Gove orders ‘independent’ review of Teesside regeneration scheme

The UK government has promised an “independent review” of its flagship northern regeneration project, which is overseen by the Conservative party’s most high-profile mayor, Ben Houchen, following allegations of cronyism, lack of transparency and poor value for money.

Levelling-up secretary Michael Gove said he was taking the “exceptional” step of appointing an external panel to investigate the claims relating to Teesworks, the vast former steel site in north-east England that forms part of the Teesside freeport. 

But he stopped short of ordering the National Audit Office to investigate, rejecting calls for the UK’s public spending watchdog to lead a probe after an investigation by the Financial Times raised concerns about the way public assets had been transferred to local developers.

In a letter to Houchen, Gove wrote: “Given the importance to you and Teesside of addressing this matter, I have taken the exceptional decision to support the commissioning of an independent review to consider the specific allegations made.”

Gove said he had rejected the option of bringing in the NAO, which can only inspect local bodies at the request of a minister. “I do not think it would be appropriate to expand so significantly the role of the NAO by asking them to lead this inquiry.”

Shadow levelling-up secretary Lisa Nandy led the calls for the spending watchdog to step in last week, a move subsequently backed by Houchen himself.

Teesworks is the country’s largest brownfield site and is overseen by the South Tees Development Corporation, chaired by Houchen. The project, which is now 90 per cent privately owned, is aimed at regenerating Redcar’s huge former steelworks and forms a large part of the Teesside freeport.

Gove promised the independent review would be made up of a panel of experts, to be appointed by him on terms of reference yet to be published. It would look both at specific allegations levelled at the project and more broadly at governance, decision-making processes and value to the taxpayer. 

Gove said the review would also look at the oversight of the project provided by STDC and the Tees Valley Combined Authority of five local councils, which is also chaired by Houchen.

It was “still the case”, he added, that his department has seen “no evidence of corruption, wrongdoing or illegality”. 

Houchen welcomed the move, saying that allegations of wrongdoing were “starting to have a negative impact on the prospects of the local community”. 

Previously, the government, STDC and the developers defended the project and the way it was being managed.

Middlesbrough’s Labour MP Andy McDonald said the government had “bottled it”, arguing a full NAO inquiry was still needed. 

Teesworks is one of the government’s most high-profile “levelling up” projects — a policy aimed at closing regional economic divides. Criticisms of the scheme, which has received more than £200mn in taxpayer funding and is overseen by Houchen, focus largely on the transfer, in private, of 90 per cent of its shares to local developers between 2020 and 2021.

It remains unclear how much the developers, who have received at least £45mn in dividends since 2020, have invested into the project. 

The NAO said it had been “willing and able” to carry out such an inquiry at Gove’s request, adding: “The government has decided to make alternative arrangements for looking into these matters, as is its prerogative.”