Mayor Ben Houchen denies claims that Teesside Freeport project is ‘shrouded in secrecy’
It comes after the Tory Mayor was urged to explain where the publicly-run South Tees Development Corporation (STDC) is planning to acquire over £90m of funding for a project called Teesworks.
The project aims to transform around 4,500 acres of disused industrial land on the bank of the River Tees into a manufacturing hub that will create thousands of jobs and generate billions of pounds for the local economy.
Mr Houchen sits on the board of the STDC, which has stated £207m is due to be spent on Teesworks in 2022/23. It said £41m will be provided by the Government, £73.7m will come from a UK Infrastructure Bank loan and £92.7m will come from an “other” source.
Alex Cunningham, Labour MP for Stockton North, said the project is “shrouded in secrecy” and “it’s time for much greater transparency”.
“This is an illustration of that secrecy – claiming that money is coming from somewhere but it's not actually guaranteed,” he added. “To have secret investors seems peculiar to me. If people are confident of their investment they should be out there talking about it.”
Mr Houchen said the money will come from “private sector investment”, long-term borrowing and the sale of scrap metal and land.
He also said there is no secrecy, as STDC reports “giving detailed financial information” and audit reports are regularly published online.
Prime Minister Rishi Sunak has endorsed the redevelopment project, claiming it is a shining example of levelling up. It is part of the Teesside Freeport zone, where businesses enjoy tax breaks and lower tariffs, and has received more than £200m of Government funding since 2015.
A company called Teesworks Limited was set up to deliver the project in 2019. It is owned by STDC and private developers JC Musgrave Capital, Northern Land Management Ltd and DCS Industrial Ltd.
STDC owned 50 per cent of the company until December 2021, when a share transfer took place. The developers now own 90 per cent.
Two property developers, Christopher Musgrave and Martin Corney, and Tees Valley Combined Authority Chief Executive Julie Gilhespie are listed as directors.
But local Labour MPs have called for an inquiry into the share transfer, claiming taxpayers are set to lose tens of millions of pounds because valuable assets have been transferred to two businessmen without a full and transparent procurement process.
Andy McDonald, MP for Middlesbrough, said: "That's got to be concerning for people because that is not how public money should be used."
"They are exercising options to acquire freehold parcels of land for nominal sums of money, and they are going to benefit massively as a direct result of that.
"That's not what this project should have been about. It shouldn't have been about making rich men even richer."
Mr Cunningham said there is "no indication at all" that the developers are investing any money in the project.
But Mr Houchen said Teesworks was set up with the approval of various Government departments and local authorities, including the Labour-run Stockton Council, and he has worked with the company to secure “significant global investment”.
Under the current arrangement, STDC is responsible for the expensive remediation work, as the 4,500 acre site is contaminated by waste produced by the industrial businesses which were based there, and Teesworks Limited will then take care of “commercialisation”.
According to the STDC, it cannot accurately predict how much that remediation will cost, but it is likely to range between £120k to £300k per acre.
The corporation has also asked the Government to introduce "new landfill tax provisions", claiming the current Landfill Tax Levy, of £96.70 per tonne, could potentially make the redevelopment project unviable.
Remediation has already been completed on a 90-acre plot of land, which will be leased to SeAH Wind so it can build a £400m wind turbine monopile manufacturing facility.
According to STDC, Teesworks Limited will exercise its option once the remediation work has been completed.
BP Exploration Operating Company Limited is also expected to agree an option for lease agreement with Teesworks Limited and STDC, so it can build a gas-fired power plant and carbon capture facility on a 100-acre plot, as part of a £1.5bn project.
These projects promise to bring highly-paid jobs and investment to the area. Tees Valley Combined Authority, which owns STDC, and Redcar and Cleveland Borough Council both expect to collect millions through business rates payments.
However, STDC has not revealed how much Teesworks Limited (90 per cent owned by developers) will make from the lease agreements, but the company receives half the money made through scrap metal sales.
By July last year, £63m had been made by selling 205,774 tonnes of scrap metal. One assessment, commissioned by Tees Valley Combined Authority, found there could be more than 370,000 tonnes on the site.
Before the redevelopment began, STDC secured a compulsory purchase order (CPO) in 2020 to acquire 1,420 acres of land, which was home to the SSI steel making plant until the company went into liquidation in 2015 and owned by three banks in Thailand.
The CPO inquiry was told that in November 2019 Mr Musgrave and Mr Corney’s company DCS Industrial Limited signed a three-year lease for a 70-acre plot of land on the adjacent Redcar Bulk Terminal site, for £489,000.
The inquiry was also told that Mr Musgrave then made an unsolicited offer to the Thai banks for all the land in December 2019.
Mr Houchen said he has worked with Teesworks Limited to secure more than £2bn of investment in recent years and he is “proud of our record of delivery”.
“The Labour Party has always been anti-business, they want to nationalise everything in the country except Teesside Airport, which they want to see closed,” he said.
“It is also false for Labour to suggest the loss of millions of pounds and valuable assets to the taxpayer, when the site was valued at being worth minus £482m as well as costing the taxpayer £20m a year from the day the steelworks went bust.
“This deal is fantastic value for the taxpayer, will bring jobs, investment and tens of millions of pounds a year to be spent on local services and our local communities.”