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Two founders of the Teesworks regeneration project chaired by Lord Ben Houchen have accused the Conservative mayor overseeing the scheme of “total incompetence” they claimed would cost taxpayers hundreds of millions of pounds.
The stinging criticism of Houchen’s decision to hand over most of England’s biggest regeneration scheme to private developers comes just days ahead of voters in Tees Valley deciding on whether to give him a third term as mayor.
Paul Booth, formerly chair of SABIC UK Petrochemicals, and Steve Gibson, owner of Middlesbrough football club, told the Financial Times the public should have a greater share of the project in Redcar, Teesside.
They estimated that the public purse would lose out on £350mn to £550mn in rent over the next 10 to 12 years due to Houchen’s decision in August 2021 to raise the stake in the Teesworks project held by two local businessmen to 90 per cent for no cash consideration.
Booth and Gibson were involved in the original deal to set it up as a 50:50 public-private ownership the previous year.
“That’s the enormity of what’s been given up,” said Booth, adding that the money “could have gone into making lives better” through local investment in training, skills, transport and culture. “He’s gifted that away,” added Gibson.
The Teesworks scheme, aimed at reviving a vast former steel site that is part of the country’s biggest freeport projects, has become mired in controversy.
A damning independent review published in January found no evidence of corruption at Teesworks but strongly criticised the project’s governance and recommended the 2021 transfer of ownership be renegotiated.
On Friday, the House of Commons business select committee backed the call for a renegotiation and said the National Audit Office, the public spending watchdog, should be brought in to investigate.
Gibson and Booth said they had chosen to speak out days before the mayoral election on May 2 because of Houchen’s refusal to renegotiate the ownership of the scheme.
Houchen oversees the project through his chairmanship of local public bodies and has promised a public-private partnership would attract a new wave of industrial companies to the Teesworks.
The Conservative government, which saw Houchen as its poster child for resuscitating former industrial areas of the country, backed the plan and the site has received £560mn in public funding. The outcome of his bid for a third term is seen as a litmus test for Tory party fortunes nationally, ahead of a general election expected later this year.
Booth and Gibson, who was a Labour councillor in Middlesbrough in the early 1980s, were appointed to the board of the South Tees Development Corporation (STDC), the local public body overseeing the site’s regeneration, in 2016. When Houchen first became mayor the following year, he took over as chair of STDC.
Gibson said Houchen sacked him and Booth shortly after his landslide second election win in 2021 and three months later the STDC board decided to lift the stake held by the two local businessmen to 90 per cent.
The company that owns Teesworks reported a tripling of profits the following financial year. There is no legal obligation for the developers to invest in the project and it remains unclear how much they have spent so far, while the public sector still faces potential stranded liabilities, according to findings of the independent review.
Booth and Gibson said there was “no chance” the 2021 deal would have been done by the original STDC board they had served on, which had been put together by Tory grandee Lord Heseltine. They put the decision down to poor judgment. “We just can’t make sense [of it], other than total incompetence,” said Gibson.
He lamented the lost opportunity. “If we get it right . . . it’s going to revolutionise the Tees Valley,” Gibson said. “But it’s got to be in the hands of the people.”
Houchen has repeatedly defended the August 2021 deal. “I stand by the decision I took,” he told a mayoral hustings earlier this week, describing it as “fantastic for the local area”.
In a statement to the FT, Houchen did not refer to Booth but said Gibson was a “good guy” and thanked him for his past support. “Sometimes in business, you have to agree to disagree,” he added. STDC declined to comment.