I beg to move,
That an humble Address be presented to His Majesty, that he will be graciously pleased to give directions that the Secretary of State for Levelling Up, Housing and Communities provide all papers, advice and correspondence involving Ministers, senior officials and special advisers, including submissions and electronic communications, relating to the decision by the Secretary of State for Levelling Up, Housing and Communities and the Prime Minister to commission a review into the Tees Valley Combined Authority’s oversight of the South Tees Development Corporation and the Teesworks joint venture, including papers relating to the decision that this review should not be led by the National Audit Office.
Let me start by saying that I am really disappointed that it has come to this. Devolution was meant to empower people in every part of Britain to “take charge of their own destiny”. This Government were elected on exactly that promise and exactly those words, and here we are standing in the House of Commons trying to persuade the Government to come clean about why they have chosen to block an independent inquiry that would help us get to the bottom of the use of public assets and funds on Teesside in the wake of some of the most serious allegations I have ever seen in my time in Parliament.
For nine years, since the Government accepted Greater Manchester’s case for greater devolution, I and many others on all sides of this House have been pressing the Government to respect the right of people in every part of Britain to know how their assets and money are being used and to close the gap that currently exists by inviting people back into the conversation, and by building a system of local and national scrutiny and accountability that is fit for purpose, backed by a Government who are willing to open the books.
I think the key point in this debate was aired in what the hon. Lady said a moment ago, when she said that some of the most serious allegations she has ever heard aired in this House have been made. Will she stand with those allegations? At the moment, Andy McDonald has alleged “industrial-scale corruption”. The hon. Lady has been very careful in all her public utterances, as indeed has he outside this Chamber, to avoid repeating that claim. Does she agree with him, or does she not?
The problem, as the right hon. Member well knows, is that Members of this House and, more importantly, people on Teesside simply do not know the answer to that question. Serious allegations have been raised not just by Members on the Opposition Benches, but by respected national journalists who have conducted meticulous investigations, and the point of holding an independent inquiry is that these serious allegations and the questions that have been raised need to be answered.
At every juncture and at every level of Government, when it comes to fair and reasonable questions about the South Tees development corporation, accountability, scrutiny and democratic control have broken down. It is only because of my hon. Friend Andy McDonald and some tenacious, meticulous journalists, such as Jennifer Williams of the Financial Times, that we even know the bare facts of what has unfolded. People on Teesside should not have to rely on a national newspaper to discover what has been done with their assets, their community and their civic inheritance.
Honestly. It is about time that hon. Members stopped chirping and started paying attention.
The Secretary of State for Levelling Up, Housing and Communities has accepted that an investigation is needed to give investors confidence. I saw him walking through the Chamber a moment ago, Madam Deputy Speaker—he could not get away quick enough. This is why we want to see an investigation launched without delay: to restore investor confidence and the confidence of the public in both the project and the devolution model itself.
The Secretary of State’s decision to block the National Audit Office from investigating these allegations is nothing short of bizarre. It is an investigation that is backed by the Tees Valley Mayor, by the official Opposition and by three Select Committee Chairs. The National Audit Office has the experience, capacity and independence to carry out an investigation—it has said itself it was able to do so and that the Secretary of State has the power to order that investigation—so it beggars belief that the Secretary of State has blocked that inquiry and now set up a review where the terms of reference and the members have been hand-picked by him. Then to come to the House on Monday and be unwilling—or perhaps unable—to answer basic questions about why he chose to do that is completely unacceptable. Saying that consultations were had and that the Government do not wish to set a precedent will not do. For decades, people on Teesside have made a major contribution to the UK through the steel industry. The Teesworks belongs to them and they have the right to know what is being done with it in their name.
My hon. Friend is absolutely right and has been a huge champion of this for communities across the country. Most importantly, our regions will not prosper and will not grow unless we can have confidence that decisions are being taken in the right way and in the public interest, and the people of that region need to know that they will benefit from those decisions. That is the point of devolution.
Would the hon. Lady not agree that Teesside did not prosper or grow for decades after the demise of heavy industry and that it was only when Ben Houchen came along and started delivering for the people that people started realising that the Conservatives on Teesside were delivering, when Labour had failed for generations?
I will take absolutely no lessons from a representative of a political party that stood aside and watched as the Tees works collapsed in 2015.
Labour is therefore asking the Government to provide all papers, advice and correspondence, including Ministers, senior officials and special advisers, relating to the decision by the Secretary of State and the Prime Minister to commission a review into the Tees Valley Combined Authority’s oversight of the South Tees Development Corporation and the Teesworks joint venture, including papers relating to the decision that the review should not be led by the National Audit Office.
The hon. Member is probably aware that, in addition to the scandal that she is outlining in her excellent speech, Woking Council has today issued a section 114 notice, following its having run up £1.9 billion of debts under a Conservative-led administration, when it has core spending power of just £14 million. Does she agree that a National Audit Office investigation is important for the people of Woking as well, because there is clearly inadequate scrutiny of decision making on public money?
There is a wider point here, which is that devolution matters but it matters for a reason. It matters because decisions taken closer to people, driven by the people of the place they call home and for the benefit of those people, have the ability to transform lives. We need and deserve proper robust scrutiny arrangements and accountability in every part of the country, not just some, in order to ensure that.
I am sick and tired of hearing Conservative Members making accusations at our doorstep about unfounded allegations and naysaying about regeneration in the north-east. They are wrong and I suspect that they know it. The Labour Front-Bench team has not made allegations against Teesworks and the development corporation, and we will not do so before any investigation reports back. What we have asked for is honesty, transparency and clarity about what appears on the face of it to be an incredibly murky situation. It is the clear breakdown of local accountability that is sufficiently alarming that an investigation by the National Audit Office is required. We want to see this resolved. Conservative Members should want to see this resolved for the benefit of people on Teesside. The South Tees Mayor believes that is the case, as do three Select Committee Chairs, the Prime Minister and the Secretary of State—if he did not, no investigation at all would be forthcoming. Let me be clear that the Humble Address today is about ensuring that a proper, full and independent investigation can take place in terms sufficient to provide the public with confidence in the process and the outcome of the investigation. In hand picking a panel and terms of reference, the Secretary of State has done a disservice to the principle of independent scrutiny and to his commitment to devolution, which until today I believed to be sincere. He has made it harder for confidence and transparency to return.
I thank the hon. Lady for giving way and for being so generous with her time. Some of the claims she makes are quite serious and in this House we always want to act in the spirit of transparency and openness, but with these very serious claims, I would ask: where is the evidence—what is the basis of this in the first place? Perhaps she could outline some of the evidence she is using as the basis for making these claims in the first place.
The hon. Gentleman might want to take that up with his colleague, the Mayor in question, who has referred himself and asked for a National Audit Office investigation. I do not know why Members on the Government Benches think his judgment is so poor that he should not have done that, but we believe he is absolutely right to have done that and we stand firmly behind him in asking for a proper investigation.
Incredibly, even by the standards of this shambolic Government, the terms of reference and the names of the panel members for this inquiry were sent to me seven minutes before this debate began. That genuinely is no way to conduct government. I assume that is where the Secretary of State is right now: sitting behind his desk knocking out terms of reference on the back of a fag packet. Clearly, I have not had much time, Madam Deputy Speaker, to read them, but on first sight what he has sent me looks like a system-focused review, rather than an investigation into what has happened. Ministers have still failed to give us an explanation as to why the National Audit Office cannot conduct its own investigation, a body that has capacity, resources and expertise, and is widely respected across the political spectrum. Instead, we are having a bizarre argument about the remit of a respected organisation that is patently able to conduct the investigation required. Can the Minister not see why the public would rightly raise an eyebrow?
It is completely unacceptable for the Government to hide from proper scrutiny. I remember a time when the Secretary of State could not wait to get to his place in this House. Nowadays, we barely see him. Where is he today? There is no clear justification for not ordering a comprehensive independent investigation from the National Audit Office. It cannot be right that hundreds of millions of pounds of public money have been handed over to a company that is now 90% in private ownership, and it appears that the Department has handed over that money and then simply walked away. This is a matter that has profound implications for people on Teesside, who rightly expect this site, through which they contributed so much to our country over so many years, to continue to benefit them and their community for years to come.
There is much we do not know about what has happened—that is the reason we need an independent investigation—but here is what we do know. When the 140-year-old steel industry on Teesside collapsed in 2015, thousands of jobs were lost along with a key political, social and economic asset for the communities of the north-east of England. In 2017, the South Tees Development Corporation began to collate over 4,500 acres of industrial land, including the site of the former steelworks, off the back of a Conservative Government promising hundreds of millions of pounds in taxpayer funding for the project, something we had championed and welcomed. In the face of losing that key economic and social asset, it is absolutely right that all options were considered about how to build a wide programme of regeneration around the site and that the combined authority was given the autonomy to determine the strategy to regenerate the site. Even where we have strong disagreements about policy, strategy and direction, that point is not, and will never be, in dispute.
However, in May, an extensive report by the Financial Times detailed how the Government had spent hundreds of millions of pounds of taxpayers’ money to support a project in which two private developers now hold a 90% stake. The deal never went through a public tender process. There was no consultation. There was no announcement. It also reports that those developers have secured £45 million already in dividends, despite failing apparently to invest a single penny of their own money in the project. In return for their role in securing the site, the South Tees Development Corporation awarded companies owned by the developers a 50% stake in the joint venture that would operate the project—a share transfer that also took place without any public tender. The new operating company, eventually named Teesworks Ltd, controlled the entire 4,500-acre site and its assets, including 500,000 tonnes of scrap metal. It was also given the option to buy any parcel of land on the site at market rate.
The announcement that freeport status was being awarded led the South Tees Development Corporation to fundamentally change its business model, according to documents obtained under freedom of information laws and published by Private Eye. Following that, in a complex two-stage process, the two developers ended up with a 90% stake in the project, also without ever going through public bidding. According to emails received again under freedom of information from the Department for Business, Energy and Industrial Strategy—the Department with responsibility for the project in Government—one official only became aware of the deal via the media in January 2022 and expressed “concern” and “surprise”. The Financial Times reports that an official at the Department’s office in the north-east responded that he had received “verbal” assurance locally that the deal was value for money. Can the Minister see why such serious concerns have been raised on both sides of the House, including by respected Members such as the Chairs of the Select Committees?
It is at this point that we called for the National Audit Office to investigate this matter in its entirety, to restore confidence for investors and the public in what was an increasingly murky affair. Indeed, the former chief executive of the Audit Commission, a public body that examined local government entities before it was disbanded by the Conservative Government, says the evidence
“calls for a full and thorough investigation by the National Audit Office and the Public Accounts Committee, as the situation now appears far remote from the business case originally agreed with Government”.
It is important to be clear that he is himself a former Labour councillor. The point in this debate is that we are offering an independent inquiry. As we have heard, an inquiry is under way and the reasons the NAO is not the appropriate body were set out very clearly by the Secretary of State in his letter.
Can I just correct the right hon. Member? As he well knows, this is not an independent or full investigation. Perhaps he also has not had the courtesy of having been given the time by the Secretary of State to look at the full terms of reference, but it genuinely beggars belief to try to claim that this is somehow politically motivated. If Conservative Members believe that the call for a NAO inquiry is politically motivated, they might want to ask the Mayor what on earth he is doing calling for one himself.
In all of this heat, it might be wise to be clear about the independent role of the NAO. The Comptroller and Auditor General has letters patent from the King and reports to this House, not to Government. He is independent and makes his own decisions, and it was his independent decision that it would be appropriate, because of the size of the site, to offer the opportunity to do an audit. It is then a matter for the Secretary of State to decide whether or not he asks for that to happen. It is a three-legged stool, because then the local organisations have to agree to open their books, too. It is important to be clear on the record that the NAO is not making political decisions here; it is a very independent decision by the chief auditor of this country.
I thank my hon. Friend for making that point, which absolutely concurs with my experience of the NAO. Members on both sides of the House will have had experience of having written to the NAO to raise concerns, and all of us are treated with decency and impartiality by the NAO when it seeks to respond.
Unbelievably, the situation gets even more complicated. Questions were raised at that point about whether the NAO even had the ability to investigate. It turns out that it did, subject to the preparation of a suitably worded agreement between the Minister and the relevant body into which the examination is to be conducted. We called on the Secretary of State to provide such an agreement, which was met with radio silence. Into that void stepped the Prime Minister, who confirmed at Prime Minister’s questions on
Now that we have the terms of reference, let me say this to the Minister: it is utterly unacceptable to establish an inquiry that fails to ensure that all decisions that have led to the current situation are on the table, with no exclusion of factors that would impact a complete and fair assessment of whether the public interest has been protected. It must have expert support, administrative capacity and resources to ensure the same level of access that the NAO would have had. Any officials who worked at South Tees Development Corporation or public bodies on Teesside must be free to comply with an investigation, regardless of any non-disclosure agreements that exist.
The investigation must report back on what assessment the Department and wider Government made of the South Tees Development Corporation’s decision to transfer a 50% stake in the joint venture without any public tender process. [Interruption.] I am grateful to the Minister for clarifying that from a sedentary position. Presumably, he has had a chance to read those terms of reference. It would have been nice if Members had been afforded the same courtesy. [Interruption.] The Minister is chuntering again from a sedentary position. That is precisely what we are attempting to do—establish the facts. That is what the Tees Valley Mayor is attempting to do—establish the facts. That is what the Chairs of the Select Committees in this House are attempting to do—establish the facts. And that is what the people on Teesside are attempting to—establish the facts. It says something about the extraordinary arrogance of this Government that they think that is an unacceptable request.
The investigation must confirm when Ministers were first made aware of the decision to increase the share to 90% and if an assessment of value for money for taxpayers was made in advance. Could the Minister confirm whether there was any discussion of the terms of reference with the relevant Select Committee Chairs—including the Chairs of the Public Accounts Committee, the Business and Trade Committee and the Levelling Up, Housing and Communities Committee—or are the Government determined to show the same contempt for Members that they are showing for people on Teesside?
My hon. Friend was going through the events of the past week or so and the actions of Government, which smack of a cover-up. That is the fear and concern of the people of the Tees area and the wider public.
I studiously avoided trying to prejudice any terms of the inquiry in advance of their announcement, but I was given seven minutes for a cursory glance at the terms of reference. If the Minister wants to tell people on Teesside that they deserve two minutes to understand the terms of reference, he is very welcome. That is arrogant and shows utter contempt for people in this country. Having looked at the terms of reference, I share my hon. Friend’s view. To many people in this country, it increasingly looks like an utter whitewash.
As far back as 2015, I raised concerns with this Government that democracy must not be an afterthought in the devolution model. Where the public have been let into the conversation, it is because of some of our brilliant Mayors across the country, such as the Mayor of Greater Manchester and the Mayor of West Yorkshire, who have chosen to go out proactively and involve the public in conversations about the things that matter deeply to them and to their lives. As has been so often said, it is our right to have that information and to be in charge of our own destiny; it should not be in the gift of whoever happens to be elected. When the respected Chair of the Public Accounts Committee says that the measures that we have around transparency, scrutiny and accountability are not sufficiently robust, Ministers must take that seriously.
On the Opposition Benches, we believe that the people on Teesside are just as deserving of safeguards to ensure that the public money and assets spent and used on their behalf are used for their benefit and in their interests as the people in London, Greater Manchester or the west midlands. These are our communities; they are our assets; it is our money; and it is about time this Government started to show some respect for a country that belongs to us.
Let me try to make an assessment of how many people are trying to catch my eye, so that I am able to gently point out that Back Benchers may have a relatively short amount of time to make their contributions. I hope that colleagues will bear that it mind.
I remind colleagues that if they speak in the debate, I want them to be back in good time for the wind-ups, including the Minister. If interventions are made on a speaker, it is normal practice to stay until the end of that speech.
It is, rightly, a long-standing convention that Opposition parties in this place have the opportunity to raise their concerns through debates such as this, to deal with the big issues of the day and to use the precious time of the House to articulate their vision for the future of this country. On these occasions, the Opposition can choose the subjects, the words they use, the allegations they make and the inferences they allow to be drawn.
So here we are today, having a debate about a blighted and costly site, with a massive price tag when industrial activity ceased, that is being transformed for the benefit of those who live and work nearby, in a region that is on the up. The debate is not about the achievements to date, or the failure of successive Labour Governments and Members of Parliament to improve the lives of people on Teesside. Instead, it is a debate about technicalities. It is not about whether a review will happen, look at these matters in depth or be led by independent experts, because all that will happen. Neither is it about whether the facts will be established, as was raised by Lisa Nandy, because they will be.
Instead, the Opposition have chosen to have a three-hour debate about the process by which a decision was made to have a review that is led by one group of people, instead of by another group of people. It is a debate about how we have chosen to set up a review, in the usual way that we choose to set up reviews rather than in the extraordinary way that the Opposition propose. The Labour party makes strange choices.
I want to say this, because it is important: the Government believe in the people and the places that make Teesside special. We have backed them with funding and powers to level up, which was sorely lacking under the 13 years of the previous Labour Government. That was why Ben Houchen was elected as Mayor in the first place. His record of attracting investment and delivering for the Tees Valley speaks for itself. In that spirit, he approached the Government some time ago about an independent review of the South Tees Development Corporation and the Teesworks joint venture after Andy McDonald had made serious allegations in the House, which he will not repeat outside the House. I want to make it clear now that, as previously stated, Ministers and officials have so far seen no evidence of corruption, wrongdoing or illegality.
I give way to the hon. Gentleman, who can, perhaps, tell us precisely what corruption, wrongdoing and illegality he is alleging.
I just want to point out to the Minister that what he is threatening my hon. Friend the Member for Middlesbrough with is a strategic lawsuit against public participation. We have had debates in this Chamber about SLAPPs; in fact, the Under-Secretary of State for Business and Trade, Kevin Hollinrake, who is sitting next to the Minister, has supported action against them and their use to cover up the Londongrad fraud whereby illegal money has been washed through London banks and financial centres. The Minister should think very carefully before he comes here and threatens people with legal action outside the House to silence democratic debate.
There is absolutely no silencing going on. We are debating, we will continue to debate, and we have set up a review to ensure that we understand the allegations that have been made. It is perfectly legitimate for me to point out that the hon. Member for Middlesbrough refuses to repeat those allegations elsewhere, and for people to draw whatever conclusion they wish to draw from that. However, it is also clear that the allegations being made threaten to damage confidence in Teesworks and its success—hence the Secretary of State’s decision on
On the “Today” programme this morning, the hon. Member for Wigan was challenged with the observation that
“there is a danger that political parties throw about allegations of corruption”.
To that point no answer came this morning, and an answer certainly did not come in the opening speech. Now that the Labour party has chosen to allocate a significant amount of parliamentary time to this discussion today, it is incumbent on Opposition Members to spell out their specific concerns. They may have tried not to do that, but they need to state the allegations about which they are concerned.
We listened to a long speech from the hon. Member for Wigan, who set out a factual case about the events that happened in the order in which they happened, but made no comment about what element of concern she felt about each of them. There have been no specific allegations; nothing has been forthcoming except rumour, gossip and innuendo. Perhaps the hon. Lady does not wish to provide allegations, but Opposition Members have certainly alleged that this is the case.
The hon. Lady has already had a significant amount of time in which to speak, and I am not willing to give her more time to produce similar innuendo. On
Thank you very much, Madam Deputy Speaker, for intervening to make sure that some basic manners and courtesies are respected.
May I ask the Minister to stop this ridiculous politicking? I have just set out for him a series of concerning points that have been raised by a respected national newspaper, with evidence behind them, many of which are not disputed by those involved in the proceedings. I have explained to him why an independent investigation is needed, and I answered those questions on the radio this morning, as he well knows. He may not agree that the National Audit Office is the best body to investigate, but if he disagrees with that, why will he not tell us the reason? That is all we are asking for.
We are concerned about the fact that no value for money is being achieved in this project, because of allegations raised in the report in the Financial Times, which set out that hundreds of millions of pounds have been put behind a project that Ministers appear to have handed over and then walked away, in a company 90% of which has been transferred into private ownership, where two investors have taken—apparently; allegedly—£45 million out but put not a penny in. We want to ensure that that constitutes value for money for the public and that this asset, which belongs to the people of Teesside, will be used for the benefit of people on Teesside for generations to come. If the Minister can reassure us in detail on those points, it would be absolutely wonderful. If he cannot, why will he not commit to an independent investigation?
That is, finally, extraordinarily helpful. For the first time in multiple questions to the hon. Lady, she has actually given an answer. She is concerned about value for money. Excellent! We are all concerned about value for money across local government. That is why we have a best value regime, which means that the Secretary of State announces inquiries and reviews, and appoints people to undertake them. The hon. Lady and her Front Bench team know that, because we have talked about it on numerous occasions in this place. They are completely aware of the best value regime that this Government use, because in 1999 it was the Labour party that endorsed that regime as part of its legislation.
I will give way to my right hon. Friend, who actually knows what he is talking about on this issue.
My hon. Friend is right to highlight the fact that it is Labour’s own regime that we are applying, but can we also get on record the fact that Department for Levelling Up, Housing and Communities officials do not believe that the threshold for a best value investigation has been met in this case? That is to say, the civil service does not believe that such an investigation is merited. We are doing it to dispel the allegations and smears from the Opposition.
I am grateful to my right hon. Friend for clarifying that important point, particularly in respect of the Department.
It is important, given the inferences by the Opposition, to highlight what has actually been put in place. The specific terms of reference and the announcement that was made long before today are clear about the intention of the Government to clarify this matter. The review will be led by Angie Ridgwell, who is currently chief executive of Lancashire County Council and has over 30 years of experience across local government, central Government and the private sector. She will be supported by Quentin Baker, a qualified solicitor and director of law and governance at Hertfordshire County Council, and by Richard Paver, who brings significant financial experience and knowledge of combined authorities from his previous role as the first treasurer of the Greater Manchester Combined Authority. They bring significant experience of senior public leadership, specific financial and legal expertise, and confidence of detailed scrutiny. All Members of the House should support their important work so that they can proceed quickly and free from partisan comments.
There is still time for Labour Members to articulate why they are suddenly so keen on NAO-led inquiries in local government when they have not been keen on them before. When there are challenges or potential questions, there is a long-standing precedent of someone other than the NAO reviewing and assessing those concerns. Why should Labour Members know this? Because, as I said, they endorsed this process in the Local Government Act 1999. They confirmed that the Secretary of State could determine the approach where there were questions about local government bodies, and as far as I am aware, they have not critiqued the use of those powers when they have been used multiple times before, including in the last few weeks. Perhaps Labour Members could tell me which parts of the Local Government Act 1999—their Act, their decisions, their choices—they have randomly, abruptly and arbitrarily decided, simply for the purposes of an Opposition day debate, that they no longer wish the Government to apply.
If Labour Members are deciding that they no longer want to use the established regime, perhaps they could tell me which of the established reviews, inquiries, panels or commissioners they wish to switch into their newly preferred process. I do not remember this being requested when the Secretary of State intervened following an external review of Labour-led Sandwell Council in 2021, following allegations of serious misconduct by members and officers that painted a deeply troubling picture of mismanagement. Should we move that to an NAO review?
I do not remember Labour suggesting this approach when the then Secretary of State determined to appoint experts to carry out an inspection at Labour-led Liverpool City Council in 2020 as a result of arrests made on suspicion of fraud, bribery, corruption and misconduct in public office. [Interruption.] There is a lot of chuntering on the Opposition Benches, but are they seeking to bring the NAO into that? The hon. Member for Wigan talks about hand-picking, but the Labour party appointed its own inquiry into the wrongdoing. That inquiry was led by a former Labour MP, supported by a peer newly ennobled by Keir Starmer. And I cannot remember the Labour party requesting an NAO review of Labour-led Croydon Council after a number of serious concerns about the council’s governance and risk management were outlined in a public interest report by external auditors in 2020.
The cold, hard facts are these: the Mayor of Tees Valley has had much success over the past half a decade in bringing jobs, growth and economic development to an area that is now on the up and thriving again, thanks to its Conservative leadership and its engaged and constructive Conservative Members of Parliament. On this specific issue, the Government agreed to a request from the Mayor for a review, which is being set up in a similar way to other reviews. Those who will be involved have been appointed as others have been appointed in the past. The terms of reference have been published using a similar process and, if there is an issue, we will deal with it in the normal way. The experts who are giving of their time and expertise should now be given the time to get on with the job, in the normal way, and to present their conclusions when they are ready.
My right hon. Friend is absolutely right, and that is one of the few facts that the hon. Member for Wigan left out of her contribution, in which there was no clarity about what she is actually alleging.
These are serious matters. Serious allegations have been made, and it is incumbent on us all to clarify the position as soon as possible, for the good of Tees Valley. The review we have set up will do that, and we look forward to it reporting in the usual way at the earliest opportunity. Members should welcome and support the review, and I hope against hope that, in the next two hours, they may still do that.
This is an important debate. I raised the issue at Prime Minister’s questions a month ago, and I stand here today unsatisfied at this Government’s progress on being transparent with the people of this country on such a crucial issue.
This debate is not only about the conduct of government, both regional and national, but about priorities, the economy, the cost of living and trust. It is a debate about hard-working communities in the north-east that are being let down by their elected representatives. The north-east has suffered the greatest cuts to public spending since the Conservative Government took power in 2010, through their programme of austerity and their abolition of our regional development agency, One North East, which focused economic regeneration across the region from Sunderland to Teesside—its abolition damaged our economic prospects.
The beauty parade of the levelling-up competitions since 2019 was exposed by the BBC “Panorama” programme last year for tilting investment to the wealthy Conservative seats of Richmond and Newark while places like Stockton and Billingham missed out. The dereliction of the former Prime Minister David Cameron and the then Business Secretary, Sajid Javid, in letting the Redcar steel site collapse in 2015 was a shocking contrast to the intervention under Labour in 2009, which allowed the site’s rebirth with SSI.
Conservative Governments under five successive Prime Ministers have undermined both private and public investment in the north-east of England, which is why the people of Tees Valley were entitled to hope that, despite abandoning steel on Teesside eight years ago, the Tories’ belated promise to develop the SSI site would be made good.
In Sunderland, we know the importance of investment, because it gave birth to Nissan and its advanced manufacturing supply chain. We know the benefits that industrial rejuvenation provides in terms of good jobs that are skilled, well-paid and vital to local pride. On Teesside, the site that has become known as Teesworks is rightly billed as the biggest industrial opportunity in Europe. A large-scale site, connected to the port, with good energy supplies and the experienced industrial workforce on Teesside is not just a regional opportunity for the people of Middlesbrough, Stockton, Redcar, Hartlepool and the wider north-east; it should be an international opportunity for the UK.
That is what makes the details that have emerged about the activities of Ben Houchen and the South Tees Development Corporation so troubling. It is why this attempt by the Conservative Government to water down transparency and accountability is so damaging to the confidence that private investors need to have if Teesworks is going to be a success, as we all want it to be. It is why last month I asked the Prime Minister whether he or any of his Ministers had given commitments to BP, Equinor or any other companies about contracts at the Teesworks site. I was appalled by the triviality of his reply, when he asserted:
“Contracts at the site will be a commercial matter for the companies involved.”—[Official Report,
Vol. 732, c. 334.]
We know already that interventions by STDC are shaking the confidence of outside investors. We need the confidence of an inquiry that only the NAO can provide, because we know that other issues in Tees Valley are already giving private investors cause for concern about their investments due to the behaviour of the Mayor and actors around the combined authority.
The Financial Times has done a superlative job of setting out the complicated issues around Teesworks. Another report by Jennifer Williams today about issues with Mayor Ben Houchen’s approach to PD Ports suggests there are wider behavioural issues at stake. Its headline reads, “UK port accuses Ben Houchen of wasting public funds in legal action”, and, “Mayor accused of risking ‘the public purse and the reputation of Teesside’”. As the article states:
“PD Ports owns and operates Teesport, the country’s fifth-largest port by tonnage”.
It is an important asset for the north of England. Back in April 2021, The Daily Telegraph reported that the Mayor was
“mulling an audacious takeover of PD Ports”, which is owned by Brookfield, and was seeking to “absorb” its container gateway. It is not for me to comment on a Conservative Mayor’s seeming addiction to nationalising economic assets, but since that article the issue has ended up in court.
Given the troubles at Teesworks, the Financial Times reports:
“Court papers filed by PD accused the STDC of foul play, claiming its chief operating officer at the time, Jerry Hopkinson, was told by then-STDC board member Paul Booth that the corporation’s intention was to buy the port ‘at a discount’ by denying access to its land and then ‘flip it to make a profit’.”
Mr Booth contests the account, while STDC itself says that the comments
“were made in a personal capacity”.
This is concerning. The problem that the people of Tees Valley and the country face is that there are clearly now a series of issues regarding the conduct of elected and appointed officials engaged with Tees Valley Combined Authority and STDC. These problems reflect troubling allegations at Teesworks.
The cavalier approach of Conservative Ministers and the Mayor to transparency and accountability is harming the investment prospects for Teesside. In case Ministers have forgotten, the rule of law stands at the cornerstone of our democracy. Not only are citizens entitled to know that the taxes they contribute will be spent well and that value is not being extracted from the public realm due to inappropriate dealings behind closed doors; businesses are entitled to know that their property cannot be simply nationalised by local Mayors to, as is suggested at STDC, “flip a profit”. The only way to end the doubts that investors and the public have about activities undertaken by Mayor Ben Houchen, TVCA, STDC and Teesworks is to ensure that there is a full investigation by the NAO. There can be no confidence in the pretence of an “independent” inquiry touted by a Secretary of State who has, in his own words, already found his Conservative colleagues innocent of all charges.
Given the economic situation in which this Government have left the country, we simply cannot allow more taxpayers’ money to be wasted, as it is here. That is why the Humble Address has been designed to enforce transparency and accountability on a Government who have, at every opportunity, tried to hide what they get up to and left hard-working taxpayers in the dark. Ministers have been involved in Teesworks from day one, so why has it taken the work of investigative journalists to bring this to light for the Government to realise that this merits an investigation at all? Is this wilful ignorance, or is it a fear of the public knowing what is really going on?
We have the covid inquiry, the hidden communications, the whole Boris Johnson Administration, and now this.
Order. That is the second time the hon. Lady has referred to sitting Members by name. I know that it is complicated because there are former Prime Ministers and former Secretaries of State who can be referred to by name, but, otherwise, Members must be referred to by their constituency, as I am sure the hon. Lady well knows.
I apologise, Madam Deputy Speaker.
As I and many other colleagues have noted, there is a way out of this for the Government. They can commit to the full National Audit Office investigation, which is so needed in an issue as important as this. They can let go of the idea of the Secretary of State picking the people he wants to carry out the investigation, as has happened with the investigation into the ecocide off the coast of Teesside, and let the NAO do its job, as it has the experience, capacity and independence to do this properly. There must be a reason why the Government do not want this to happen. I ask the Minister, as the Secretary of State is not in his place: why will he not support Labour’s call for a comprehensive, independent investigation by the NAO, so that we can get to the bottom of what has actually gone on? Does he know something that the rest of us do not? When the investigation takes place, can he assure the House that those who were engaged in the process will be able to speak freely and honestly, irrespective of any non-disclosure agreements in place? That is extremely important, because the investigation needs to be thorough, transparent, and, above all, trusted. I know that “trust” and “honesty” are not the buzzwords of this Government, and they are not the buzzwords of this process, but they need to be.
We all know why we are here. This has all transpired because of allegations made by Andy McDonald. Interestingly, he will not repeat those allegations outside of this Chamber and the immunity that it provides. At the end of May, I listened to “World at One” in which the hon. Gentleman was asked directly about the accusations that he made in the Chamber. Hats off to him: he performed verbal gymnastic feats of which Olga Korbut would have been proud. I have never heard anybody evade answering a direct question quite so well. I shall stop complimenting him now.
Mayor Ben Houchen and the Teesworks board were perfectly open to a National Audit Office review. I must declare an interest here: I sit on the Public Accounts Committee and I have every faith in the NAO to perform that review. However, the Department for Levelling Up, Housing and Communities decided not to go down that route, and for good reason—it is completely understandable why it made that decision. It would be an extension of the powers of the NAO, giving it jurisdiction over local authorities, which it currently does not have, and that could set an unnecessary and regrettable precedent.
There is to be an independent inquiry, which will follow the rules laid down in the Local Government Act 1972, and that should be sufficient for everybody. Sadly, those on the Opposition Benches once again seem intent on spreading scurrilous rumours and baseless accusations for their own political ends. They know that casting a shadow of doubt over the Teesworks site will deter investors—investors who would provide jobs and grow the economy throughout the region for our people. Labour Members once again want to keep the poor poor. They are the enemy of aspiration and the friend of misery, and only by keeping their big, red socialist boot on the throat of the electorate can they hope for re-election. Conservative Members choose to be positive and to support people into well-paid jobs. We seek only to bring good futures, regeneration, growth and opportunity to our region, a region that Labour has ignored and taken for granted for generations.
I get the sense that there are quite strong feelings in this debate. I hope that everyone will bear in mind that we expect temperate and moderate language, and we expect the debate to be like that.
I want to raise three concerns in particular regarding Teesworks and Teesside. First, there are serious questions on the oversight of contracts that the Tees Valley Combined Mayoral Authority or its bodies have entered into on the land deal and other contracts relating to Teesworks, and the management of the project is risking its success. Secondly, there needs to be more scrutiny over the process by which contracts are won, not only at Teesworks, but at a sister structure in the airport. Thirdly, the Government’s model of mayoral development corporations lacks sufficient local democratic scrutiny and accountability checks.
I want to add to the genuine arguments already made, in good faith, by colleagues in support of a full NAO investigation into Teesworks. There are simply questions that only the NAO can find the answers to—with every stone we overturn on Teesside, a new list of questions appears. Colleagues have already described the deal, so I will not repeat the details, but there are clearly questions that remain unanswered.
How did the developers first know to buy the option to lease from Redcar Bulk Terminal Ltd in 2019? What due diligence was done on their credentials to take over operations for the largest brownfield site in Europe? How much money have they personally risked on the project? Why was there no procurement exercise conducted for the relationship and no contract published?
Then there are the side deals that colleagues have touched upon. Failing an NAO audit on the entire project, will the Government’s independent investigation look beyond the land deal to the project’s side deals? Take Teesworks Quay Ltd, for example, or the contractors taking immense profits from the sites, and how those deals came about.
Those questions are all important, because we want to know that the progress of the project is by the book and that no corners are being cut, even though potential issues with the progress of the project have gained significant attention in the last year. Mass marine die-offs continue to plague north-east beaches, a worker only just survived after an excavator fell into the river and it is reported that relationships with significant industrial partners have flatlined, antagonised by the Mayor’s legal action. But the public relations operation churns on, aggrandising speculative jobs—as we have heard again in this debate—and investment brought to the area, and painting a picture that just does not match the reality.
Coming to my second point, I am interested to know whether the investigation will scrutinise the process by which contracts have been won generally. Again, my concerns have come about because questions raised about the oversight of the projects have been brushed away, obstructed or avoided. Teesworks’ sister structure at the airport, part of the freeport, is another Tees Valley CMA asset that has received millions of pounds of public money. The same two private developers at Teesworks became joint venture partners in Teesside International Airport Business Park in March 2020. What tender or public process was conducted for that?
Since the airport has struggled to reap rewards from the runway, it has turned to the business park to bring profit. In March, it awarded its first contract for the business park to GMI Construction Group. GMI was recorded as having paid for the lobbying services of Recognition Services Ltd, whose director, Graham Robb, conveniently sits on the South Tees Development Corporation board and reportedly does the Mayor’s public relations, too. What was the significance of that relationship in the awarding of the contract to GMI? What tender process took place, and why will the Mayor not assure the public that due diligence took place? We need to address exactly what is going on in Teesside with that web of connected parties.
That points to my final concern on the whole governance model in the Tees Valley Combined Authority. It is only right that constituents in places with combined authorities should be able to hold local leaders accountable to the same standards as they can the Government here in Westminster, but almost every week, we hear new, disturbing reports out of Teesside that legitimately question the probity, decision-making and value for money across different wings of Ben Houchen’s combined authority, following painstaking investigation from highly respected journalists.
Why has the Mayor been able to push decisions through, under the radar, with little or no scrutiny? What oversight of all those decisions really takes place, and why are the public not allowed to see any of it? Why are STDC and the developers allowed to mark their own homework? Why are the people responsible for the performance of projects also the judges of their progress? These basic questions point to a serious flaw in governance.
We are not raising these concerns to talk down Teesside. In fact, protecting and future-proofing the projects is the reason why these matters must be raised today. The stakes are so incredibly high; we need the projects to succeed. That does not mean closing more doors to scrutiny. Local accountability has clearly been unable to address these concerns, and Government supervision, or lack of, has allowed for what could be a huge failure in industrial strategy that affects the people of Teesside and our green ambitions.
This is an opportunity to finally right any wrongs by giving full investigatory remit to a body with the powers and capacity to probe deep into what has happened, including by ensuring that officials who have previously worked as part of STDC, the freeport or a related public body are free to comply with an investigation, regardless of any non-disclosure agreements that may exist. From there, we can learn lessons so that local communities can better scrutinise their combined authority Mayors through an operational structure that prevents conflicts of interest and the secrecy that has been so damaging to local politics and business relations on Teesside—maybe taking inspiration from the Welsh Government’s arrangements for Cardiff.
The Levelling Up Secretary knows that it is inevitable that this will all eventually come to light, so I implore him to allow a full NAO audit. If there is nothing to hide, why not open that door? For him to suggest that north-east colleagues are on a misinformation campaign is deeply disingenuous. Will he say the same of well-respected journalists, and news outlets such as the Financial Times, which are also asking these questions? I expect he will not.
I want these projects to be a success for Teesside and the wider north-east, which I care about deeply, but that should not mean that there are obstructions to finding out the truth. Selling a dream of success that does not match reality does not deliver that success to the people of Teesside. If the Government insist on proceeding with their own Department-led inquiry, it must answer the three concerns that I have laid out: why and how did the land deal and other contracts fall into private hands, what scrutiny is there of how wider contracts are won, and when will the Government remedy the gaps in oversight and accountability for the wider devolution ambition? Only once these questions have been addressed can we reassure Teesside communities that they are the priority, not private profit. Government obstruction without clear justification will only kick the can down the road, stalling any progress in the north-east. I urge the Government to reconsider their course of action.
Teesside is being transformed, from our airport, saved after Labour let it drift to the brink of closure, to our town centres of Middlesbrough, Guisborough and Loftus benefiting from tens of millions of pounds of direct investment. We have the new mayoral development corporation to turbocharge the regeneration of Hartlepool. We have the Treasury’s northern campus in Darlington and we have the UK’s largest freeport on the Tees. Overshadowing, and indeed uniting, all of this is Teesworks, the largest brown-field remediation project in the country, and the beating heart of our industrial future. The site of the former Redcar steelworks was costing the taxpayer £1 a second as long as it stood idle. It is right that the Government and our Mayor have brought it back to life. Government investment of £246 million has been put in, but as we know, the cost of total remediation is some £482. 6 million, as independently assessed. That is the reason for the joint venture established with the private sector.
It is important to clarify exactly what has happened. The first point is that the site has never been a public asset. The private sector Teeswork partners brokered a deal to take back control of the land from the Thai banks. It brought the deal and the land to the South Tees Development Corporation, not the other way round. That is why the Opposition’s talk of no public tendering process having taken place is such a red herring.
The public-private partnership was agreed, moreover, by the TVCA cabinet, the STDC board, the Department for Business and the Treasury. Bob Cook, the Labour leader of Stockton council, voted in favour. Andy McDonald stated on the BBC’s “Sunday Politics” that he understood the reasons for a 50:50 split. A lot of revisionism is going on now.
I have spoken to the leader of Stockton borough council and he has had no part in any decision relating to the transfer of those assets from the public to the private sector. He is a member of the combined authority, not a member of the STDC board. It is important that the right hon. Member recognises that.
The hon. Gentleman is completely wrong. Mr Cook voted for this structure and he cannot change that vote.
There is no credible suggestion that wrongdoing has occurred. Teesworks is double audited, first by Mazars and then by Azets, two separate auditors. There is then an audit committee for Teesworks. Here we come to the truly jaw-dropping fact that that audit committee is chaired by none other than Councillor Matthew Storey, the leader of Middlesbrough Council’s Labour group and the head of the parliamentary office of the hon. Member for Middlesbrough. He chairs that audit committee —what concerns has he raised? He is part of the audit structure that is now being cast into doubt.
It is noteworthy that in the speech by the shadow Secretary of State we heard nothing that amounted to a substantive allegation. We heard a series of inferences and questions that amount to nothing more than the same tittle-tattle that has characterised this process, with the exception of the allegation of industrial-scale corruption that has been made but never substantiated, because the hon. Member for Middlesbrough knows that he would be sued for libel if he repeated it.
It is up to each individual Member to determine whether their declaration of interest should be made during a debate. Clearly, processes are available should a Member not do so and other Members believe that they should have.
Thank you, Mr Deputy Speaker. I can confirm that no such interest exists, despite desperate attempts to insinuate to the contrary.
Who speaks for the Labour party in this debate? We have the shadow Secretary of State, Lisa Nandy, clear that she is making no allegations, but we had the hon. Member for Middlesbrough making very pointed, very serious allegations of criminal wrongdoing. There is a yawning gulf between the two.
The next key point I wish to raise is about the process that the Government have adopted to set up the independent investigation that has been announced this afternoon. As the Minister set out very clearly at the Dispatch Box, that is the legal structure for investigating when a best-value investigation is triggered. The irony here, of course, is that the civil service does not believe that that threshold has been met and has advised Ministers to that effect. [Interruption.] I have spoken to Ministers about this point and, as Ministers have made clear, that is the case. It is not Ministers asserting that this threshold has not been met: the civil service does not believe that that standard has been met.
As both the former Secretary of State and the former Minister of State for Local Government, I can say with total assurance that this process is normal and straightforward. In his letter to Ben Houchen a fortnight ago, the Secretary of State set out why one would not want to seek to extend the remit of the NAO in the way that is being proposed. We have the long-standing, Labour-instigated system of commissioning these independent inquiries under the Local Government Act 1999. The key point here, of course, is that it is not just public confidence but investor confidence that is being undermined by the Labour party. It is doubly ironic, therefore, that we have never seen Labour calling for a similar process anywhere else— as we heard from the Minister, not even in Labour-run Liverpool when actual criminal wrongdoing had taken place. To add insult to injury, was the Labour party’s own investigation into its people’s conduct in Liverpool independently led? No: it was investigated by one of Labour’s own former MPs and a former council leader.
So we return to the purpose of this campaign—this vendetta. It is an attempt to systematically smear Ben Houchen, destroy Teesworks and make Teesside poorer. We have seen this movie before: earlier this year, not one but two independent reviews led by some of the most eminent scientists in the country thoroughly rebutted the idea that marine deaths were anything to do with the dredging at Teesworks, but just moments ago, we heard Julie Elliott again dredging up those allegations—you will pardon the pun, Mr Deputy Speaker—knowing full well that they are baseless. Labour will seize on any excuse and take any chance to try to talk down my region. I am sick to death of it, and so are the people of Teesside, because it is not in the public interest: it is in the Labour party’s interest. That is why Labour pursues these wrecking campaigns.
Teesside has been rescued from a cycle of secular decline with some bold leadership and private sector investment, and the public back it. That is why, in 2021, Ben Houchen received 73% of the vote to carry on with his mission. I ask shadow Front Benchers to confirm whether they will respect the impartiality of the senior officials from the local government family who have now been tasked with conducting this investigation, and I ask the hon. Member for Middlesbrough to confirm that in his speech, too. If they do not respect the integrity and impartiality of those officials, why do they not do so? What is wrong with the investigation that has been instigated this afternoon?
I directly challenge the hon. Member for Middlesbrough on this point, too—if it is established by that inquiry that his allegations of “industrial-scale corruption” are baseless, as I firmly believe them to be, will he come to this House and withdraw the allegations that he has made here? If he does not, it will amount to one of the most flagrant abuses of parliamentary privilege that I can conceive of, and I believe that he should be ordered to this House by Mr Speaker in the event that he declines to do so.
This is a cynical, shameless, seedy attempt to talk down Teesside, to imply wrongdoing and to damage the interests of the very deprived communities that I am proud to represent. I look forward to the report of the independent inquiry. I will be voting against Labour’s motion today. It is time to draw a line in the sand against this game playing by the Labour party. Labour Members have done it before—they have done it on the crabs, they have done it with the Teesside police and crime commissioner, and they have done it to the former Mayor of Middlesbrough. They know full well what they are doing. They abuse this place to make allegations, rely on others to amplify them outside and then feed off the clouds of suspicion and miasma of doubt that they create. All they have to offer is slander, negativity and decline—all the hallmarks of their toxic legacy on Teesside. Enough.
There are seven Members wanting to take part in the debate, and we are going to do wind-ups of 10 minutes each. As the House can see, we have just under an hour for those seven Members. If people can focus their contributions so that everybody can get equal time, that would be really good.
Secrecy is a disease that is threatening a once-in-a-lifetime opportunity for the people of Teesside—an opportunity of thousands of high-quality jobs and a share of the dividend from hundreds of millions of pounds of taxpayers’ money. It is secrecy that drives the suspicions, questions and doubts about how the Tory Tees Valley Mayor, Ministers and their cronies do business not just at the Teesworks site, but at our publicly owned Teesside International airport, which continues to lose millions of pounds and has twice been bailed out to the tune of £10 million using taxpayers’ money.
Tomorrow will be the 13th anniversary of my maiden speech in this House. I was happy that day to tell the world how proud I was to be an adopted Teessider, and that remains very much the case today. We have a wealth of resources, from our people to our amazing cultural offer. We have our beautiful countryside, our coast and our amazing industrial base, which has created so much of our country’s wealth, but we deserve so much more.
My hon. Friend Andy McDonald and I have been consistent in demanding openness and comprehensive scrutiny of decisions and the use of hundreds of millions of pounds of taxpayers’ money by the Tees Mayor and his close-knit band of supporters and partners. The fact that several national newspapers, led by Private Eye magazine, have made front-page news of how business is done on the mayoral projects on Teesside warrants a completely independent investigation not by a group appointed and favoured by the Secretary of State, but by the National Audit Office, which has confirmed that it could do one if given the green light by Ministers. The Tees Mayor is up for it; why are the Government not?
Similarly, I hope to see Ministers withdraw their opposition to the inquiry proposed by the Select Committee on Business and Trade, which would have the power to scrutinise in a way so far denied by all those concerned. It could also summon people here to give evidence. I have had all manner of concerns over the years as the Mayor has been aided and abetted by Ministers as senior as the Prime Minister himself, hiding not just the decisions made about the airport and the Teesworks site, but how those decisions were reached, who was involved and who was excluded.
I do not know whether you have heard of the Darwin’s bark spider, Mr Deputy Speaker. It weaves the largest and most dense webs in the world. They can be as large as 28,000 sq cm, but that spider has nothing on the Tees Mayor when it comes to creating dense webs of secrecy, with organisations, companies and even charities created in an attempt to dodge full and proper scrutiny of how he and his mates do business and spend public money on what is referred to as the UK’s biggest levelling-up project.
As has been alluded to, things came to a head last year when a record posted with Companies House showed that the once public asset that is the Teesworks site is now 90% owned by a small group of local businessmen, the shares having been transferred to them by the Tees Mayor and the board of the South Tees Development Corporation, but we still do not know why such a decision was taken and who exactly was party to it. For certain, it was not taken by the Tees Valley Combined Authority, made up of the elected Mayor and the elected leaders of the five local authorities. They were not even consulted, as far as I know.
The Mayor thinks he had to do business with two men in particular, Chris Musgrave and Martin Corney, because they owned what can only be described as a ransom strip of land on the Teesworks site and they would take on the liability of the hundreds of millions still needed to remediate the site. I have an issue with both his reasons, or perhaps “excuses” is a better word. The Tees Mayor took on the might of the Thai banks, which owned most of the site after SSI walked out on Teesside and ended over 100 years of steel production. He decided he would go as far as a compulsory purchase order, and to his credit, he acquired the site for the public. Why, then, did he not take similar action against the two local businessmen who were holding the public to ransom? He will not answer that question, but perhaps the Minister can help.
The Minister may also be able to help over the costs of the remediation of the site. The Government get no accolades for allowing the steel industry to die on Teesside, but I do give them credit for agreeing to fund the remediation of the site so it could be fully developed. During his short-lived tenure as the Government investment tsar for the Tees Valley, Lord Michael Heseltine—I am quoting him directly—said:
“The money to clean up the site will be what it costs. No-one knows what the condition of the site is and although there have been estimates, they are estimates based on guess work. So it is much better to make it clear”— and I agree that it is much better to make it clear that—
“central government will pay the clean-up costs and underwrite them whatever the bill comes to.”
Successive promises were made by Government Minsters that the Treasury would fund that work, so there was never any need to find private capital.
We have heard the Tees Mayor claim that he may have been naive in some of his dealings, but never did anything illegal. That may well be the case, but that naivety has cost our communities on Teesside the chance to share the dividends from the site and the public money invested in it. Sadly, however, we go back to the word “secrecy”. Were other companies and organisations considered for partnering with the Teesworks site? Were other offers made for the land? I have heard of one, and that was increased. What were the criteria and business case for selecting partners? It is all very much a secret, and none of the decision-making bodies is subject to the Freedom of Information Act.
I do not want to repeat all the accusations laid at the doors of the Mayor and his friends by the FT, The Times, the Daily Mirror and The Guardian, but I do hope we can get a fully independent investigation by the NAO into the wholesale transfer of assets, including the tens of millions of pounds of on-site scrap, to the private sector. That includes the Private Eye claim—a claim yet to be denied by the Mayor or anyone else—that Orion Kotrri, Mr Musgrave’s son-in-law, has been running the scrap operation. The South Tees Development Corporation has refused to say why he was selected for the role, who employs him or how he is paid. It is no secret that the business is being kept in the family.
The media and others are right that there are critical questions over how a bunch of local businessmen could already have extracted around £50 million in cash and assets from Britain’s biggest levelling-up project before a single business has begun operating on the site, and apparently without investing themselves. Perhaps all those concerned with the scrap should meet the challenge from The Northern Echo, which has said:
“There must be a ledger showing how much scrap has been sold which can put the facts in the open and enable people to judge whether there is any truth in the rumour”— that is, the rumour of poor management.
I will not.
Is the Minister aware of any such ledger of what are public assets, of where they have gone, and of what cost and value? Private Eye has established that decisions have been pushed through a board of the South Tees Development Corporation dominated by Houchen placemen and women in unrecorded discussions. Surely Ministers will recognise that they have some cleaning up to do. All we are seeking is for the truth to come to light. If the claims are not true, why is the Mayor not coming forward to publish all the relevant documents? Why is he not challenging, through the courts if necessary, all these media claims that he simply dismisses?
I would love to see the promises made by the Tees Mayor come to fruition. I want our communities to benefit from the jobs, but from much more than that too. Just as London boroughs benefit from the massive council tax base, those on Teesside could benefit from the dividends from Teesworks, and goodness knows we need it. Our community in the Tees Valley faces soaring levels of hardship compared with the national average. Research released on Monday by the End Child Poverty coalition showed that, in Stockton-on-Tees alone, over 40,000 children are living below the poverty line.
The picture is the same across all of the constituencies of Members from Teesside represented in the Chamber, but time and again we have seen the Mayor and his Government fail our area. They failed to do anything to retain steelmaking on Teesside. Despite claims of help on the way, they allowed our historic and world-leading Cleveland Bridge and Engineering Company to go to the wall, with the loss of hundreds of highly skilled jobs. When the Sirius mine got into cash-flow difficulties, the Mayor promised help, but his Government brokered a deal for a multinational company to take over, leaving thousands of local investors with very little. Many of them were former steelworkers who had invested their redundancy pay in the venture. Who knows what could have been done if business had been handled in a different way on Teesside, with public benefit being the focus.
We need assets on Teesside. We need investment. We need to know what is going on with people’s existing assets and how they are being disposed of. If there are huge profits to be made from Teesworks—the scrap alone is said to be worth £100 million—surely they should be going into our communities for development and quality services and not almost exclusively into the pockets of private companies. We need answers. We need openness and transparency. We need to see an end to this secrecy.
I work out that if people keep to roughly eight minutes or so, everybody will get a fair go.
As a Tees Valley MP, I am pleased to speak in this debate that is so relevant to many of my constituents. I have to admit that I am baffled by the Opposition’s choice of motion for the debate. If I were them, the last thing that I would want to do is spend hours discussing the lack of investment in the north-east by a previous Labour Government. It is only under a Conservative Government that we have started levelling up. The Opposition’s demand for the National Audit Office to investigate is also surprising, given their resounding silence when my right hon. Friend Robert Jenrick ordered an inquiry into Liverpool, where actual corruption was taking place.
Labour has 17 Opposition days, which are meant to be used to discuss important issues, yet it has chosen to use today to throw mud at a successful levelling-up story. Labour could have used today to address the country’s priorities, which the Prime Minister set out in his five pledges. It could have talked about halving inflation, which has started to fall. It could have talked about economic growth, as recession is likely to be avoided: the OECD predicts growth of 0.3% this year and 1% next year. It could have talked about falling national debt, with borrowing forecast to fall every year according to the Office for Budget Responsibility. It could have talked about reducing waiting lists. The figure for patients waiting over 18 months peaked in September 2021 at 125,000; in March this year, it was 10,737. Labour could have talked about stopping small boats. Compared with last year, crossings are down by 20%.
Has Labour chosen any of those subjects or talked about any of its own plans? No. Could that be because the news from the shadow Chancellor is that she wants to avoid unfunded spending commitments? Well, that would mean that Labour Members would have nothing to say. Could it be that even their supportive unions call their policies naive and say that they lack intellectual rigour and thinking? Where does that leave Labour? Back to the mudslinging and talking down places like the north-east.
I am sorry, but I am proud of the Conservative-led transition of the Tees Valley. Teesworks is an excellent example of an industrial area that was neglected until a Conservative politician, Ben Houchen, came along and decided to do something about it. I remind the Chamber that doing nothing with the steelworks would not have been a neutral act, either. Even standing idle, it cost the taxpayer hundreds of thousands of pounds every week, while in 2015 unions warned that clearing the site to repurpose it for housing or industrial developments would cost as much as £1 billion.
The site required so much work to become usable again that its value was in the negative hundreds of millions. Until recently, the joint venture appeared to have a level of cross-party support among local politicians. For example, the Labour leader of Stockton Council voted for it, and the independent leaders of Hartlepool, Middlesbrough and Redcar and Cleveland all approved it. A wide range of people and organisations in both the private and public sectors have been involved in the development of Teesworks, which is another reason why I find it difficult to believe that there could be some alleged secret tie-up to swindle taxpayers, as seems to be suggested.
It remains a clear and obvious fact that although Andy McDonald alleges industrial-scale corruption when he is in this place and enjoying the protection of parliamentary privilege, despite many requests he has declined to repeat those allegations where he would have to defend them. Can I also remind him that another great success story in the Tees Valley is the resurgence of Teesside airport, driven again by the Tees Valley Mayor, after its almost total demise under the control of Labour-led councils prior to his election? The airport is now enjoying further growth in both passenger numbers and as part of the Tees Valley freeport, delivering economic growth and employment.
We have already seen remarkable progress as a result of the joint venture partnership, including the demolition plan that is two years ahead of schedule. Less than £250 million of public money has been invested in the site, yet it has already secured over £2 billion-worth of private sector investment. I must also mention in passing the 2,750 long-term jobs that are being created through this project. Job creation is always appreciated, but it is all the more important in this case, where 1,700 jobs were lost with the closure of the steelworks. Now that the site is doing well, Labour has decided to use it as another opportunity to talk down the north. Considering this was the first mayoral development corporation outside London, I think the record is pretty good.
The motion is about accountability and scrutiny of Teesworks, so we ought to note that Teesworks is double audited by Mazars and Azets, whose audit is then further audited by Mazars. Surely, if corrupt or illegal decisions had been taken, they would have been spotted by at least one of the accountancy firms, rather than going unnoticed? The Mayor, as has been said, requested that the National Audit Office become involved as a result of the accusations, but the Secretary of State decided that a more appropriate step would be to commission an independent review to consider the specific allegations.
As an aside, facts are always facts. Alex Cunningham alleged that—[Interruption]—Martin Corney’s son, sorry, had benefited. That is just incorrect. If the hon. Gentleman would like to intervene and correct the record, that is a choice for him to make. Silence.
The Secretary of State’s determination was that it would be inappropriate for the NAO to examine individual local government bodies. The fact that the Mayor requested NAO engagement would strongly support his contention that there is genuinely no corruption, wrongdoing or illegality.
I am disappointed that the Labour motion wastes parliamentary time and once again attempts to talk down progress in the north-east. It reminds me of the Leader of the Opposition, when it was announced that the Treasury was coming to Darlington, stating that it was not levelling up, it was giving up. With the success of Teesworks, Teesside airport, the Darlington Economic Campus and so on and so on, I for one am proud of what the Conservatives are doing to level up the Tees Valley. I hope that when we get a north-east mayor for the LA7, they will also be a Conservative and deliver in the same way that Ben Houchen has delivered, meaning that all my Sedgefield constituents can be as well served as that portion who reside in the Tees Valley.
Much of the debate has been targeted at me and there has been a request for details of allegations. I trust I will be given the opportunity to set those out.
I am grateful to my colleagues on the Labour Front Bench for giving this issue such prominence today. I want to start by paying particular tribute to Richard Brooks of Private Eye. Without his amazing forensic tenacity and persistent investigative journalism over many, many months, we would not be having this debate today. Similarly, Jen Williams of the Financial Times has gone to the trouble of conducting in-depth investigations and has raised many pertinent questions, and The Yorkshire Post so courageously refused to be bullied or silenced. The BBC and many others have taken note of these matters. It is reassuring that investigative journalism is alive and well.
It is a complex web that has been woven and it requires significant attention to try to understand what has gone on. I share the bewilderment of those on my Front Bench that the Secretary of State is determined not to request that the NAO investigate these matters in full.
The core background to this saga is founded in the painful post-privatisation collapse of steelmaking on Teesside, which came to an end in 2015. It has left a massive hole in the local landscape and economy. The Tees Valley Combined Authority was established in 2016 under the Chancellorship of George Osborne, when the Labour Tees Valley local authorities, hamstrung by austerity, agreed to set up the new body, principally to focus on economic development and regeneration, transport and skills, led locally by Councillor Sue Jeffrey, then the leader of Redcar and Cleveland, Dave Budd, then the elected Mayor of Middlesborough, and others. In May 2017, Ben Houchen was elected as Tees Valley Mayor and promised to bring back steelmaking to Teesside. Clearly that has not happened.
The South Tees Development Corporation came into being in August 2017, its principal task to assemble various pieces of land and bring them into public ownership to facilitate development, with the levering in of private investment a key element. People like Sir Alan Cockshaw, a most highly respected figure in the business world, Steve Gibson, the chair of Middlesbrough football club and Bulkhaul, and Paul Booth of Sabic all served on the STDC board and put in many hours of unpaid time—and, indeed, flew to Thailand at their own expense to further the negotiations with SSI’s creditors to free up and secure the land.
The plan of the original board for development of the site was to remediate one parcel of land, develop it, let it, and then utilise that income to fund the next parcel, and so on. In effect, the outcome would have been a sovereign wealth fund for Teesside. All that changed with Ben Houchen’s re-election in 2021. Those hard-working and generous board members were sacked by Ben Houchen and a new team brought in. While the funding was allocated from central Government—from the Department for Business, Energy and Industrial Strategy and the Ministry of Housing, Communities and Local Government—to be applied over three years from 2020-21 through to 2022-23, running into hundreds of millions of pounds, the Government made it clear that they were not in favour of sustaining an equitable public-private partnership beyond those committed moneys and that the private sector should take it on. So that was, and still is, the determinant ideology, and the end of any thought of a sovereign wealth fund for Teesside.
In the following rush, these concerning events have unravelled. It would seem that the private developers were very smart and in the right place at the right time. They seized on the opportunity when SSI got into financial difficulties and twigged that SSI was prepared to sell a particular asset in an attempt to assist in addressing its own financial woes. They secured an option to acquire a lease of some 70 acres of what was then SSI land not far from the Redcar bulk terminal. That was sold to Musgrave and Corney by SSI for some half a million pounds. In effect, they became the putative default partner in what was to manifest itself later as Teesworks Ltd.
Other parties were interested in partnering with STDC, but they had no chance. There was no tendering process or proper procurement; there was no competition. Any inquiry will need to explain how these property developers came to acquire this key part of the site when the Tees Valley Combined Authority was pressing for a compulsory purchase order to buy the entire site.
More interesting things then happened in 2019. Mr Musgrave formed DCS Industrial Ltd, which was the vehicle for his Teesworks shareholding, and what we now describe as the SeAH site was acquired by STDC through its subsidiary company, South Tees Developments Ltd, from the former occupant, Tata Steel, for £12 million. This is the site upon which SeAH, the South Korean wind turbine company, will house its factory. The construction of the South Bank quay was made possible with a £107 million loan to STDC from the Government’s UK Infrastructure Bank.
“joint venture partners lack of experience on size, complexity and hazards associated with the South Tees site” and the
“differing governance requirements between joint venture partner background and public sector requirement impacting procurement”.
Despite that, in March 2020 STDC formed Teesworks as a 50:50 joint venture with companies controlled by Chris Musgrave, Martin Corney and Corneys’s father-in-law Ian Waller, all of whom paid nothing for their shares. I trust that Mr Clarke will correct the record as far as Mr Waller is concerned.
STDC stated at the time that the joint venture company, Teesworks, would pay market value for the land it elected to buy. That changed fundamentally a little later. In early 2020, options were given by STDC for Teesworks to acquire freeholds from STDC. In August 2021, Gary Macdonald, the director of finance at STDC, reported to the board that there was now only a five-year window for development, which meant that there had to be a quick use of Government funds and
“a transfer of significant risk and rewards” to the joint venture partners
“to incentivise the required pace of delivery”.
Those are the very people that STDC had expressed such doubts about just 18 months before.
That all begs the question, what value for money assessments did BEIS, DLUHC or the Treasury perform on this project, into which such vast sums of public money have been sunk? We should be able to see the Green Book calculations for all the different stages, ranging from the initial 50:50 arrangements through to the change to 90:10 in favour of the JV partners. In November 2021, the shareholdings of Musgrave, Corney and others via their various companies were increased from 50% to 90%. Again, they paid nothing for that increase in their equity stakes. Remarkably, they then secured the major options to buy any parcel of land on the site. Presumably, the quid pro quo was that they would stump up when the public cash ran out. As STDC put it, the extra shares were
“in return for Teesworks taking on the future development of the site, together with the net future liabilities in preparing the site for tenants”.
The inquiry will need to see the details of the meetings between Houchen, Musgrave and Corney on all those matters. What did they discuss—and when—about the initial JV and the variation to a 90:10 split and the associated changes, such as options to buy land? Why were the share classes of Teesworks Ltd changed at the same time as the 90:10 split, meaning that no dividends have to be paid to the public sector, and can be paid only at the board’s discretion?
While the split was 50:50, the position was that Teesworks would pay market rates for the land it opted to buy. A freedom of information reply from STDC indicates that once the ratio was changed to 90:10, land acquired from South Tees Developments Ltd could be appropriated at a nominal sum of £1 an acre.
Teesworks did exercise its options to buy the freeholds constituting the SeAH site, but that was not known to the public until Private Eye revealed HM Land Registry’s entries dated
Ben Houchen has said that the true consideration paid by Teesworks is actually £15 million, despite those Land Registry records saying otherwise. Apparently, the lower figures were adopted for tax reasons. If that is right, I am sure that His Majesty’s Revenue and Customs will have something to say about it, as might His Majesty’s Land Registry. If inaccurate or misleading figures are put on transfer documents, there are usually consequences. I hope the inquiry will examine those matters, as it should.
When will this mysterious £15 million be paid? In one of his many intemperate media rants, Mr Houchen claimed that the lands we are talking about have “never” been in the public sector, and that has been repeated here today. Really? Given the audit trail and what the Land Registry documents say, it is difficult to see how he could possibly sustain such an argument. I confess to feeling somewhat sorry for his officials, who have to sweep up behind him to sort out his inaccurate stories, but it still does not wash.
There then followed a series of transactions. Teesworks retained the freehold, but leased its 90-acre site to a private investor, now known to be Macquarie, the Australia-based global financial services company, for a peppercorn rent, for which Macquarie paid Teesworks a lump sum of £70 million to £80 million. In turn, TVCA, the taxpayer, leased the land from Macquarie, the investor, for an inflation-linked £3.65 million per annum for 40 years. TVCA then sub-let the land to SeAH for £4.3 million per annum. That means 90% of the £70 million to £80 million will be going to Musgrave, Corney, Waller and their associate Chris Harrison, who have 45%, 21%, 19% and 5% shares in Teesworks respectively. That is a staggering £65 million-plus instant payday for the Teesworks joint venture partners.
While Teesworks is the freeholder for both sites, a clause in the transfer agreements ensures that the publicly owned South Tees Developments Ltd retains responsibility for environmental liabilities arising from hazardous substances. So Messrs Musgrave and Corney are not, according to that document, liable for cleaning up the site. The concern is that these property developers, who have never engaged in anything comparable to this undertaking, have become rich beyond anyone’s wildest dreams, all with the benefit of public moneys and opportunities.
Then there is the scrap. There was an agreement between STDC and Teesworks that as the by-product of the clearance and remediation works on the site, the proceeds from the scrap metal would be shared. There are hundreds of thousands of tonnes of metal on the site—approximately 500,000 tonnes in all. Up to now, a total of £94 million of valuable equipment, metals and other materials have been taken off site, weighed or otherwise. The sale proceeds are shared between STDC and Teesworks, with around £45 million going to Musgrave, Corney et al. Does the Minister believe that that represents good value for the taxpayer, who only three years ago owned all the metal on the site? Can he explain what is happening to the rest of it, which is estimated to be valued at up to £120 million?
What was there by way of a tendering or procurement process? Again, as was revealed by Private Eye, running the scrap operation is a man called Orion Kotrri, who just happens to be married to Martin Corney’s daughter. Any inquiry will need to ask how Mr Kotrri was hired, what his qualifications are for the job, whether that job was advertised and who employs him. Incredibly, we have now seen footage of Ben Houchen on a “trade mission” to meet the Albanian Prime Minister and the Mayor of Tirana, along with Martin Corney and Mr Corney’s Albanian scrap metal dealer son-in-law. We need to understand why they were present, given the visit was billed as a trade mission about international co-operation in travel and education. What did Mr Corney and his son-in-law have to do with that?
And then there is security. There is a fire raging at Teesworks right now. My hon. Friend Mrs Hodgson referred to the injury caused to the man who fell into the river, and let us not forget that two men died in the process of remediating the site. NE Security Ltd got the contract, initially worth £2.4 million, to protect the site, and then, a few months later, a further two-year contract worth £3 million. There are certainly some colourful characters involved, as has been reported by Private Eye, including those with a history of insolvency who owe HMRC £1.5 million, including an estimated £1.4 million to the anti-tax avoidance unit. Let us not overlook the proprietor’s son, who is in charge of health and safety on site, who has been given a prison sentence of 11 years and eight months for his part in running a drugs racket that stretched from Liverpool to Teesside. Both, of course, now have freeports. You could not make this up, Mr Deputy Speaker. It is the stuff of the movies.
Much criticism has been levelled at me for speaking up about these issues. I have to say to critics of my use of parliamentary privilege that they really must understand that I will not be bullied, and that the use of privilege in this place is cherished and should not be derided. It is an important part of our democracy, and it is there so that Members of Parliament can raise well-founded concerns—as I have demonstrated today and on previous occasions—without fear or favour. So I ask those critics to grow up. They may or may not be advocates of SLAPPs, but they should be careful about embracing the concept of lawsuits being used to censor and silence critics.
As for the charge of being anti-business or “talking Teesside down”—a charge that is regularly levelled against me and against the Labour party—it is nonsense. Since the day I first set foot in this place I have been advocating the advancement of green industries, along with my friend and neighbour, my hon. Friend Alex Cunningham. Not only are these industries critical to saving our planet; they are a key factor in bringing good, well-paid, secure, unionised jobs to Teesside, a region that desperately needs those jobs and is ideally placed, both industrially and geologically, to pave the way not only for hydrogen industries, but for carbon capture, utilisation and storage and so much more.
That is why the behaviour of the Tees Valley Mayor is so distressing. While my critics are still obsessing about me, I have to spell it out: businesses can read. Whether I say these things or not, these concerns are widespread, and if anything and anyone is undermining the confidence of investors, it is the reckless conduct of the Tories’ blue- eyed-boy in the north, Ben Houchen. If they really care about how public moneys are spent, and if they are truly as pro-business as they say they are, this Government must abide by their own declared strictures of “integrity, professionalism, and accountability”. They should wake up and smell the coffee, and join me in ensuring that these matters are fully investigated, and corrected, before it is too late, because if they do not, a Labour Government will.
As I said earlier, the winding-up speeches will begin at 6.40 pm. Four Members are trying to catch my eye, so according to my maths, they have just over five minutes each if they want to use equal amounts of time.
Having lived my entire life in Teesside, I know the challenges that it has faced, and I know the difference that being home to the UK’s first and biggest freeport will make in bringing investment and jobs to my area. It will create incredible opportunities for people to take up the jobs of the future in green technology and energy for generations to come. I understand that it will also provide a huge cash boost for local councils, with unprecedented revenue generated from business rates with the potential to turbocharge local services. Redcar & Cleveland Borough Council alone is set to receive as much as £30 million a year from 2026, and there is a hell of a lot more to come.
This is probably the largest levelling-up and remediation project in the country. Eight years ago the Redcar steelworks on the site closed, which caused devastation across Teesside, with 1,700 job losses. The huge site remained redundant, a scar on our community, and that redundant site was costing the taxpayer £13 million a year: yes, that is £1 for every second. The former Member of Parliament for Redcar suggested that it would cost up to £1 billion to clear the site. That has been done, and £246 million of public money has gone into the project, which has so far secured £2 billion pounds in private sector investment. On a site that caused so much heartache and pain, this project has already created 2,725 long-term jobs, and in the longer term it looks likely to create a total of 20,000 with the potential for a further 4,000 at the new airport business park. That is 24,000 great jobs that could make a huge difference to the lives of youngsters growing up in Stockton, Thornaby, Ingleby Barwick, Yarm, Eaglescliffe, Billingham and Middlesbrough, and not only are there jobs; the training is coming too, with the new Teesworks Skills Academy, as well as further opportunities being opened up in local colleges. These jobs and investments are a huge part of a bigger picture that has put Teesside back on the map, from the Darlington economic campus bringing senior civil service jobs and decision making to Teesside to saving Teesside airport, hooking up my area with the world and all the investors it has to offer. Teesside is on the up.
As well as benefiting from this and the potentially huge revenues that will come to my local council from the freeports business park at the airport, Stockton South is seeing unprecedented investment, including in a renewed railway station for Eaglescliffe; investment in high streets in town centres in Stockton, Thornaby and Yarm to bring back pride of place and support local businesses; a new purpose-built vocational training facility to open doors, opportunities, chances and choices for young people; and much, much more.
But there are always those who will talk down our area, deterring and jeopardising investments. They are more concerned about party politics than the interests of local people, and they lack the ambition to believe that we can do more on Teesside. When it came to the Mayor saving our airport after the complete and utter disgrace of the way it was cared for by Labour authorities, my Labour predecessor said that it was “fantasy politics” and that we should draw a line under the idea that anyone would buy back the airport. Alex Cunningham said that there was “no credibility” to the plan and that we would never see the money that was required. Well, with ambition and drive, Ben went on to save our airport and as the months go by, it continues to see more destinations and passengers added to its offering, much to the disappointment of the hon. Member. Now, thanks to its freeport status, the new airport business park is expected to create a further 4,000 jobs. Opponents are desperate to talk down our area, using parliamentary privilege to make comments that they are unwilling to repeat outside this place.
The decisions around the site, its ownership and its liabilities have gone through the combined authority cabinet, on which my Labour council leader—who I understand was previously employed by the hon. Member for Stockton North—sits. I understand that he raised no concerns about the proposal and that he in fact voted for the joint venture. Yes, the hon. Member for Stockton North’s former employee, the Labour leader of our local council, voted for the joint venture. Similarly—there is a bit of a theme here—the Labour group leader in Middlesbrough, who I understand might also by employed by Andy McDonald, chairs the authority’s audit committee and never raised a single concern about the venture.
Teesworks is, as we have heard, heavily audited by two firms with a double audit. Moreover, the use of £246 million of public money has already been investigated and reviewed by the National Audit Office, which found it to be properly used in line with the business case. I think it is fair for people to make legitimate criticisms over the direction of the site, but what we have seen is politically motivated baseless smears, insinuation, tinfoil hats and mud throwing, with allegations of impropriety that people are unwilling to state outside of parliamentary privilege. It is wrong to play politics with something so important to the prospects of our area when unprecedented investment and jobs are on the line.
I have found that the door to the combined authority is always open and that it is willing to answer questions from me and my constituents. The independent review commissioned by the Department for Levelling Up, Housing and Communities in line with established practice—I think Labour established that practice—will provide yet another opportunity for questions to be asked and answered. It will also allow Members of this House to put forward any evidence, if indeed they have any. The tinfoil hats and politically motivated smears from the Opposition have real consequences for the people that I represent. They deter and jeopardise investment, jobs, opportunities and the huge rates revenue that my council will benefit from. This is a huge opportunity for Teesside and it is time for my Labour neighbours to get behind it and work with our phenomenal Tees Valley Mayor so that he can continue to deliver incredible change, investment and jobs for Teesside.
I start my brief contribution by congratulating my hon. Friend Andy McDonald on his forensic representation of this murky saga at Teesworks. The abuse and attacks will not deter him from unearthing the answers, as we can see from his fantastic speech. People need to back off and treat this issue extremely seriously. I give thanks and credit to Private Eye and the Financial Times for their fantastic journalism.
It would be helpful if the hon. Gentleman clarified that every single person cited in that Financial Times report, on which so much credence is being placed, is a Labour politician.
I was very gracious in giving way, and the right hon. Gentleman did not even answer the question. I think it is fair to say that the answer is no.
I also give credit to The Northern Echo. Despite its commercial considerations, and in the best traditions of that newspaper, it has put public duty above all other interests. It has published nine important questions, which are worth putting on the record.
The central allegation is that Musgrave and Corney have made £45 million from Teesworks in three years without investing any of their own money. By contrast, the taxpayer has put in £260 million, plus a £107 million loan. However, Teesworks says it has acquired a site that requires £483 million of remediation work, so it is a huge liability. Will the inquiry explain how much Musgrave and Corney have invested in the site? How much will they be required to invest in the site, and what is the business case for Teesworks raising the £200 million-plus that is required to complete the remediation?
Musgrave and Corney’s entry point into the development was through their acquisition of part of the bulk terminal site in 2019. Will the inquiry explain how those two private investors came to acquire this key site when the combined authority was pressing for a compulsory purchase order to buy the entire site?
Musgrave and Corney’s involvement has never been tested on the open market. Should there have been a public tendering process to find investors or firms to provide security for the site? That has been mentioned by virtually every speaker in this debate.
There is said to be 500,000 tonnes of scrap metal on the site. Sales have so far raised £90 million, with £45 million going to Musgrave and Corney. Does this represent good value for the taxpayer, who only three years ago owned all of this scrap? What is happening to the rest of the scrap on the site, estimated to be worth up to £120 million?
In August 2019, Musgrave and Corney’s stake in Teesworks was increased from 50% to 90%, apparently to speed up work so that the site could take advantage of time-limited tax breaks to create the freeport. Why, given the huge amount of publicity surrounding Teesworks, did their increased ownership not become public knowledge until December 2019, when there was a filing at Companies House?
The Northern Echo has posed a number of other questions, and it deserves so much credit for want it has done on this murky situation at Teesworks on Teesside.
I will conclude simply by saying that transparency, clarity, accountability, integrity and scrutiny are all very important in a democratic society. They all seem to be really lacking at Teesworks in Teesside. Show the people of Teesside the respect that they deserve, for heaven’s sake. Call in the NAO, as the Mayor and the Select Committee Chair are saying, to lead this inquiry.
In autumn 2021, the Secretary of State for Levelling Up, Housing and Communities, on a visit to Teesside, said:
“If you want to see what levelling up looks like, come to Teesside.”
So let us have a look. Hundreds of millions of pounds of taxpayers’ money has been invested to bring forward local regeneration and jobs creation. The Tees Valley Mayor says that £2 billion of private sector investment has been leveraged and that almost 3,000 jobs have been created. What we do not yet know is how the joint venture partners in Teesworks were selected, why they were selected, and how or if any other potential joint venture partners had the chance to express an interest in being selected.
What outputs projects may have delivered is not the subject of this debate. What matters here is whether this is value for money, who is benefiting and how. It seems to have gone quite well for the joint venture partners. In the space of a few years, they have gone from having a 50% stake in the company to having a 90% stake. According to the Financial Times, they have also received £45 million in dividends and, as far as we can tell, they have not had to invest any of their own money in the project yet. The initial share transfer of 50% took place without any public tender process; the decision to transfer a further 40% stake also took place without any public tender process.
None of that is sure-fire evidence of anything untoward having happened. However, although we cannot demonstrate that anything untoward has taken place, there is inadequate transparency and accountability to give the people of Teesside, and taxpayers across the country, any confidence whatever that their money and their assets have not been inappropriately or unfairly spent.
I spent 25 years as an officer in local government and it was impossible to buy a ream of paper without a transparently awarded procurement framework, never mind appoint regeneration partners and transfer public assets worth millions of pounds. In my personal experience, the procurement and partnership rules in local government, and the need for open and transparent public tender processes and procedures, often draw groans of frustration from officers. However, it is also my personal experience that local government officers are acutely aware of the responsibility upon them not only to spend public money appropriately, but to be explicitly seen to do so.
Arguably, Teesside is the Government’s beacon of levelling up. South Tees Development Corporation was the first ever mayoral development corporation to be set up outside London. More recently, the Tees Valley Mayor has been entrusted with another new development corporation, in Hartlepool, and, despite opposition from Middlesbrough Council, a new development corporation in Middlesbrough. So can we take it that the Secretary of State has confidence in the ability of the Tees Valley Mayor to set up and work with mayoral development corporations?
I am grateful to the hon . Lady for giving way because it has been reported this afternoon that the Middlesbrough Labour party is pulling the rug from under the Middlesbrough Development Corporation, which was established just a few weeks ago. Can she explain why that is the case and why it is forgoing the £18 million of Government support that that would bring, as well as the private sector support it would unlock? That seems to be a profoundly retrograde step for my town.
I am grateful to my hon. Friend for giving way on that point. Is she aware that the position of Middlesbrough Council was to say, “Give us the money, don’t give it to yet another self-appointed board under the tutelage of Ben Houchen”? Is she as amazed as I am that Ben Houchen has deliberately excluded PD Ports, the biggest employer and investor in the territory, from the consultation process? Does she not find that ridiculous?
Just before the hon. Lady responds, let me remind her that there is one more speaker to get in before 6.40 pm.
As I have said, the current Tees Valley Mayor is apparently trusted deeply by the Secretary of State to work with mayoral development corporations, so why does the Secretary of State reject the Mayor’s request for a National Audit Office inquiry in favour of a panel, handpicked by the Secretary of State, with a remit, scope and authority hurriedly thrashed out fewer than 10 minutes before this debate began and which, by the sound of it, is not approaching adequate?
I am a member of the Public Accounts Committee and cannot speak highly enough of the National Audit Office. Perhaps the NAO has indicated that it could not, or should not undertake an inquiry into Teesworks. But not so: the NAO has said that it is able and willing to undertake such an inquiry. We can assume then that the NAO sees no problem with it being tasked to do so, from the perspective of its remit, its expertise or its capacity.
I will not give way as I am nearly done.
When it comes to the spending of public money and the transfer of public assets into private ownership, it is not just the decisions made that cause concern among communities; it is also when those decisions appear to be made in the dark behind closed doors and without transparency. That is when people start to feel suspicious.
Therefore, to help me, others on the Labour Benches and the people of Teesside understand the Secretary of State’s decision to reject the request of the Tees Valley Mayor, to decline the offer of the NAO and to set up a new panel from scratch, I invite the Secretary of State, assuming he is listening, to share his thinking, take the lid off decision making in Teesside and show the taxpayers of this country the respect and courtesy of an independent transparent inquiry that they can trust.
I call Matt Western and ask him to resume his seat at 6.40 pm.
Mr Clarke was incorrect when he said that all the members involved in that decision were Labour councillors; they were not. That is categorically incorrect. I just want to put that on the record.
As someone who worked in procurement, I say, if it smells of fish, it is fish. This reeks of fish. The negotiations, the poor governance and the poor value for taxpayers’ money are a disgrace. Although this is a really important issue for the people of Teesside, the unfolding scandal has brought implications for the Prime Minister, for his freeport scheme and for this Government. What we are seeing is the first test of his freeport strategy and it is failing. It is thanks to the sharp investigative journalism of the Daily Mirror, which in January 2022 broke the story about the issues surrounding the project, that, ultimately, we are having this debate today.
The financial mountain that is being amassed by a few of the Mayor’s friends is colossal—friends who are also donors to the Conservative party. Fortunately, Private Eye, the Financial Times and my hon. Friends who spoke earlier in the debate have made absolutely clear the scale, the detail and just how widespread this emerging scandal is. It is a long story full of twists and turns, but at the centre of it all we have the Conservative Mayor, Ben Houchen, with the help of two counterparts, Chris Musgrave and Martin Corney, and a few others.
It is a dark web of friends and family, property developers, PR companies and scrap metal merchants—the scrap metal story is perhaps the most egregious demonstration of how perverse this situation is. Half of the proceeds are now going to Messrs Musgrave and Corney and their companies. The day-to-day operation of this is led by Orion Kotrri, an Albanian man who, as we have heard, is married to Corney’s daughter. I could go into all the other relationships, but they have been well covered by my colleagues.
There are more questions than answers. Seven people have spoken to the Financial Times to raise concerns about accountability and governance. We all want to see investment across our regions, and Teesworks is the Prime Minister’s flagship freeport, but there seem to be parallels here with the personal protective equipment scandal, given the network of donors involved in the project. This is not a scheme—this is a scam.
It is a pleasure to close for the Opposition in this debate.
Let me start by bringing us back to first principles. The Mayor of Teesside himself has requested a National Audit Office investigation into the Teesworks joint venture. That is backed by the Chairs of three parliamentary Select Committees. The Opposition, as hon. Members have heard, support it. The media support it. The only people who disagree with this are Ministers on the Treasury Bench and their Back Benchers. The purpose of the motion and the debate is to establish why the Government have taken the eccentric course of rejecting an NAO-led review. Is there a sound public policy reason or is it a partisan decision?
My colleagues have made very strong cases. My hon. Friend Julie Elliott set out in significant detail the pain the north-east has felt over 30 years of austerity; I would have thought that Conservative Members would have reflected on that, but they did not. My hon. Friend Alex Cunningham reflected on the region’s potential, which makes that pain doubly saddening. My hon. Friends the Members for Washington and Sunderland West (Mrs Hodgson), for West Lancashire (Ashley Dalton) and for Warwick and Leamington (Matt Western) raised a range of very serious questions that simply must be addressed by a review that everybody can have confidence in.
I associate myself with what my hon. Friend Ian Lavery said about journalism and the courage of those various journalists who have taken this issue on. Despite all the criticism they have had from the players involved, they have stood up, done their job and shone a light on the issue, and we are having this debate today in part because of that.
My hon. Friend Andy McDonald set out an extraordinary, deep and detailed case, worth listening to by those colleagues who have sought to shout him down, both today and previously. He has shown incredible courage, knowing what is right for his constituents and doing what is right for his community when it would have been easier for him not to. There will have been days when he got out of bed, knowing the barrage that he was going to face, and it would have been easier not to, but he has too much courage to do that, and I salute that.
I turn to colleagues on the Government Benches. Paul Howell said it was inconvenient that we were bringing this motion today. I understand that, but I gently say that it is for the Opposition to ask the questions and for the Government to answer them—they cannot ask the questions as well. Jill Mortimer hit the nail on the head when she said that the Mayor has asked for this audit. It is not so unreasonable that we should ask for such an intervention when the Mayor himself has done so.
Matt Vickers asked, as did the Minister in his opening speech: why are we departing from established practice? This is the first time such a thing has happened. We have never had such an incident involving an elected Mayor or a mayoral development corporation. Of course whatever we do will be a new and novel approach, because we have never done it before. Falling back on false equivalence simply does not work.
I turn now to Mr Clarke, who made a bombshell contribution to this debate when he made it clear that he was basing his decision today on the discussions he has had with civil servants and the advice they were able to give him as a Back Bencher—advice that he knows we have not had any access to. At the root of the motion is the point that we need to know the information that is clearly available to some but not to others.
I am afraid the hon. Gentleman has misunderstood what I was saying. I was saying that Ministers have not been advised by the civil service that the threshold has been met. That is a matter of public record. It is in the letter the Secretary of State sent to Ben Houchen at the end of last month and it was repeated by my hon. Friend the Minister at the Dispatch Box during his opening remarks. Ministers have been advised by the civil service that no such threshold for a best-value investigation has been met. That is not our view; it is the civil service’s view.
I chirped during the right hon. Gentleman’s earlier contribution to ask him how he knew. I took from that—if I am wrong, the record will show otherwise—that he had had those conversations. Frankly, I think that that muddle is at the root of the issue.
Of course, this issue cannot be decoupled from the Government’s supposed commitment to levelling up the country—a commitment on which, as has become increasingly clear over the past 18 months, the Government cannot and will not deliver. We have seen a levelling-up White Paper which talks more about a Medici-style renaissance that a real commitment to our communities; a bodged levelling-up fund that locked deprived areas out from getting the money that they need; and much-heralded levelling-up directors quietly canned even though they were supposed to champion the revitalisation of our nations and regions. What a waste. What a waste of the pent-up potential of our regions, towns and cities which is waiting to be unleashed if only the Government were serious about delivering on their promise. Once again from this Department, it is all press releases, no delivery.
Teesside was supposed to be the flagship, the proof of concept, which makes the concerns expressed today all the more crucial. If this is what levelling up is, who benefits from it? Who is it for? The questions keep mounting up, as colleagues have said. Reports in the media outline how millions of pounds of taxpayers’ money have supported a project in which two private developers now hold a 90% stake despite seemingly never having entered a competitive process, and how those developers have taken significant dividends, outsizing their investment in the project. People rightly wonder how that has happened, who sanctioned it, whether value for money has been delivered, whether these concerns are legitimate, and if so, why has it taken dogged reporting on the issue, and colleagues in this place, for them to come to light?
Those are crucial questions that require answers, but rather than call in the National Audit Office, as the Mayor himself asked for, the Secretary of State has chosen to set up his own review, set the terms of that review and appoint the panel himself. We are now in the ridiculous situation where a flagship Government project that is facing serious allegations of failures in accountability is subject to a review set up and appointed by the Government themselves, and we are told that that will give the public the reassurance that they need. How can the Secretary of State expect the public to have confidence in that process? It is no wonder he did not come today and stand up for it, and instead sent the Under-Secretary of State for Levelling Up, Housing and Communities, Lee Rowley, whom I hold in high regard, into an impossible situation.
Let us face it: the Government are on their way to court for a statutory review that they themselves set up, because they are doing anything they can to avoid being candid in it. Now, they ask us to trust them and put our confidence in a review that has not even those safeguards and powers, and they are surprised when we, the media and the public say that that is simply not good enough. We have waited for the answer today; it has not been forthcoming.
It is critical to public trust that the Government are transparent about the decision making that led to this process being adopted. The motion before us seeks to do just that by calling on the Government to release correspondence and communications pertaining to the decision not to order an independent NAO-led investigation and instead to commission their own review. For the sake of public confidence that all decisions have been made in good faith, and with the express intent to get the answers that the people of Teesside deserve, the Government should be open about how they reached their decision. That is all the more important because this does not relate to Teesside alone; it is the first project of its kind, with far-reaching implications for Mayors, combined authorities and development corporations. We need to know the truth now so that we can learn the lessons later.
The Government have had the chance today to establish a credible public policy reason why the Mayor’s own self-referral to the NAO, supported by everyone but the Government, was rejected. We did not hear any such reason from the Minister; we heard false equivalence about processes pertaining to different public bodies. Unless the Under-Secretary of State for Business and Trade, Kevin Hollinrake takes this opportunity to change course, we must use Parliament to compel the release of the information behind the decision. We must vote for the motion.
It is absolutely right that this place offers right hon. and hon. Members the opportunity to raise concerns about value for money or process, particularly when it comes to public money, so I am grateful for the contributions from both sides of the House, and in particular from so many fellow northern Members. Indeed, as a Back Bencher, I have on a number of occasions used the privilege that this House offers to raise concerns about other alleged wrongdoings, but I think it important that we consider our language, our tone and the content and context of the claims that are made. I think that it is wrong to exonerate someone without due process, as it is to condemn somebody without due process.
In the case of the South Tees Development Corporation and Teesworks joint venture, it remains the case that the Government have seen no evidence of corruption, wrongdoing or illegality. Neither have the auditors of the STDC, nor have my hon. Friend Matt Vickers or Ashley Dalton. However, the seriousness of the allegations, some of which have been made in the House and discussed today, could damage public trust, so it is right that they are investigated.
It is important to recognise that the review that we have commissioned was called for not only by Members of this House but by the Tees Valley Mayor himself. Our elected Mayors play an important part in championing their areas—convening communities, local leaders, businesses and investors to support levelling up in those places. As my right hon. Friend Sir Robert Goodwill and my hon. Friend Paul Howell highlighted, industry on Teesside was in decline prior to Mayor Houchen taking office. The project has the potential to deliver more than 40,000 jobs and billions of pounds of economic growth.
The Mayor has understandably raised concerns about the allegations made, recognising the damaging effects they could have on investments and job creation across the Tees Valley. That was a point raised by Julie Elliott. The continued allegation of corruption poses a real risk to our shared ambitions to deliver jobs and economic growth in Teesside. My hon. Friend Jill Mortimer rightly stated that those concerns and allegations—unfounded at this point in time—deter investment in the region, a point also made by my right hon. Friend Mr Clarke. As he said in his final words, we have had enough of talking down the region.
Andy McDonald said that people did not need to rely on his comments about the allegations being raised, citing newspapers that had raised them. But he must be aware that the Financial Times makes no allegations of wrongdoing, but merely quotes his comments made in this House. That is similar to the points made by the hon. Members for Wansbeck (Ian Lavery) and for Warwick and Leamington (Matt Western). They raised facts, but they made no direct allegations as the hon. Member for Middlesbrough did. Those allegations are an ongoing concern, shared by the Secretary of State for Levelling Up, Housing and Communities, my right hon. Friend Michael Gove and me. That is why my right hon. Friend has announced the independent review, which will address the accusations directly and robustly.
As the Under-Secretary of State for Levelling Up, Housing and Communities, my hon. Friend Lee Rowley confirmed earlier in the debate, the Department for Levelling Up, Housing and Communities has also now published full details on the review, including the independent panel that will lead the review and the terms of reference. I can assure hon. Members that, in line with existing practice, the Government have appointed a panel composed of external, independent experts with extensive experience at senior levels.
As the lead reviewer, Angie Ridgewell brings extensive experience of senior leadership in local government. She is the current chief executive at Lancashire County Council, having previously held senior roles across the public sector, including as director-general of two Departments. Richard Paver and Quentin Baker have been appointed to ensure the panel are fully equipped to consider the complex legal, financial and commercial matters the review is likely to cover. Richard Paver acts as the finance lead for an existing non-statutory intervention at Wirral Council. Quentin Baker is currently director of law and governance at Hertfordshire County Council and has 17 years of experience acting as statutory monitoring officer for several large local authorities.
The shadow Secretary of State raised concerns about the extent of the review and I understand that, given the time that she had to study the announcement. But she was not right to say that the review relates only to general governance, because it clearly specifically refers to allegations that have been raised, and the inquiry needs to respond on those issues, including commercial arrangements.
Members have raised the question of the prospective role of the National Audit Office. The Government considered carefully calls for an investigation to be led by the NAO. It is not, however, the NAO’s role to audit or examine individual local government bodies, and its powers would not normally be used for that purpose. It would not be appropriate to expand so significantly the role of the NAO by asking it to lead this inquiry. In confirming the review, the Government have been clear that we would welcome any action by the NAO to update its review of Government funding arrangements. These are all points that were raised by the hon. Members for Sunderland Central, for Washington and Sunderland West (Mrs Hodgson) and for Stockton North (Alex Cunningham), as well as by the shadow Minister, Alex Norris, who described that position as eccentric despite the fact that it is the established process—a process that Labour actually established.
It is important in this debate that we do not lose sight of the value of devolution in empowering our local communities. Mayoral development corporations are but one tool at the disposal of our elected Mayors to support renewal and regeneration where it is much needed—in places such as Redcar and Cleveland, Middlesbrough and Hartlepool, where the challenges of post-industrial deprivation are significant but the opportunities are equally so. Local and regional government working together with the private sector is an opportunity to provide the leadership and strategic direction needed to enable growth.
Equally, this Government have been clear about the importance of accountability and scrutiny for areas with devolved powers. The English devolution accountability framework, published this March by the Department for Levelling Up, Housing and Communities, sets out the ways in which we expect mayoral combined authorities to make themselves accountable to both the public and Government. The forthcoming scrutiny protocol will set out how we expect such bodies to create a sustained culture of scrutiny.
Once again, I thank Members for their important contributions today. We should be focused on ensuring the best outcomes for the Tees valley, so this is an important debate to have. Only a few years ago, the Teesworks site was a burden to the taxpayer and a danger to the public, with a significant price tag merely to maintain its safety and security. We should not lose sight of the fact that investments in that site—public and private—are helping meet our net zero targets, while providing economic opportunity and a sense of prosperity for future generations.