Teeside Freeport: a scandal that levels down?
By Adam Wells[1] Levelling Up has been a key pledge of the government with Boris Johnson starting the scheme in 2019 and this has continued under Rishi Sunak. The policy aims to bring growth back to former industrial communities, especially those in the ‘northern powerhouse.’
One aspect of Levelling Up was the introduction of freeports, which receive preferential customs or tax laws and ultimately sit outside with the jurisdiction of the state. In March 2021 the first eight locations for freeports within the UK were announced. Teesside was one of these areas and the project is overseen by the elected regional Mayor Lord Ben Houchen.
Scheme aims to create over 18,000 jobs in areas such as renewables and chemical processing by investing hundreds of millions in 4500 acres. Some of sites include Teesside International Airport, Middlesbrough Port and the former steelworks in Redcar. Consequently, Teesside Freeport is now the largest brownfield development site in Europe and will supposedly generate billions to the local economy.
The project has been poorly managed Sounds like a no brainer, right? However, the project has been poorly managed and two businessmen, Chris Musgrave and Martin Corney, have ultimately gained control over the development.
According to a report into the Teesside the pair were able to “cherry pick” the most profitable elements of the former steelworks in Red Car. Through their privileged position, businesses have made millions while acquiring no risk. On the other hand, the taxpayer has invested over GBP560mn and has been chained to further liabilities.
In turn, Levelling Up Secretary, Michael Gove, ordered a review of the financial dealings and governance of the joint venture between Houchen’s South Tees Development Corporation and companies run by Musgrave and Corney. The review revealed aspects of the project have been shrouded in secrecy, describing how “none of the standard checks referring to proof and source of funds, credit rating and money laundering were carried out” at the point when Musgrave and Corney partnered with developers at Teesworks. Ultimately, this came to a head when developers gained 90% control of the development vehicle without scrutiny from councillors.
Shockingly, the developers could buy land at staggeringly low GBP1 an acre, resulting in huge profits. Earlier this year the Financial Times reported that the profits from Teesworks Ltd had tripled in the year after this deal to GBP54mn. Additionally, the review into the project discovered that developers had cashed in on GBP45mn in dividends with a further GBP63mn within the company itself.
Other claims surrounding corruption we in the project are associated with multiple important positions being filled by the friends and family of the partners. The developers could buy land at staggeringly low GBP1 an acre For example, Orion Kotrri, the son-in-law of Martin Corney, has been given the role of managing scrap metal on the work site, Teesworks Ltd works have refused to reveal his salary and appointed him in the position without advertising it.
Controversy surfaced again when it became apparent that Martin Corney’s daughter, a fashion designer, had amended the primary role of her gemstone company to include the leasing of construction and civil engineering equipment. Her company has also been given permission to open an outlet at the Airport owned by the company. Again, this came with no competition.
The appointments are only a couple of examples which have confused local people, who describe seeing the family members of the developers driving around the local area in expensive cars. Despite of all this, the report released found no evidence of illegality or the “industrial scale corruption” alleged by then-Labour MP for Middlesborough Andy McDonald. Regardless, this has been one of the many scandals currently unfolding for the government.
Some argue that the profits made on the Teesside development is reminiscent of the PPE scandals in the ongoing covid-19 enquiry. As more details of the project emerge, it is evident that more questions will be asked about how things came to be. Despite Teesside only being one project, some say it strongly echoes the government sleaze of the late 1990s.
With an election on the horizon it begs the question, will the Conservatives be punished again?
Image credit: Simon Walker / No.
10 Downing Street
References
- ^ Posts tagged with Adam Wells (www.palatinate.org.uk)