There is “no evidence of illegality or corruption” at the Teesworks regeneration project, an independent review has concluded.
However, the review added that the 2,500-acre Redcar regeneration project was excessively secretive and could not ensure public money was being well spent.
The report was triggered by claims by Middlesbrough Labour MP Andy McDonald that the regeneration scheme harboured “corruption on an industrial scale”.
Tees Valley mayor Ben Houchen called for the inquiry to clear his name last year.
The report, published yesterday, said: “The governance and financial management arrangements are not of themselves sufficiently robust or transparent to evidence value for money.”
It added: “We found evidence of inaccuracies and omissions in reports, which undermines decisions.”
The claims centred on Houchen’s deals with two private developers, Chris Musgrave and Martin Corney, who were handed 90% control of the site for £100.
So far, the report said, they have invested no money into the site, but the Teesworks Ltd vehicle’s most recent accounts show that its profit tripled to £53m in the following financial year, allowing the company’s partners to take nearly £45m in dividends.
Alongside this, taxpayer investment has soared.
“There has been no private finance invested to date whilst over £560m of public funds have been spent or committed,” the report said.
Despite saying there was no evidence of corruption of illegality, the report made 28 recommendations which it said were vital to ensure value for money and an acceptable level of transparency.
“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,” the report said.
It added: “There is no oversight of Teesworks Ltd, despite requests from various combined authority members and committees.”
It also criticised the project and those running it for a lack of “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,” it added.
All but one transaction studied by the panel had been decided without “detailed commercial financial advice”.
Shadow employment minister Justin Madders said the report was “damning” and the project needed to be investigated by the National Audit Office.
“These are not minor trifling concerns. They reveal a systemic and flawed decision-making process that hinders transparency and fails to show value for money,” he said.
But housing minister Lee Rowley told MPs that Houchen and the combined authority had been “cleared” of “lurid allegations”.
“Today, we have the answers to the primary question of the extremely seriously charges and illegality: they are not correct. They are untrue,” he said.
“No corruption, no illegality. There is no evidence to back up the worst of the allegations repeatedly thrown at local parties managing the project, no referrals onwards to the other bodies for further review, no substance to the most serious of allegations.”
Houchen said the report set out “in black and white” that there was “no evidence of corruption or illegality” at Teesworks.
Calling for the resignation of McDonald, Houchen said: “I called for an independent review to set the record straight, clear the name for our hard-working staff and local joint venture partners who have worked tirelessly to turn this site around, and to put a stop to the naysayers talking down our area for political gain.
“We have returned jobs and investment to the former steelworks that has provided jobs and prosperity to local people for generations, and I welcome this investigation setting the record straight.”
Houchen has been given until March to address the concerns raised by the report.
Photo by ANL/Shutterstock
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