'Cronyism and backroom deals': Labour calls for Teesside development probe

Labour is demanding an inquiry into the regeneration of the Teesside Steelworks site following allegations of “cronyism and backroom deals”.

The party claimed there has been “a worrying lack of effective safeguards to ensure value for money for taxpayers”, attacking the Conservative mayor for the Tees Valley, Ben Houchen.

Mr Houchen dismissed the calls as “a coordinated attack by the Labour Party to try and undermine and talk Teesside down”.

Shadow levelling up secretary Lisa Nandy wrote to the comptroller and auditor general of the National Audit Office (NAO) to call for the inquiry.

She said an investigation is warranted to “answer important questions about the transfer of a vital public asset into private ownership, the potential loss to the public from these transactions, and the almost total absence of sufficiently robust oversight or accountability at national, regional or local level”.

Ms Nandy said she is “deeply concerned” that ministers and civil servants appear to have had “little or no knowledge” about what was happening on Teesside.

The Labour frontbencher made the intervention following a report in the Financial Times.

Reports that private developers came to own 90% of the shares in the project without a public tender are a key concern raised by Labour.

Ms Nandy also highlights claims that “developers have already secured £45m in dividends despite failing to invest any of their own money in the project”.

Labour states the taxpayer has invested “more than £260m, in addition to providing a public loan worth more than £100m”.

After the steel plant in the Tees estuary closed in 2015, a company was set up to manage the regeneration of the sizeable industrial site.

Mr Houchen is the chair of the board of the South Tees Development Corporation.

It is the ownership of shares in this company which Ms Nandy raised in her letter to the NAO.

Mr Houchen says there has been “£2bn of private sector investment” and almost 3,000 jobs created in Teesside since 2015 – and that Labour is seeking to “smear” an “incredible project” that has been “delivered by the Conservative Party in a traditional Labour heartland”.

There are also plans to turn the Tees development into a freeport – a scheme championed by Rishi Sunak, which seeks to create tax-free zones for shipping.

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Ms Nandy said: “[The FT] report raises very serious questions. The government has handed over hundreds of millions of pounds of taxpayers’ money to a project that is now 90% in private ownership, while the private owners appear not to have put in a penny and pocketed millions.

“There seems to have been no scrutiny or basic oversight from ministers. Instead they’ve simply signed off on this deal and walked away.

“There must be a comprehensive, independent investigation to ensure the public interest is protected.”

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