What is Teesworks and what prompted an investigation into its management?

The Teesworks project is aimed at regenerating 4,500 acres of land to the south of the River Tees. Credit: Teesworks

An independent inquiry into claims of corruption and illegality linked to the finances at the controversial Teesworks development has been published.

The report into financial management of the project found no evidence of corruption or illegality at the site.

However, it made a series of recommendations surrounding transparency and overall governance moving forward.

Here we take a look at what Teesworks is and what prompted an investigation.

What is Teesworks?

The Teesworks project is aimed at regenerating 4,500 acres of land to the south of the River Tees in the Borough of Redcar and Cleveland.

It includes the former Redcar steelworks, which closed in 2015, as well as other industrial assets and is now the UK's largest freeport - a special trading zone offering low tariffs aimed at boosting the local economy.

The site was acquired by the public body South Tees Development Corporation (STDC) in 2020 following a compulsory purchase led by Tees Valley Mayor Ben Houchen.

It was set up as a joint venture between STDC and companies run by two local developers, but was then transferred to majority private ownership in late 2021.

One of the largest brownfield industrial sites in Europe, more than £560million of public funds have been spent or committed to Teesworks.

A dedicated quay at the site services the offshore sector. Credit: Teesworks

What are the plans for the future of the site?

There are hopes the area will become a leading industrial site, focussed on clean energy and advanced manufacturing.

Among the projects earmarked for the site include:

  • Net Zero Teesside – Led by energy giants BP, Shell, Total, Eni and Equinor the project will use carbon capture technology.

  • SeAH Offshort Wind – the world’s largest factory for the manufacture of offshore wind monopiles. Construction started in July 2022 and is still underway.

  • Circular Fuels Ltd Renewable Gas – non-recyclable residual waste from households to convert into renewable dimethyl ether (rDME). The company is leasing about 24 acres of land at Dorman Point and is hoped will be up and running by 2025.

  • Tees Valley Energy Recovery Facility – the plant would burn non-recyclable household waste to generate heat and electrical energy which would be transported off site to power homes and businesses.

  • South Bank – a 4,500,000 ft2 site on the banks of the River Tees, set to be used for manufacturing, logistics and distribution.

Why was there an investigation into Teesworks?

News that 90% of the project had been sold to two local businessmen drew criticism.

In April 2023, Middlesbrough MP Andy McDonald, stood up in Parliament to call for an investigation into alleged "industrial-scale corruption" related to the project.

Speaking in the House of Commons, the former Labour MP, who is currently an independent, said the site had received hundreds of millions of taxpayer investment but “private developers exercised their option to purchase for a mere £1 an acre plus inflation, paying £96.79 in December 2022”.

Andy McDonald, speaking in the House of Commons in April 2023.

The following month, Levelling Up Secretary Michael Gove ordered an independent review into the issue.

Lord Houchen, who chairs the South Tees Development Corporation which oversees the Teesworks site and originally called for the inquiry, denied allegations of corruption.

Who carried out the investigation?

Labour had called for an investigation by the National Audit Office (NAO) – the public spending watchdog - into the use of public money on the site.

Michael Gove said it would not have been “appropriate” work for the NAO to undertake.

Instead, the Department of Levelling Up, Housing and Communities announced an “independent” panel made up of three local authority officers from elsewhere in the country.

It was led by Angie Ridgwell, the chief executive of Lancashire County Council.

The report was first expected last summer before being delayed to the autumn and then again to this month.

The site is a freeport - a special trading zone offering low tariffs aimed at boosting the local economy. Credit: Teesworks

What has the investigation concluded?

The report "found no evidence of corruption or illegality" but "identified a need to strengthen governance and increase transparency which can be done with limited impact on pace of delivery".

It acknowledged the "challenges posed by the site and the circumstances within which much of the current work has taken place". These included a "worldwide pandemic, a number of geopolitical shocks and economic instability".

The report made 28 recommendations, some of them around transparency and governance, and said the project needed to do more to make sure taxpayers can see that the investment was generating value for money.

It concluded: "Based on the evidence from the review the governance and financial management arrangements are not of themselves sufficiently robust or transparent to evidence value for money."

It also found the lack of transparency surrounding the joint venture between the South Tees Development Corporation, a public body, and companies run by two local developers has a “corrosive effect on public trust”, the Teeswork inquiry found.

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