Teesside Freeport: Was valuable land sold to developers for just £1 per acre?

The Tory mayor has responded to concerns that hundreds of millions of pounds of public money is being spent on clearing the Teesworks site, but when that land is leased to investors most of the profits will be paid to two local developers, Chris Musgrave and Martin Corney.

It comes after they were handed a 90 per cent stake in a company called Teesworks Limited, which has options to acquire valuable parcels of the land on the 4,500 acre site that was previously home to Redcar Steelworks.

Remediation work has already been completed on a 90-acre plot of land, which is being leased to company SeAH Wind so it can build a £450m wind turbine monopile manufacturing facility.

Andy McDonald, Labour MP for Middlesbrough, recently made allegations about “corruption”, after obtaining a transfer document from HM Land Registry.

It appears to show the site was sold to Teesworks Limited for £96.79 (plus VAT) in December 2022, by a subsidiary of the publicly-funded South Tees Development Corporation (STDC).

However, Mr Houchen, who runs STDC, said Teesworks Limited actually agreed to buy the land for £15m, after it was independently valued.

“We separately valued the site in contemplation of SeaH, which gives us a proper commercial value,” he said. “We then negotiated a deal with Teesworks.”

Documents seen by The Yorkshire Post show STDC signed off on a deal for £15m, the amount listed on a land value deed document, during a meeting in August 2021.

An STDC spokesman said it was "documented as part of the overall transaction rather than simply for disposal of the land”.

He also said the £15m site is listed as a fixed asset in the accounts of its subsidiary – South Tees Developments Limited – for the financial year ending March 2022 and the payment will be recorded as a receivable on the next set of accounts.

An investor has bought the rights to lease the site for 40 years from Teesworks Limited for tens of millions of pounds.

That investor will lease the site to STDC’s parent company Tees Valley Combined Authority for £3.65m, which will then itself rent the land to SeAH Wind for £4.3m a year.

“We make £650,000 a year. That comes to us, not to Teesworks,” said Mr Houchen. ”So over the 40-year lease we’re making £26m. Plus we get £7m a year in business rates from SeaH.”

The Teesworks project aims to transform thousands of acres of disused industrial land into a manufacturing hub that will create thousands of jobs and generate billions for the local economy.

STDC is providing millions of pounds of taxpayers’ money for remediation. Estimates suggest it cost at least £120,000 per acre.

Mr Houchen said the current arrangement ensures Teesworks Limited – 90 per cent owned by the developers – ultimatley pays for each parcel of land it acquires and then covers the remediation costs.

“Not only are they paying us back, they’re paying us interest on that money,” he said.

“If, for whatever reason, they chose to not exercise their option or not pay us back, they lose their option over the land. We would then own the land 100 per cent and keep 100 per cent of the income.”

However, the developers will earn millions of pounds from the lease agreements and half the money made from the sale of scrap metal (more than £93m so far) from the site.

BP and Equinor recently signed a lease agreement for a 100-acre plot with Teesworks Limited and STDC, so they can build a gas-fired power plant and carbon capture facility.

But before it was signed, they asked Teesworks directors for legal assurances that none of assets at the site had been acquired through an “unacceptable act”.

The site is part of the Teesside Freeport zone, where businesses enjoy tax breaks and lower tariffs, and the redevelopment project has already received over £300m of Government funding and loans.