Taxpayers are not being guaranteed value for money or transparency at a regeneration project overseen by the Conservative Tees Valley mayor, Ben Houchen, according to a review that cleared it of cronyism and corruption.
An independent review of Teesworks, one of the highest-profile, government-backed regeneration schemes in Britain, found the project was excessively secretive and could not ensure public money was being well spent.
However, the reviewers said there was no evidence to support allegations of corruption or illegality at the industrial project, which is central to the Teesside freeport, in a wider programme championed by Rishi Sunak.
In an otherwise damning review, the panel made 28 recommendations to improve transparency and decision-making at the project, which is overseen by the rising Tory star Houchen’s South Tees Development Corporation (STDC) and companies run by two local developers.
The review into the project at Redcar was ordered by the levelling up secretary, Michael Gove in May 2023.
The land at the centre of the row has been described as Europe’s largest brownfield site and was once home to the town’s steelworks.
“We have found no evidence to support allegations of corruption or illegality. However, there are issues of governance and transparency that need to be addressed and a number of decisions taken by the bodies involved do not meet the standards expected when managing public funds,” the review said.
The heavily delayed report said the systems of governance at Houchen’s Tees Valley combined authority and STDC did “not include the expected sufficiency of transparency and oversight across the system to evidence value for money”.
It also warned of what appeared “to be a persisting theme or culture of excessive confidentiality/lack of transparency”.
In a letter to Houchen, Gove acknowledged “some specific areas for improvement and lessons to be learned” but underlined that the report made “clear that the panel found no evidence of corruption or illegality”.
Liam Byrne, the Labour chair of parliament’s business and trade committee, said the report showed the need for the National Audit Office to investigate Teesworks.
“Mr Gove has praised Teesworks as a flagship for freeports yet today’s report highlights ‘decisions taken by the bodies involved do not meet the standards expected when managing public funds’,” said Byrne.
“So it [would] now be wise to have a NAO investigation into the value for money for this project that funnelled £124m profit to a firm that actually did very little to invest significantly in creating jobs.”
Justin Madders, a shadow business minister, said the report was a “damning one” as “the issue has always been one of value for money”, and on that the report showed “taxpayers money was not being spent in the way the public would expect”.
The report, he continued, shows a “systemic and flawed decision making process that hinders transparency and fails to show value for money.
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“This scandal has exposed gaps in accountability and serious questions remain about the lack of local democratic scrutiny throughout this process.”
Madders added: “No amount of bluster will make this a good deal for the taxpayer and nothing they [government ministers] say will change the view still held by many that something is seriously wrong in the Tees Valley.”
Lee Rowley, the housing minister, said the review showed “no corruption, no illegality” and had recommended improvements that he was confident would be put into action.
The row over Teesworks has been an acrimonious one, with the Middlesbrough MP, Andy McDonald, using parliamentary privilege to accuse Houchen of “truly shocking industrial-scale corruption”.
Houchen responded by calling McDonald a “liar” and a “coward” for failing to repeat the allegations away from the Commons chamber.
The mayor welcomed the report, “which sets out in black and white that there is no corruption or illegality at Teesworks”.
He added: “I welcome the recommendations of the panel and my team and I are already working to review the recommendations to improve our processes and procedures in line with the report’s findings.”
Afterwards, McDonald said: “This report is absolutely damning and what is clear is there are massive concerns about governance and finance, oversight, scrutiny, value for money – all of the things that I have said over these years.
“The system is completely flawed and as a net result we have got the enrichment of a handful of businessmen making money hand over fist at no risk whatsoever. Where is the morality in that? Where is the value for money and due diligence? Are we really saying we are content with that?”
