will he now hand it over the NAO, as others have requested, so that all aspects of the business at Teesworks—not just those chosen by the Secretary of State—can be independently investigated?

--- Later in debate ---

[Lee Rowley]

Again the Labour party attempts to move the discussion elsewhere, and I will call it out every time. The report was set up because of extremely serious allegations of industrial-scale corruption, which have proven to be incorrect. The least that Labour Members could do when standing up to read their pre-prepared speeches is to acknowledge that they were wrong.

[Peter Gibson (Darlington) (Con)]

I thank the Minister for his statement, which will give my constituents the reassurance they need that Tees Valley Mayor Ben Houchen is doing things by the book and for the benefit of our region. The uncertainty and suspicion raised has been damaging to our region’s reputation and to investment prospects. The whole Tees Valley has benefited from Ben’s vision and leadership, which has led to jobs, investment and a renewed sense of Tees pride. Now that, thankfully, we have this report, does my hon. Friend agree that unfounded and scurrilous allegations should not be aired in this place? Does he further agree that Teesside is not well served by continually being talked down by the Labour party, and that those who have peddled damaging allegations should apologise?

[Lee Rowley]

My hon. Friend speaks up loudly for the north-east and his constituents. He is absolutely correct that this is a huge opportunity for the north-east, and about the transformative potential of Teesworks. He is also absolutely correct that it is the responsibility of all Members of the House to be cautious and careful in their language to ensure that those benefits are realised for the people who matter the most—the people of the north-east.

[Chi Onwurah (Newcastle upon Tyne Central) (Lab)]

Over the weekend, when the right hon. Member for Middlesbrough South and East Cleveland (Sir Simon Clarke) and I appeared on the excellent local media programme “Politics North”, it became obvious that Members on the Government Benches had an insight into the publication date and contents of the report, which Opposition Members did not. I am very glad that the report has been published, but to spin it as some kind of vindication of Mayor Ben Houchen is absolute nonsense. Given that is the spin that the Conservatives are going for, why will the Minister not demonstrate that Teesworks provides the value of money that he asserts by having an independent inquiry by the National Audit Office? The north-east gets little enough investment; we must make sure that every pound counts. Why can the National Audit Office not be allowed to demonstrate that?

[Lee Rowley]

I am grateful to the hon. Lady; I have the greatest respect for her, and she provides immensely important contributions in this place. But she will recognise, I hope, when we move away from the talking points, that there has already been a review, which was already independent and has already followed due processes—the same processes, by the way, that were followed for Labour-controlled Birmingham, when the council there lost £1 billion; the same processes that were followed with Labour-controlled Croydon, which lost hundreds of millions of pounds and had serious governance issues; and the same processes that were followed with Labour-controlled Slough, when it did something similar. If those processes were good enough and independent enough for Labour in those instances, when Labour was in charge of those authorities, why are they not good enough here? Is it simply because Labour is trying to make a party political point because an election is coming up?

[Paul Howell (Sedgefield) (Con)]

The hon. Member for Middlesbrough (Andy McDonald) clearly made comments that were not just wrong, but extraordinarily emotive and designed to do nothing other than undermine confidence in the tremendous investment work that has been done by the Conservative Tees Valley Mayor, Ben Houchen. Voices in this place can be hugely negative and can roll over to become hugely destructive when things are said in the way they were said by the hon. Member—or, indeed, when they are not said. I just do not get Labour’s position on business. NETPark in my constituency is fantastic; I have mentioned it more times than my predecessor did in the previous 12 years. Does the Minister think that Labour actually understands business, given that the Member responsible for this debate was on the shortlist to be the Chair of the Business and Trade Committee?

[Lee Rowley]

I am grateful to my hon. Friend—another example of speaking up for the north-east. He asked a hugely important question about the importance of business and private enterprise to our success and wealth creation in this country. It is vital that we support business in order to make the wealth that allows us to support the public services we all need. The transformative opportunities of things like Teesworks will ensure that the north-east has those public services and the taxpayer revenue needed to support them in the coming years and decades.

[Ian Lavery (Wansbeck) (Lab)]

The report was published in November ’23—published in nearly February ’24. Can the Minister explain the delay? I must say, there are suspicions that the report has been diluted. Can the Minister say whether the report has been altered because of discussions or communications between the author and the Government? Will he ensure—for the sake of transparency—that all communications between the author and the Department are published?

[Lee Rowley]

If I have misheard the hon. Gentleman, I apologise in advance, but I am pretty sure that he just said that the report was published in November 2023. That was not the case. The report was received by the Department last week, and we have published it within a week of receipt.

[Sir Robert Goodwill (Scarborough and Whitby) (Con)]

I wish to inform you that in line with the convention of the House, Madam Deputy Speaker, I informed the hon. Member for Middlesbrough (Andy McDonald) that I would be raising this matter, and we had quite an interesting exchange of text messages—but suffice it to say I wish him a speedy recovery.

I have to say, however, that the hon. Gentleman does have previous form on this issue. First, he ignored scientific evidence to try to prevent dredging in connection with the freeport development, and today we discover he has levelled vile, unfounded accusations of corruption and dishonesty at the Tees Valley Mayor. Does the Minister agree that jobs and economic development are more important to the people of Teesside—including those who live in Middlesbrough, incidentally—than scoring political points on the basis of incorrect and unfounded allegations? Does he share my disappointment that rather than apologising on behalf of their colleague, the Opposition Front Benchers are doubling down on some of these allegations, which have now been blown completely out of the water by the report?

[Lee Rowley]

My right hon. Friend is absolutely right: the report in front of us says explicitly that the accusations levelled at this project are not true. It is beholden on Members in this place, when they get things wrong, to say that that is the case; and it is vital that we ensure that this project gets going, keeps going, accelerates even further and gets the benefits for Tees Valley as soon as possible.

[Julie Elliott (Sunderland Central) (Lab)]

The report says:

“We did not see sufficient information provided to Board to allow them to provide effective challenge and undertake the level of due diligence expected of a commercial Board”?

Does the Minister think that is acceptable? Can he expect the people of Teesside to have confidence that decisions being taken in this way are in their best interests or will deliver best value for money? Is it not time to get the National Audit Office to look at the matter?

[Lee Rowley]

The hon. Lady needs to ensure that when she quotes from that report, she does so with completeness. It is also the case that paragraph 4.8 of the report says:

“we have sufficient evidence and consistency of views to form our conclusions as set out in the report.”

The hon. Lady was in this place a few months ago saying that the report would not be sufficient and referring to the pretence of an “independent” inquiry, which she is now quoting from. Labour Members cannot have it both ways. They cannot say that the inquiry does not work and then, when conclusions come out that they do not like, seek to disregard them.

[Grahame Morris (Easington) (Lab)]

May I pass on my best wishes for a speedy recovery to the good and hon. Member for Middlesbrough (Andy McDonald), and commend his bravery in raising this issue? Clearly, the Minister does not like use of the C-word, but he will be telling us next that the personal protective equipment contracts represented good value for money and that no dubious practice was involved in the awarding of those contracts—stretch the truth thin enough and people start to see through it.

I want to ask about value for money and scrap. Apparently, there are 500,000 tonnes of scrap metal on the site. Sales have so far raised £90 million, with £45 million going straight to private developers Musgrave and Corney, without any risk or investment themselves. How on earth does that represent good value for money? Will the Minister or the Secretary of State instruct the National Audit Office to begin a full value for money investigation into the goings-on at the Teesworks site?

[Lee Rowley]

The hon. Gentleman, again, is inferring continued corruption. This report said—

[Grahame Morris]

I did not!

--- Later in debate ---

[Lee Rowley]

The hon. Gentleman said “the C-word”. That is inferring corruption, which has been absolutely comprehensively disproven in this report. The hon. Gentleman then went on to talk about value for money and the financial position, which is important. It is vital we put on record that the liability of this site—a massive site, which had liabilities in the hundreds of millions of pounds, if not more, and was costing the best part of £20 million a year just to keep in its dirty state prior to any clean-up—was falling on the taxpayer in the main.

The only reason these changes and the joint venture have been brought forward is to transform the area for the good of the area in the long term. I note, once again, what happens when Labour Members do not like a report that they called for—when it does not have the conclusions that they asked for and does not get to the place they wanted it to. What do they do? They just call for another one.

[Liam Byrne (Birmingham, Hodge Hill) (Lab)]

I am glad to hear that nothing illegal has happened, but sometimes in this world it is what is legal that really shocks us. Like me, the Minister probably remembers that when the Secretary of State for Levelling Up, Housing and Communities came before the Business and Trade Committee, he said that this freeport was a flagship for the policy. Yet paragraph 1.7 of the report concludes:

“a number of decisions taken by the bodies involved do not meet the standards expected when managing public funds.”

The firm was allowed to buy 100 acres of land at £1 an acre; it was given rights to sell scrap metal of £50 million; it then went on to sell the lease it had for, I think, about £93 million; and it has booked £124 million of profit in the course of two years. Surely there are lessons to be drawn about how we absolutely maximise value for money in what is still a novel and important policy. It is for that reason that it would benefit all of us in this House if the NAO was allowed to get to the bottom of the question of how we ensure that profits like these are not just extracted from the taxpayer.

[Lee Rowley]

The right hon. Gentleman has clearly read some of the report. I just want to draw his attention to some other elements of it. Paragraph 12.7 states:

“The project is described as the largest regeneration project undertaken in the UK covering thousands of acres of land. The project is complex and the JV between the public and private sectors brings the inevitable cultural tensions between the desire to move at pace unencumbered by bureaucracy as opposed to the expectations of accountability and transparency”.

The report itself says that there was a debate to be weighed up on that, but it also states in paragraph 6.14, on the very point about the involvement of business and regeneration, that there was “no obvious viable commercial” proposition for regenerating part of the land, and that the joint venture

“was critical to being able to reach agreement with the Thai Banks”

to start it in the first place. It was necessary, it has been done, and it will be transformative for the people of Tees Valley.

[Matt Western (Warwick and Leamington) (Lab)]

The Minister talks about this being a complex project, but I am not quite sure exactly how complex it is. As I see it, Teesworks reported a turnover of £143 million, on which it made a £50 million profit—a 35% return. The only similar return I have seen recently was Baroness Mone’s, for her personal protective equipment. Given the scale of what I think is a scandal and many view as a scandal, the public expect the NAO to undertake an independent report. I admire the Minister’s conviction, but will he not support an independent NAO report to corroborate and validate his own?

[Lee Rowley]

The hon. Gentleman appears to be questioning whether the site is complex. These are not my words, but the words of the review, which many of his colleagues have used, often out of context in the past half an hour, to throw accusations around the place. He stood up once before, on 7 June 2023, to indicate that he thought the project was “a scam”. He was not choosing his words carefully then and he is not choosing his words carefully now. He should consider whether he wants to withdraw any of them.

[John McDonnell (Hayes and Harlington) (Lab)]

I am choosing my words carefully. For past similar projects we have had NAO investigations after the event. Many of us have been disappointed by our own decision-making process of not producing reports soon enough. The issue here is that there are potential allegations of excess profits, so would it not be better to have the NAO vet the project with regard to excess profits at this stage, rather than run the risk of trying to learn lessons after the event?

[Lee Rowley]

I am grateful to the right hon. Gentleman for bringing that up. I repeat that we have just had an independent inquiry—an independent inquiry which went through a process that the Labour party, when last in government, set up. If the Labour party is so desperate to have an independent inquiry into the Tees Valley after one has already been completed, I would love to hear from them where their calls are for independent inquiries into Birmingham, Croydon, Slough and Liverpool, all areas where mistakes have been made by Labour administrations but which they do not want to talk about.

[Andrew Gwynne (Denton and Reddish) (Lab)]

The report into the Teesworks joint venture highlights gaps in the oversight and accountability of mayoral development corporations and such joint ventures. Given that the mechanisms of mayoral development corporations are being rolled out across England, will the Minister say what thoughts he and his Department have given to greater scrutiny and probity not just of the work of metro mayors, but in particular of the work of mayoral development corporations?

[Lee Rowley]

I am grateful to the hon. Gentleman for his question. Mayors and mayoral development corporations have the potential to be transformative for their areas, and both Conservative and Labour mayors have clearly made significant progress on that over the past decade or so. As I said in my opening remarks, we will carefully consider the recommendation that has been brought forward for the Department for Levelling Up, Housing and Communities, but it is absolutely important to remember—I will say it once more for the avoidance of doubt—that the charge was corruption and illegality and that has been proven to be incorrect. The report states that it is incorrect, and it is important that that is on the record and repeated again and again and again.