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Minister Michael Gove should order Britain’s public spending watchdog to investigate the finances of the controversial Teesworks redevelopment project, a cross-party group of MPs said on Friday.
The House of Commons Economic Affairs Committee said questions raised by an independent inquiry this year into the use of taxpayers’ money at the former Redcar steelworks site in Teesside, northeast England, were serious enough to warrant a full investigation by the National Audit Office.
In January, a damning independent review of the project made 28 recommendations on governance and finances, warning that there were insufficient checks and balances to protect value for taxpayers.
Teesworks is the largest redevelopment site in the country and has been part of the largest freeport since 2021. Led by Conservative Mayor Ben Houchen, it is highly controversial due to concerns about transparency, governance and the role of private developers.
Gove wrote to Houchen asking him to respond to the independent review’s findings, but did not call the NAO. Houchen has promised to respond by September.
The committee, which was carrying out a wider inquiry into the Government’s plans to establish freeports across the UK as part of its strategy to improve the regional economy, said: “The Secretary of State. . . must instruct the National Audit Office to review the expenditure of public money in relation to Teesside Freeport.”
MPs said the regulator’s investigation should be expanded to include the development company and the combined authority overseeing the scheme locally. Houchen presides over both cases.
Ordering an investigation by the spending watchdog would recognize the freeport’s “flagship status”, take into account “the gravity and breadth” of concerns raised by the review and “broaden the review beyond the limited remit” given to the authors, the committee said .
An NAO investigation would also “ensure that public taxpayers’ money was paid out properly and lawfully,” she added.
The task of expenditure supervision is limited to auditing central government expenditure. Only Gove, as secretary of state, could direct the regulator to investigate other areas of public spending.
The Teesworks project aims to redevelop the vast brownfield site in Redcar left by the collapse of steelmaker SSI in 2015. Houchen led the project, which has received £560 million of public investment since he was elected mayor of Tees Valley in 2017.
In August 2021, as the mayor wanted to accelerate development to take advantage of the new freeport status, he struck a deal with two local businessmen that would see them take over 90 percent of the project’s developer, Teesworks Ltd.
The committee said this deal should be renegotiated. “At first glance,” it said, “the deal has the potential to significantly increase the financial returns” of the now privately held company and “conversely reduce the proceeds received from the public.”
There is also a “plausible scenario” that the public sector is sitting on stranded liabilities, the committee added, as no investment obligations are being imposed on developers.
Teesworks Ltd’s accounts show profits tripled in the year after the deal closed, while it remains unclear how much the developers invested.
Houchen described the deal as “fantastic” earlier this week, adding: “I stand by my decision.”
The government said in a statement that Gove commissioned the independent review “which found no evidence of corruption or illegality,” adding: “It is not the role of the National Audit Office to audit individual local authorities or to investigate.”
Houchen did not immediately respond to a request for comment.