A council cabinet member has joined calls for a National Audit Office investigation into the Teesworks regeneration project.

Councillor Lynn Pallister, who has the growth and enterprise brief on Redcar and Cleveland Council, said overview and scrutiny had “definitely been lacking”.

Labour’s Cllr Pallister, along with other councillors at a meeting of a council committee, aimed criticism at Tees Valley Mayor Ben Houchen, while referencing elements of the recent review commissioned by Levelling Up Secretary Michael Gove.

A resulting report made 28 recommendations, highlighting concerns around transparency and value for money.

It also suggested a joint venture arrangement which saw companies run by property developers Chris Musgrave and Martin Corney take a 90% share of the former steelworks site via a private sector vehicle – Teesworks Limited – should be renegotiated to provide a better settlement for taxpayers.

Last week Labour peer, Baroness Sharon Taylor told a House of Lords debate that the people of Teesside had been “fobbed off” and an investigation by the national spending watchdog was appropriate.

But Baroness Kay Swinburne, Parliamentary Under Secretary of State in the Department for Levelling Up, Housing and Communities, said it was not the National Audit Office’s role to carry out such a probe.

She said: “Given that we have had a very thorough independent review which has been done then I think it’s time that we actually learn from those lessons and actually implement that rather than repeat it.”

Members of the council’s growth scrutiny committee had received a council update on efforts to transform what is the UK’s largest industrial zone and secure inward investment which also referred to a legal dispute between Mr Houchen’s Tees Valley Combined Authority (TVCA) and Teesport operator PD Ports over access rights, which has proved costly.

Cllr Pallister said: “It [the Teesworks review] is a really damning report.

“I hope that after May one way or another the National Audit Office does come in because we need to see how much money we have lost that could have been beneficial, not only to us but to Teesside.

“11,000 jobs [being created] is great news, but the fact that millions are getting lost in legal challenges and to two businessmen is an absolute disgrace.

“It’s not right.

“We have to move forward and hope that there is more overview and scrutiny because it has been definitely lacking over the past few years.”

Another councillor, independent Wayne Davies complained of “electioneering” by Mr Houchen in some announcements that had been made and said he would “put as much as money as anything” on the council not seeing any cash flowing into its coffers from Teesworks.

Redcar and Cleveland Council is entitled to a split from business rates generated from the Teesworks site as a result of its designation as a ‘special economic area’ with the Government taking half and the local authority and TVCA sharing the other 50% equally.

The council update said in 2022/23 a net sum of £369,774 had been received from new development or changes to existing business rate liabilities due to reliefs or exemptions.

It said: “[It is]very difficult to accurately calculate the future business rates income across the whole Teesworks site.

“[It] only becomes possible when a developer/business physically starts work on site and the ‘asset’ can be valued by the Government’s Valuation Office.

“To date the only certainty we’ve got is on the SeAH [Wind] site at South Bank.”

Mr Houchen, who is seeking re-election in May as Tees Valley mayor and is chairman of the board of the South Tees Development Corporation, said the council was due to benefit from more than £15m a year in business rates from the new SeAH plant, which will manufacture monopiles used in wind turbine construction, as well as the Net Zero Teesside (NZT) gas-fired power station and carbon capture facility being located on the site of the former Redcar blast furnace.

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SeAH began recruiting for staff in January and expects to begin operations in 2025, while a groundbreaking ceremony for the NZT project took place last September.

Responding to some of the criticism aired by councillors, Mr Houchen said: “I think the councillors should speak to their own chief executive as he has said that Redcar and Cleveland is on the verge of an ‘economic renaissance’ as a result of what we’re doing at Teesworks.”

He told the Local Democracy Reporting Service that Labour politicians had called for the independent inquiry into Teesworks – which concluded there was no evidence of alleged corruption – “that they now don’t want because it gave them an answer they didn’t like”.

On the desire from Cllr Pallister for an intervention from the National Audit Office, the mayor added: “It’s also bizarre that [councillors] don’t recognise that the leaders of Redcar and Cleveland Council, along with senior officers, supported and agreed every single decision STDC have taken. 

“Does this mean they want an investigation into their senior officers and their own political leaders?”

He also said critics were “skirting over” the “thousands of jobs that are here and coming” as if it was incidental.

Mr Houchen previously accepted all 28 recommendations which span out of the Teesworks review with Mr Gove requesting he contact him in six months’ time to report on progress relating to implementing them.