a scandal that levels? – Palatinate

By Adam Wells

Levelling Up has been a key government promise, with Boris Johnson launching the programme in 2019 and it has continued under Rishi Sunak. The policy aims to bring growth back to former industrial communities, particularly those in the ‘northern power’.

One aspect of Levelling Up was the introduction of freeports, which are given preferential customs or tax laws and ultimately sit outside the jurisdiction of the state. The first eight freeport locations in the UK were announced in March 2021. Teesside was one of these areas and the project is overseen by the elected regional mayor Lord Ben Houchen.

The plan aims to create more than 18,000 jobs in sectors such as renewable energy and chemical processing by investing hundreds of millions across 4,500 acres. Sites include Teesside International Airport, Middlesbrough Port and the former Redcar steelworks. Teesside Freeport is now the largest brownfield development site in Europe and is said to generate billions for the local economy.

Sounds like a no-brainer, right? However, the project has been poorly managed and two businessmen, Chris Musgrave and Martin Corney, have ultimately gained control of the development. According to a report in Teesside, the pair have been able to ‘cherry pick’ the most profitable elements of the former steelworks in Red Car. Their privileged position has allowed companies to make millions without taking any risk. On the other hand, the taxpayer has invested more than £560 million and is shackled to further liabilities.

In turn, Michael Gove, secretary of Levelling Up, ordered an investigation into the financial affairs and governance of the joint venture between Houchen’s South Tees Development Corporation and companies run by Musgrave and Corney.

The investigation found that aspects of the project were shrouded in secrecy, detailing how “none of the standard checks relating to evidence and source of funds, creditworthiness and anti-money laundering were carried out” at the time Musgrave and Corney were working with developers at Teesworks. This eventually came to a head when developers were given 90% control of the development vehicle with no oversight from councillors.

Shockingly, developers were able to buy land for a staggeringly low price of £1 per acre, resulting in huge profits. Earlier this year Financial Times reported that Teesworks Ltd’s profits had tripled to £54m in the year following the deal. In addition, the investigation into the project found that developers had reaped £45m in dividends with a further £63m within the company itself.

Other allegations of corruption in the project involve the fact that several key positions are held by friends and family of the partners.

For example, Orion Kotrri, Martin Corney’s son-in-law, has been given the job of managing scrap metal on the site. Teesworks Ltd will not disclose his salary and has appointed him to the role without prior notice.

The controversy resurfaced when it emerged that Martin Corney’s daughter, a fashion designer, had changed the primary role of her gemstone business to include leasing construction and civil engineering equipment. Her company has also been given permission to open an outlet at the company-owned airport. This too was done without competition.

The appointments are just some of the confusion caused by locals, who say they have seen relatives of the developers driving around the neighborhood in expensive cars.

Despite all this, the published report found no evidence of illegality or the “industrial scale corruption” alleged by the then Labour MP for Middlesborough, Andy McDonald.

Either way, this is one of many scandals currently unfolding for the government. Some claim that the profits made from the Teesside development are reminiscent of the PPE scandals in the ongoing Covid-19 investigation.

As more details of the project emerge, it is clear that more questions will be asked about how things came about. Although Teesside is just one project, some say it is reminiscent of the government’s sleaze in the late 1990s. With an election looming, the question is whether the Conservatives will be punished again.

Image Credit: Simon Walker / No. 10 Downing Street