Michael Gove has confirmed an investigation into Teesworks will be launched after 'serious allegations' were made about the site.

Pressure has been piling on the Government in recent weeks to launch an investigation into the site after Labour's Shadow Levelling Up Secretary Lisa Nandy called for a review and Conservative Tees Valley Mayor Ben Houchen echoed her request later the same day.

The Levelling Up Secretary said since 'serious allegations of corruption, wrongdoing and illegality have been made', he will ask an independent panel to 'address these accusations directly, and to report on the governance arrangements at STDC including how decisions are made, as well as looking at the value achieved for the investment of public money on the site'

Mr Gove said: I have considered calls for such an investigation to be led by the National Audit Office (NAO). It is not, however, the NAO’s role to audit or examine individual local government bodies and its powers would not normally be used for that purpose.

“I do not think it would be appropriate to expand so significantly the role of the NAO by asking them to lead this inquiry. Nonetheless, I would welcome the NAO updating its review of Government’s funding arrangements for STDC.

Read more: Police confirms no investigation into Teesworks, as questions continue

The Northern Echo:

“Given the importance to you and to Teesside of addressing this matter, I have taken the exceptional decision to support the commissioning of an independent review to consider the specific allegations made and Tees Valley Combined Authority’s oversight of the STDC and Teesworks joint venture.

“As set out above, this is not because I am advised that there is evidence to recommend such a review, but to answer your request of 16 May. I will appoint a Panel, in line with established practice, to undertake an independent, external assurance review.

“Since serious allegations of corruption, wrongdoing and illegality have been made, I will ask the Panel to address these accusations directly, and to report on the governance arrangements at STDC including how decisions are made, as well as looking at the value achieved for the investment of public money on the site.

“I will publish detailed terms of reference shortly. I will invite any interested party, including Members of Parliament, to make representations to the Panel as part of their evidence gathering. The report and any recommendations will of course be published in line with usual practice”

Mr Houchen said: "I welcome the Government agreeing to my request for an independent review into the Teesworks project, including the involvement of the NAO. As someone whose primary responsibility, as Mayor of the Tees Valley, is to attract investment and create jobs for local people, I felt that the recent misinformation and the abuse of Parliamentary Privilege by Andy McDonald was starting to have a negative impact on the prospects of Teesside and the local community.

“I feel that an independent review is necessary to show investors, businesses and local people that there is no corruption, wrongdoing or illegality in what has become and continues to be an incredible project for jobs and investment in our region.

“I look forward to the outcome, in due course, and will be making no further comment until the independent review has been completed, so to allow the independent body to carry out their work without influence or favour. My officers stand ready to provide any and all information requested by the independent review.”

Concerns were raised about Teesworks after a share transfer saw companies owned by Mr Corney and Mr Musgrave – JC Musgrave Capital, Northern Land Management Ltd, and DCS Industrial Limited – increase their Teesworks Ltd shares from 50% to 90%, leaving the STDC with 10%, rather than the 50% it had held before.

At the time, Stockton North MP Alex Cunningham said the area was seeing “dodgy deals” but Mr Houchen said the deal removed the liabilities for the site from the taxpayer and allowed the freeport to secure hundreds of millions of pounds of private cash.

A valuation seen by The Northern Echo puts the cost of remediating the site, excluding the 90-acre SeAH plot, at £482.6m and a nominal value of £1 was placed on the entire site.

Read more: Baroness Chapman urges review of Teesworks deals in House of Lords

Originally, the aim was to develop 20,000 jobs over 25 years at Teesworks, with public money used to remediate some parts of the site and then cash from investors would be reinvested to remediate the next plot.

However, Mr Houchen has previously said the remediation work needed to be speeded up so investors could take advantage of time-limited freeport tax breaks, which will be reviewed in 2026. This is the argument behind moving to a 90/10 shares split, so private investment could be brought in quicker.

Currently, Teesworks Ltd is entitled to buy land at the site for £1 an acre. The STDC borrows money to remediate plots and then Teesworks Ltd pays it back with interest. If it does not pay back the STDC, it will not be able to acquire the land.

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Teesworks Ltd is also eligible for half of the income of the scrap from the site. The most recent figure suggests the scrap amount has totalled £93m.

Mr Corney and Mr Musgrave did not take part in a public tender process to acquire shares in Teesworks in the first place (or when the shares were increased to 90%), however, Mr Houchen has said without the developers the scheme would not have happened.

Levelling Up Minister and Bishop Auckland MP Dehenna Davison said the Government had seen “no evidence of corruption, wrongdoing, or illegality”.

Conservative Middlesbrough South and East Cleveland MP Simon Clarke previously said Mr McDonald had led a “shameful attempt” to “smear” the freeport scheme. Mr McDonald said the Tories were being “totally ridiculous” blaming Labour and they had to accept there are “very serious and legitimate concerns”.

Speaking about today's announcement, he said: “There has been a shameful campaign led by Andy McDonald MP and the Labour Party to smear Teesworks - the largest regeneration project in the country and the best thing to happen for Teesside in a generation.  Mr McDonald in particular has behaved abysmally, hiding behind Parliamentary privilege to make accusations he refuses to make in public, where he could be sued.

“Their continued attempts to throw mud risk frightening off investment and jobs.  It is vitally important we clear the air and I am very pleased that the Government has listened to Ben Houchen’s call for this independent investigation.

“I look forward to the independent inquiry, supported by the National Audit Office, delivering its assessment - hopefully as swiftly as possible.

“The truth will come out and all those who have attempted to discredit a project that will deliver tens of thousands of good jobs for Teesside will have to answer for their cynical wrecking campaign.”

Reacting to the announcement of the investigation, Ms Nandy said: “This is bizarre. The Secretary of State’s letter refers to an organisation that doesn’t yet exist to hide the fact that there has been a complete breakdown in accountability on his watch.

“The National Audit Office has the experience, capacity and independence to carry out an investigation, and Michael Gove has the power to order that investigation. Why, then, is he setting up a review where the terms and members will be chosen by him?

“The Government must not hide from proper scrutiny, and there is no clear justification for not ordering a comprehensive, independent investigation from the NAO.”

An NAO spokesperson said:“The NAO does not have a statutory power to conduct examinations of individual local authorities and associated bodies.

"The NAO can agree to carry out such work following a request by a Minister. This would require agreement between the Minister and the relevant bodies to be examined, under Section 6(3)(d) of the National Audit Act 1983.

“In discussions with government officials last week, the NAO indicated that it was willing and able to carry out an examination of the South Tees Development Corporation and the redevelopment of Teesside Steelworks, if the necessary agreement was in place.

"The government has decided to make alternative arrangements for looking into these matters, as is its prerogative.”