Teesworks: businessmen refuse to renegotiate controversial 90% stake of regeneration project despite government review

A transfer of shares in November 2021 saw the businessmen take control of 90 per cent of Teesworks Ltd, the company vehicle for the scheme, which was supported by Mayor Ben Houchen.

More than £500 million of taxpayers’ money has been spent, with Mr Musgrave and Mr Corney extracting at least £120m via dividends and other payments.

A government review, published in January, found “no evidence of illegality”, but made 28 recommendations for improvements in governance and transparency.

One of those was that the STDC should “renegotiate a better settlement for taxpayers under the [joint venture] agreement”, after the report found it was not possible to assess at the time whether or not value for money had been achieved on the project.

The Tees Valley Combined Authority group chief executive Julie Gilhespie wrote to the pair last month, asking to amend the joint venture contacts “to help ease tensions around this and create more harmony”.

They replied: “Along with STDC, we have worked tirelessly over the past few years to secure billions of pounds of economic investment with thousands of jobs for local people.

“However this has been unduly challenging due to the baseless accusations made in the House of Commons and the subsequent lengthy Independent Review that followed.”

The pair said the change to the shareholding arrangement to 90-10 was “fully justified”, and added that it had “the support of statutory officers and the Mayor”.

They said: “The return to the private sector partners is a fraction of that to the public sector partners.

“This site is at a very early stage of development and this public sector return will only further increase over the next several years.

“We therefore see no reason to vary the joint venture agreement insofar as changing the settlement terms.”

Instead, Mr Musgrave and Mr Corney offered to reduce the option length from 2050 to 2039.

The pair said they “hold a high level of confidence we can continue to deliver major developments within an accelerated timeframe”.

Yesterday, the Tees Valley Combined Authority cabinet met and approved its response to the government’s review.

The Mayor, Lord Houchen, wrote to the Deputy Prime Minister Angela Rayner setting out details of the finalised response, which was agreed by the five Labour local authority leaders who sit in the Cabinet.

Lord Houchen said: “The response has been developed following one of the most wide-ranging and extensive processes ever undertaken by the Combined Authority and its constituent authorities.

“It has produced a robust and highly detailed response to the Tees Valley Review and I would like to put on record my sincere thanks to all elected members, officers and external bodies who have contributed.

“Teesworks is set to deliver transformational change to Teesside, Darlington and Hartlepool and this work will now allow us to progress with its delivery – creating well-paid high-skilled jobs, attracting global investment and growing our local economy.”

In opposition, Labour pledged to order the National Audit Office to investigate the Teeswork project if it came to power.

Party sources have told the Yorkshire Post they are waiting on the response from Lord Houchen, before making a call on NAO involvement.

Prior to the election, the current Chancellor Rachel Reeves told the Yorkshire Post: “When there is money that isn’t being spent wisely, we need to uncover that, and that’s why I think it is right that the National Audit Office is brought in to investigate this, and that’s what we would do.”

Earlier in the year, a High Court judge ruled that STDC and Teesworks Ltd were liable to pay the majority of costs after a failed legal case they brought against PD Ports, the freeport owner, around access rights.

STDC has already spent more than £3 million on its own costs, leaving the taxpayer likely liable to pay more than £4 million for the action.