Teesworks: Tracking the freeport’s development timeline

It was seen as a flagship development for the Conservative government, a cornerstone of "levelling up" and addressing regional inequality in the UK. But the Teesworks development on the site of the former Redcar steelworks has been surrounded by controversy since a compulsory purchase brought 2,500 acres of brownfield land into public ownership in 2020. Since the 19th century, iron and steelmaking shaped the course of the River Tees and its surroundings, as thousands of acres of land were reclaimed from the North Sea by spoil and by-products, and people migrated to the area in huge numbers.

In the 1861 census, Middlesbrough's population was recorded as 4,233. By 1881, it had exploded to 61,556. There were more than 90 blast furnaces in Teesside at the peak of production (there is a reason people from Middlesbrough are known as 'Smoggies').

But by the 21st century, with the industry in decline, the last furnace was turned off in 2015 leading to more than 2,000 overnight job losses. In the wake of the steelworks' closure, the government provided funding for retraining in the region and commissioned Lord Heseltine to produce an independent review of the Tees Valley and the structural issues - as well as the opportunities at play as the region hoped to reimagine a future without steel. Published in June 2016, 'Opportunity Unlimited[1]' looked to the south side of the Tees as a key part of the area's strategic future.

The newly established Tees Valley Combined Authority (TVCA) represented the interests of five local authorities - Darlington, Hartlepool, Middlesbrough, Stockton-on-Tees and Redcar & Cleveland. A new metro mayor - with similar powers to Andy Burnham in Greater Manchester - was to be voted in for the first time in 2017 to oversee the project.

'Unlocking' opportunity

The main steelworks at Redcar was owned by SSI UK - a subsidiary of Thai steel manufacturer Sahaviriya Steel Industries. When SSI UK collapsed in 2015 it went into the receivership of banks in Thailand, to whom it owed large parts of its debt.

In order to achieve the ambition of Lord Heseltine's review, the SSI site land near Redcar had to be secured. A mayoral development corporation - the South Tees Development Corporation (STDC) - was established in 2016 to do this and lead the redevelopment of the area. In May 2017, local Conservative councillor Ben Houchen was elected mayor for the Tees Valley.

At only 30 years old, and campaigning across a largely working class, deindustrialised region, his election came as somewhat of a surprise to some. However, despite his blue rosette he campaigned on issues such as bringing the local airport into public ownership.

The NZT joint venture aims to be the world's first gas-fired power station with carbon capture and storage, generating 742 MW of power to the grid.

Partnering the heft of local government apparatus with private investment was to become the strategy for redevelopment and remediation of the steelworks site. Compulsory purchase of the land from the Thai banks was completed in April 2020, shortly after local property developers Chris Musgrave and Martin Corney had bought an adjacent piece of land from the Redcar Bulk Terminal - whose owners had lost their main stream of income, landing raw materials for steelmaking when the blast furnace closed five years earlier.

Houchen has repeatedly claimed in the years since that the businessmen's involvement had been crucial in "unlocking" the site's redevelopment. On completion of the land's purchase, a 50-50 public/private company was set up between STDC and Musgrave and Corney. Teesworks Ltd would market the land and aim to bring inward investment, with the hopes of turning the site, known globally for centuries for its steel, into one known for innovation in green energy and net zero.

The project, it was claimed, would bring 20,000 jobs to the area. The land would be remediated at the public sector's expense, while the property developers' expertise would oversee that work as well as the marketing of the newly branded Teesworks site.

(C) Supplied by Net Zero TeessideNorthern Endurance Partnership (NEP) was formed in 2020 as the CO2 transportation and storage company that will deliver the onshore and offshore infrastructure needed to capture carbon from a range of emitters across Teesside and the Humber, transporting to offshore storage in the Endurance store.

Landslide victory

Following then-Chancellor Rishi Sunak's announcement in March 2021 that the government would create eight new freeports, including one at Teesside, Houchen won re-election only two months later with a landslide 73% of the vote. Teesside's freeport would be the largest, and began operating in December 2022.

As demolition and remediation at the former steelworks site continued apace, familiar industrial landmarks beloved by locals would each come down in turn. The brutalist, concrete Dorman Long coal tower was demolished overnight in September 2021 after a controversial listing and de-listing, as campaigners attempted to save it. The blast furnace came down just over a year later.

While the enormous site changed in appearance, so too did the financial arrangements behind the scenes. The majority of Teesworks Ltd, initially a 50-50 joint venture between the public and private sectors, was handed over to the private partners at no additional cost. It gave them 90% of the equity and total control over the money-making vehicle for the project, which has been backed by more than GBP560m of public expenditure to date.

Companies owned by Chris Musgrave and Martin Corney may have been paid more than GBP90m in dividends from Teesworks Ltd and associated service agreements they hold. Meanwhile, the latest accounts for the company (for year-ending March 2024) show GBP40m in cash reserves.

A government review published in January 2024 found the property developers had "put no direct cash into the project," despite their windfalls.

The 10% of shares in Teesworks Ltd held by the publicly owned STDC are a different class to those held by Chris Musgrave and Martin Corney, and there is no evidence the public purse has received any dividend yet. Reporting by Private Eye magazine on these arrangements was cited by Labour's Middlesbrough MP Andy McDonald when he spoke in the House of Commons in April 2023, accusing the Teesworks project of "industrial-scale corruption".

A government-commissioned review, the Tees Valley Review, began two months later to investigate value-for-money arrangements and the allegations of corruption. As the investigation began, Ben Houchen became Lord Houchen of High Leven, having been nominated for the peerage in Boris Johnson's resignation honours in June 2023. While it found no evidence of corruption when it was finally published in January 2024, the Tees Valley Review made 28 recommendations, including a renegotiation of the 90-10 deal.

It also found TVCA and STDC's decision-making processes "[did] not meet the standards expected when managing public funds".

Best Value Notice

Progress in implementing the review's recommendations has been slow and value-for-money considerations remain. In April this year, TVCA was issued a Best Value Notice from the government; separately its auditors wrote to secretary of state Angela Rayner outlining their concerns around a "lack of engagement" from the combined authority when trying to complete their audit for 2023/24. Despite this, confidence has returned to the Teesworks site.

The month after the government review was published, Net Zero Teesside (NZT) and the Northern Endurance Partnership (NEP) were awarded development consent to build a gas-fired power station adjacent to the last blast furnace, and associated carbon capture infrastructure[2]. NZT is a joint venture between BP and Equinor, while NEP sees the two companies join with Eni, National Grid, Shell and Total. The joint venture aims to be the world's first gas-fired power station with carbon capture and storage, generating 742 MW of power to the grid.

Construction is currently underway, and it is thought 3,000 construction jobs could be created. Meanwhile, when operational in 2028, it is hoped the plant would provide 1,000 jobs. NEP was one of a number of carbon capture projects backed with GBP22bn of government funding in October 2024.

It will see the construction of a 145 km offshore pipeline and hopes to capture 4 million tonnes of CO2 a year. On Teesside, three projects will be 'plugged in' to the project: NZT, BP's blue hydrogen project H2Teesside, and BOC's hydrogen plant on the north bank of the river. Meanwhile, SeAH Wind have begun operations at Teesworks this year - the first commercial tenant at the site since it was bought by the public sector five years ago.

The Korean company will produce monopiles for offshore wind turbines at its new factory. At 40 metres in height and over 800 metres in length, the enormous factory stands proud at the site, visible from miles around. The demolition of the Dorman Long tower and the blast furnace were at one time inconceivable to Smoggies, whose local identity had been forged by what the buildings represented.

But the many towers and stacks planned to replace them indicate how Teesside is putting itself at the heart of both the green and offshore industries.

References

1. ^ Opportunity Unlimited (www.gov.uk)
2. ^ associated carbon capture infrastructure (www.energyvoice.com)