A TRADING zone forecast to rake in £340m in business rates must not be a “smoke and mirrors” exercise, an MP has warned.

A Special Economic Area (SEA) has been pencilled in to come to the former Redcar steelworks site in April 2020.

And a Redcar and Cleveland Council report has estimated the zone will see the South Tees Development Corporation (STDC) bring in £340m of rates in the next 25 years.

Redcar’s Labour MP Anna Turley hoped the SEA would help make the site even more attractive to international investors.

But she warned it must not mean the government “handing over” the cost of regenerating the site to Teesside taxpayers.

Ms Turley said: “Lord Heseltine was clear when the steelworks closed that the government would foot the clean up bill, whatever it came to.

“The government must make good on that promise and not rely on local people or businesses to pay the costs.”

At the moment, councils retain 50 per cent of locally generated and collected business rates – with the other half sent to central government.

But figures in the papers for a council cabinet meeting revealed the rates would be shared equally between the council and the STDC – with 50 per cent of the rates reinvested in the 4,500 acre site.

The report stated Redcar and Cleveland Council would be “circa. £121.930m better off over a 25-year period, if an SEA was in place”.

And it added: “Without the SEA in place, it is estimated that a total of only £49.478m would be generated for the council.”

But Ms Turley said the SEA must not be a “smoke and mirrors accounting exercise” which deprived funding for local services and “let the government off the hook”.

The MP added: “I will still be demanding the necessary investment from the chancellor in his spending review to clean this site up and get the investment and jobs that we need.”

The government unveiled its intention to create the UK’s first SEA on Teesside last year.

The idea is it would allow more flexibility on tax and trade rules on the site to help attract businesses.

But work is still going on between the council, the STDC and central Government to finalise the proposals.

This work sparked Redcar and Cleveland council leaders to push back agreeing the report at their latest cabinet meeting.

Cllr Christopher Massey said: “The South Tees Development Corporation has been in conversations with the government which might change the outcome of the report.

“We don’t want to put the report through at this point so we’ll defer.”

After the meeting, Tees Valley Mayor Ben Houchen said the status would be the “first step” towards a “Free Zone” in the Tees Valley to “ensure business taxes paid locally are invested locally”.

He added: “Under the old model, business rates collected on site would disappear off to London never to return.

“From 2020, we’ll retain rent and business rates to prepare the former Redcar steelworks site for even more investment.

“It’s not fair that taxpayers should pick up the whole cost of SSI’s failures, so that’s why I asked government to establish the new Special Economic Area to ensure big business shares the burden too.”