Labor has written to the National Audit Office demanding a full investigation into part of the UK’s largest freeport following concerns raised about its value for the taxpayer.
Shadow Upgrade Secretary Lisa Nandy said on Tuesday ‘very serious questions’ had been raised about the public finances of the Teesworks scheme, which is overseen by Tees Valley Conservative Mayor Ben Houchen. .
The move follows a Financial Times survey in allegations of cronyism, corruption, secrecy and poor value for money leveled against the project, which aims to regenerate the huge former Redcar steelworks and forms a large part of the Teesside Freeport in the northeast of the ‘England.
In his letter to the NAO, Nandy said: “I urge you to launch a thorough investigation to establish the facts of this matter and provide assurance that the public interest is protected now and in the future.”
The 4,500 acre Teesworks project is the largest brownfield site in the country and is overseen by the South Tees Development Corporation, chaired by the Mayor.
Under its original business plan, agreed with local all-party support in 2017, the taxpayer funding was to clear the first plots of land, which would be leased to new industrial tenants while remaining owned. public.
Over 25 years, this rental income, together with the proceeds of around £120m of scrap metal, would gradually pay for the clearing of new plots.
The mayor, however, is facing growing criticism over a private decision in 2021 that changed that model, resulting in the handing over of 90% of the project’s shares to two local developers, in exchange for the assumption of responsibilities. of the site, as well as half of the scrap metal produced.
Houchen vehemently defended the transaction, arguing that it will leverage private finance to clean up the land and transfer risk away from the state.
However, hundreds of millions of pounds in taxpayer funding have been spent to date and so far the developers don’t appear to have invested, while receiving at least £45m in dividends. This led to allegations that the taxpayer was potentially harmed.
In his letter to the NAO, Nandy asked what was known in Whitehall about the capital transfer and said there appeared to be “a worrying lack of effective safeguards to ensure value for money for taxpayers”.
Although the NAO claims it has no jurisdiction to audit local bodies, arguing that this is a role for local auditors, Nandy pointed to an investigation he started 21 years ago in the Teesside Development Corporation, a similar regeneration body which was liquidated in the late 1990s.
The inquiry concluded that £40m had been lost to the taxpayer as a result of low value deals.
Last year, the NAO carried out an “informal” review of the Teesworks project, which focused solely on whether government grants were being used as intended. He found that they were.
He reiterated, in a statement released ahead of Nandy’s letter, that he has ‘no jurisdiction’ over the actions or decisions of the local public bodies involved in overseeing the project, the South Tees Development Corporation or the Tees Valley Combined Authority. He said his role was only to review the spending of central government money.
However, he said that since recent media coverage indicated that the government grants may be extended until the next financial year, he was now “likely to make further inquiries in accordance with our normal processes”.
“This will involve liaising with relevant government departments and seeking to review relevant documents,” he said, adding that no decision would be made on whether to conduct a more detailed audit until these steps would not be complete.
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