Ben Houshen called on Conservative leaders to conduct a parliamentary review of the project. Photo: Charlotte Graham
Ben Houshen can't say he wasn't warned. Just two weeks after his surprise victory in the Tees Valley in May 2017, the Conservative mayor traveled to Westminster to meet Sajid Javid with his grand plan for the region.
Teesside's huge steel plant is ripe for redevelopment, he told the then local government secretary.
Javid explained that the place has become the bane of his life since its Thai owners have closed down. factory in 2015. Occupying an area the size of Gibraltar, the plant has become a toxic wasteland after almost a century and a half of steel production.
Simply maintaining the facility cost taxpayers £20 million a year. .
“I was sitting in his office,” Hoshen says. “I remember because this is Michael Gove's office now. He and his adviser Sonia Khan said, «Don't go near it.» It's an absolutely shitty show.»
However, Houchen was not put off by this, and six years later he finds himself the star of his own shitty show.
He is fighting allegations of love dealings with two local businessmen who threaten to sink the golden boy of the Johnson era, whose political career took off in hopes of «levelling» the Northeast.
The high cost of securing the 4,500-acre site at Teesside means the land is virtually worthless without private investment. Photo: Lorne Campbell
However, the 36-year-old man remains defiant. He admits some political «naivety», but insists that he would not have done otherwise. “A million percent, not a chance,” he says.
The plan for rejuvenating the site was supposed to be relatively simple. Government grants — almost £250m have been made available — will be used to kick-start the scheme.
After that, the private sector intervened and gradually took the lead in development. Potential industrial tenants were expected to want to take advantage of the nearby Redcar Bulk Terminal, a deep water port at the mouth of the River Tees that is one of the most attractive on the east coast of England.
The problem was, and still is, that no a colossal cleanup will be completed, all development is effectively useless.
Safety regulations dictate that, for example, at least the top two meters of earth must be removed from all 4,500 acres. If toxic surprises are discovered, more will need to be dug up.
The cost is estimated at nearly half a billion pounds, according to an appraisal report seen by The Telegraph. So the surveyors gave the site a notional value of £1.
However, according to Andy MacDonald, Labor MP in Middlesbrough, «it doesn't pass the sniff test» how two local developers, Chris Musgrave and Martin Corney, bought a 90 per cent stake in Europe's largest abandoned lot, leaving only 10 for taxpayers.
Teesworks Ltd is a public-private partnership between South Tees Development Corporation, a subsidiary of the Tees Valley Combined Authority, and two developers.
It spans a 4,500-acre site and claims to date to have created 2,725 jobs and received £2bn investment from tenants.
The two men will also not only benefit from a successful renovation. They are joint venture partners in another of Houchen's flagship initiatives, the nationalization of Teesside Airport by the United Tees Valley Authority.
Musgrave and Roots' involvement in Teesworks can be traced back to early 2019.
Houchen says that in a deal to keep the Redcar Bulk Terminal out of bankruptcy, the couple provided £540,000 in exchange for security rights to some of the land. However, the cash couldn't save the business, and the duo got a bigger say in the site's future.
Howchen's critics argue that there was no public procurement process in selecting Teesworks' private partners. .
“Regardless of the optics. We were left in a position where Chris and Martin had the keys to open the steel mill,” Hoshen insists. «Or it stays abandoned and costs the taxpayer £20 million a year and we don't create new jobs.»
More surprisingly, Musgrave and Corney's stake in the joint venture was quietly increased from 50% to 90% in August 2021.
> Ben Houshen argues that political naivety, not corruption, is behind the disputes. Credit: Ian Forsyth/Getty Images
Local government officials say there was a good reason for this.
Rishi Sunak, then chancellor under Boris Johnson, chose Teesworks as the country's largest freeport, which qualified potential tenants for generous tax breaks and more flexible border controls.
Sunak's freeport subsidies will only last for five years. years however. To take advantage of Teesport, we needed to speed up the work, but there was no public money to pay for it.
“We needed to do 15 years of development in five years,” says Julie Gilhespie, chief executive of South Tees Development Corporation.
Musgrave and Corney were willing to shorten the timeline for a larger share.
A month later, the deal became even more potentially lucrative for local men when Houchen's agency gave Teesworks another 90-acre parcel at a nominal price of £1 an acre, according to Land Registry documents.
Houshen insists that any kind of giveaway is misleading.
This land was then given to the site's first tenant, South Korean manufacturer SeAH Wind, who planned to build a turbine blade plant. While the land appeared to cost Musgrave and Corny next to nothing, this first lease resulted in the couple paying £15 million to the local authorities.
This price was in line with independent estimates obtained by Houchen's team.
Since then, SeAH has agreed to pay Teesworks £4.3 million a year in rent for 40 years. To complicate matters further, Australian investor Macquarie has agreed to step in and pay the developer £75m up front, allowing it to charge rent and make significant profits from South Koreans in the coming decades.
This arrangement is not unusual. But the local authorities' decision to guarantee Macquarie's payments, ensuring that Musgrave and Roots get their advance money, has raised concerns that the men could still walk away with 90 percent of the £75 million if Teesworks can't provide a usable site. Officials deny this.
«As part of the agreement between Macquarie and Teesworks Ltd, Teesworks Ltd has made a contractual commitment to invest tens of millions of pounds in the facility,» says a Teesworks spokesperson.
< p>Houshen says the allegations of love deals are completely unfounded.
Andy Macdonald, the Labor MP for Middlesbrough, has used parliamentary privilege to bring charges of industrial corruption. Credit: Ian Forsythe/Getty Images
Under criticism from Labor last week, he wrote to Michael Gove, Secretary for Advanced Studies, asking him to identify the appropriate body to conduct a parliamentary review of the draft.
Lisa Nandy, shadow secretary for upscaling, who also called for a full parliamentary inquiry last week, said she hasn't filed any wrongdoing allegations, but Houchen has questions to answer.
In the same edition of BBC Newsnight, Hoshen repeatedly dodged questions about how much money Musgrave and Corny were personally risking.
Declining delivery would allow Hoshen to regain control, officials insist. But you can quickly return.
Local authorities estimate that £120m worth of scrap metal is on site and the proceeds will be split equally between taxpayers and developers.
Haushen says: “I may have had the wrong impression, although I still believe in it. pretty much that people actually care about the outcome.
“It's a bit like buying an airport. No one cares that I spent £40 million buying an airport. They do not care. They take care of flights and work.
“Is everyone in Redcar free market? Of course not. They only care about the fact that factories and jobs are being created. That's why we always focus… on the result.”
Results matter. But so are the means, emphasizes MacDonald, who last month used parliamentary privilege to make accusations that Hoshen is at the center of “industrial corruption.”
“Democracy is painful, expensive and laborious.” process. But that's all we have between that and just a dictatorship and an oligarchy, isn't it?» he says.
Hauschen says: “It also seems naive to say that I don't consider myself a national politician. I've heard this from friends and other people who say that sometimes you have to recognize when you say something. But when you're trying to make those decisions, I still see myself as the guy who was randomly picked in 2017 and he's just trying his best. there is no naivete as a result. Naivety is one thing, you take it for a chin. But hinting at crime, corruption and delinquency is another matter.”
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