A Teesside MP has asked the prime minister to launch an inquiry into “crony contracts” at Teesworks.

Labour Stockton North MP Alex Cunningham wants an investigation after shares changed hands in 2021. Originally, the South Tees Development Corporation held 50% of the shares and private developers, JC Musgrave Capital and Northern Land Management Ltd held the other 50%.

However, an agreement was reached which means JC Musgrave Capital, Northern Land Management Ltd, and DCS Industrial Limited now hold 90% of the Teesworks Limited shares. Teesside businessman Chris Musgrave OBE is the director of JC Musgrave, while DCS Industrial Limited has Mr Musgrave and Martin Corney at the helm.

Mr Cunningham asked Conservative Rishi Sunak during Wednesday’s prime minister’s questions to investigate the deal. He said: “Taxpayers are set to lose tens of millions of pounds after the transfer of valuable public assets to two Teesside businessmen all without a full and transparent procurement process, and a relative of one of those people is now benefitting from millions of pounds worth of scrap from the same Teesworks site.

“Will the prime minister launch an inquiry into these crony contracts and whilst he’s at it, tell his Environment Secretary to get serious about the environmental disaster off the Teesside coast which has been linked to the site.”

An updated agreement was signed off by Tees Valley Combined Authority cabinet members behind closed doors and South Tees Development Corporation board members also agreed to the change.

Speaking after his appearance at PMQs, Mr Cunningham added: “It’s time for the Tees Valley Mayor [Ben Houchen] to stop hiding behind loopholes and insults, start treating the public with respect and be open about the deals at Teesworks.”

It didn’t take long for Conservative politicians to hit back at the Labour MP.

Mr Houchen said: “From the devastation seven years ago to the transformation that we promised and are delivering now is incredible. I’d urge the member to park petty party politics and welcome the positive investments that are creating good quality well paid jobs that the people he is meant to represent will benefit from instead of trying to smear with cheap political attacks that he wouldn’t dare say outside the Houses of Parliament.”

The Tory mayor added that Teesworks will create more than 3000 direct jobs for local people and will include the £107m South Bank Quay, the £1.5bn Net Zero Teesside power plant and the £450m SeAH wind farm. He said the partnership was signed off by all local authorities, including Labour-led Stockton Council, and it has been “instrumental in unlocking the site which without them would still be sat empty costing the taxpayer at least £20m a year to keep safe.”

Redcar MP Jacob Young and Middlesbrough South and East Cleveland MP Simon Clarke have complained to the Speaker of the House of Commons Sir Lindsay Hoyle about Mr Cunningham’s comments.

Mr Young said: “I am very disappointed that Mr Cunningham would use the cover of parliamentary privilege to make damaging remarks in the House which he must know are untrue.” MPs cannot be sued for defamation when speaking in parliament to ensure politicians can speak freely during debates.

Mr Clarke said: “If anyone doubts that Labour is determined to throw mud at Teesworks in the desperate hope that it sticks, this latest rant from Alex Cunningham should confirm it.

“Labour MPs like Alex Cunningham want Teesside to wallow in poverty and misery because that’s the whole basis of their offer to people. They actively hate the new jobs and opportunities being created at Teesworks and they will come up with any old slander to try and talk this vital regeneration and investment down.”

Mr Musgrave and Mr Corney said they have worked closely with Mr Houchen to secure investment, remediate land and demolish large structures to create a site ready for future development. They added: “It is disappointing that, Alex Cunningham MP has regularly tried to undermine the progress that has been on the former steel site over the past three years.

“Recent statements made by Alex Cunningham under the veil of parliamentary privilege are false and have no foundation – his comments are irresponsible and mischievous with the sole intention of ‘torpedoing’ the site at any cost. He should realise that his words have the potential to adversely affect investment and the creation of jobs. Mr Cunningham would be well advised to get his facts right before he slanders and smears our reputation, and that of others.”

The businessmen also said they offered Mr Cunningham a personal briefing on the progress of the site but he declined the offer.

The Labour MP did not get a response from Mr Sunak on the Teesworks inquiry, however, he did respond on the crustacean deaths. The Prime Minister said: “Defra already carried out a comprehensive evidence-led investigation, considered everything robustly and concluded that natural causes was most likely responsible for some of the things that we saw.

“But we recognise that people want a thorough investigation of this issue and Defra has confirmed that an independent panel would be set up to report quickly.”

In the aftermath, Mr Cunningham said the prime minister had relied on old, outdated information. He added: “His own government has called in expert scientists to carry out their own investigations but he seemed to know nothing about that – perhaps an indication that the whole thing is a sham.”

The report from the independent panel set up by Defra, whose membership is not known, is expected soon. In October 2021, thousands of dead crustaceans washed up on Teesside’s shores and there’s been heated debate ever since over the cause with Defra blaming an algal bloom while campaigners say it is due to chemical pyridine.