Michael Gove has given Lord Houchen six months to put his house in order – but that assumes the Teesside mayor will still be in power.
Houchen, ennobled in Boris Johnson’s resignation list in 2023, faces an election in May to gain a third term.
Although the controversial mayor won 2021’s election with a huge 73 per cent of the vote, he’s likely to take his share of the backlash facing the Conservatives nationally. And his conduct over the flagship Teesworks regeneration site is likely to come under further scrutiny during the campaign.
Stockton-on-Tees-born Houchen oversees the regeneration of the vast former SSI steelworks site in Redcar through the South Tees Development Corporation (STDC), which he and the Tees Valley Combined Authority (TVCA) set up when he was first elected, narrowly, in 2017.
STDC, also chaired by the mayor, set up Teesworks Ltd in 2021 with local developers Chris Musgrave and Martin Corney, eventually transferring 90 per cent of the shares to them. Houchen claimed this would enable low-carbon-based industrial activity to finally get going, and reduce liabilities for the public sector. But after allegations in Parliament by Middlesbrough MP Andy McDonald and persistent investigative reporting by Private Eye, the Financial Times and others, Gove felt compelled to set up an inquiry into the deal, although he stopped short of calling in the public spending watchdog the National Audit Office.
The inquiry found no evidence of corruption but it did conclude, last month, that there were problems with governance and transparency, and that decisions taken by TVCA and STDC did not “meet the standards expected when managing public funds”. Its report, the Tees Valley Review, said public sector investment could run to £560 million by the end of 2024/25 while there has been “no direct financial investment” by the joint venture partners. Teesworks Ltd’s net profits tripled to £54 million in the year to March 2023.
Houchen said the report vindicated him but he welcomed its list of no less than 28 recommendations for improving TVCA and STDC processes. It’s levelling up secretary Gove’s six month deadline for implementing them that’s straddling the May election.
It’s important that where the recommendations relate to culture change, Gove writes to the poster boy of northern Conservatives, “sufficient time is given for you to develop these and for change to take effect”.
The inquiry was unsatisfactory for Alex Cunningham, Labour MP for Stockton North, who says the money given to the developers could have cleared the deficits of all five local authorities that constitute the TVCA.
“It strikes me that the public are being short-changed by the way the mayor is doing business,” Cunningham tells The Teesside Lead.
“The government’s own inquiry into the way that Houchen does his business bears that out and even suggests that that particular contract should be renegotiated, although he has no intention of doing so.
“I still believe we should have the National Audit Office in there. Hundreds of millions of pounds of taxpayers’ money has been invested in the site which has been handed over to a third party who are making a fortune from it.”
The combative Houchen studied law at Northumbria University and worked for two local firms specialising in commercial litigation and employment. He was a councillor on Stockton-on-Tees Borough Council, representing the ward of Yarm – where he still lives with his teacher wife Rachel – from 2011 until his election as mayor. In 2016, according to his official biography, he founded sportswear business BLK UK, before stepping down on being elected mayor.
He kept an initial manifesto pledge by bringing Teesside Airport back into public ownership, acquiring it from Peel Airports and proving in the process with this initially popular move that northern Conservatives didn’t have to be doctrinaire about prioritising free enterprise.
An admiring Boris Johnson picked up on this as he strove to become a big-state prime minister. Darlington was chosen as the site of a new office for officials from the Treasury and other government departments.
After Houchen’s landslide re-election in 2021 – he won 122,000 votes against 46,000 for the only other candidate, Labour’s Jessie Joe Jacobs – he promised to “fight the region’s corner”, adding: “We've made a fantastic start and I am confident the things we have put in place will bring benefits for everyone across our region, but there is still a long way to go.”
How far he has made it will be tested at May’s election. Along the way he has courted controversy but seems to shrug it off, secure in his majority.
He denounced scientists and others who wanted answers about how thousands of dead marine creatures were found washed up on the North East shores, close to Teesworks. He’s kept m’learned friends busy too, facing criticism when TVCA spent thousands on hiring a top legal firm to see if it could bring defamation charges against McDonald over his Teesworks claims (it couldn’t), and losing a High Court case when STDC sought to block port operator PF Teesport from access to its nearby land.
Others have been in his sights too. Richard Brooks of Private Eye provided written evidence to the Business and Trade Select Committee’s inquiry into investment zones and freeports, warning that hundreds of millions of pounds of public money had been spent at Teesworks “behind a veil of secrecy”, resulting in “large fortunes for private interests and a poor deal for the public”.
Houchen responded with his own letter to the committee, arguing that neither STDC or Teesworks were the same as Teesside Freeport, which he said was the appropriate body for the committee to be looking into. Houchen wrote that “therefore what Mr Brooks has submitted is irrelevant and should be disregarded by the committee”.
Houchen goes into electoral battle against Labour candidate Chris McEwan, deputy leader of Darlington Borough Council, Sally Bunce for the Green Party and the Lib Dems’ Simon Thurley. His job creation and investment record will be his shield.
Teesside Freeport is the best performing of the country’s nine such experiments, according to the Department for Levelling Up, Housing and Communities, creating 2,150 out of their total of 5,740 jobs.
The SeAH offshore wind manufacturing plant, worth £450 million according to TVCA’s website, is going to bring 2,250 jobs. Steel making is coming back to the area with a new electric arc blast furnace from British Steel.
The TVCA website also says 9,000 further jobs have been contractually secured on the Teesworks site.
Last week, announcing the selection of contractors for Net Zero Teesside, which aims to be one of the world's first commercial scale gas-fired power stations with carbon capture, Houchen said the £4 billion investment would be the single biggest one in Teesside since ICI.
According to Darlington’s Conservative MP Peter Gibson, Houchen has “transformed” Teesside.
He tells The Teesside Lead: “He has delivered jobs, investment and new opportunities. He’s saved the airport and is focused on the economic regeneration of our region. He has quite simply restored our pride.”
Gibson is confident Houchen will put the recommendations of the Tees Valley review into practice and adds: “I’m not in the habit of making election predictions. However, Ben has a track record of delivering what he said he would and I think the people of Teesside, Darlington and Hartlepool can see that.
“If Mr McEwan is the answer then Teesside is definitely asking the wrong question.”
"...we'd all be flying flags..."
But Houchen’s critics say his job creation and investment record is not as strong as claimed.
The airport’s turnaround plan involved another injection of public money and is still loss making. In 2022, Green Renewables pulled out of plans to build a wind turbine plant at Teesworks, which had come with a boast of 2,000 new jobs. Last month Teesside Live reported that Danish wind farm developer Ørsted had debunked claims it was about to announce a £100 million turbine factory at the same site.
According to the Tees Valley Economic Assessment 2022, the overall employment rate actually declined from 2021 to 2022, while it rose in the North of England and the country as a whole.
“If Houchen had delivered as much as he said he had, we’d all be flying flags,” says Cunningham. “There’s been an awful lot of announcements, re-announcements and press releases and interviews.
“Time and again he is repeating the fact that he has created thousands of jobs when that isn’t the case. The number of jobs created are in the hundreds and all the other jobs are speculative. They’ve not actually been landed yet.”
All the while, Houchen and the local authority members of TVCA have to maintain a relationship. The mayor had sought to cancel the 15 March cabinet meeting, arguing that there was nothing significant to discuss, but it was reinstated following complaints from the Labour members, including Stockton Council leader Bob Cook, who points out there was the small matter of the 28 recommendations and the need to “ensure that transparency is the end result of our action plan”.
Danny MacKinnon, professor of regional development and governance at Newcastle University, says it appears Houchen “operates pretty independently of the combined authority and local government structures”.
He adds: “Houchen has shown what you can do with the mayoral model in terms of promoting the area and getting investment. But it invests a lot of authority and profile in one individual, which people have raised concerns about.”
Central government’s plans to extend devolution to other areas in England “place more of an emphasis on scrutiny, which I would interpret as being partly related to Tees Valley”, says MacKinnon.
Cook has been a member of the combined authority since it was set up in 2017, when the area was two years into the aftermath of the “unthinkable” – the closure of the Redcar Steelworks.
The Tees Valley Review says TVCA cabinet members are ‘heavily reliant’ on the mayor and statutory officers to “provide them with a full and accurate picture to enable decisions to be taken in the best interests of the public. This tight control of information enhances the risk of misinformation and when aligned to late reports, a lack of detail and overt reliance on verbal reporting, this can undermine appropriate decision making”.
Cook says it’s difficult for cabinet members to ensure the mayor’s accountability if they don’t sit on related bodies such as STDC, but adds: “What we’ve got to do, no matter who is the mayor, is work together.
“The idea of the combined authority is to ensure we create the jobs going forward for the residents of the Tees Valley. And if we didn’t work together then nothing would get done. You’ve got to work together, you’ve got to make it work.”
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