By Jon Robinson
Teesworks, one of the largest regeneration projects in the UK, has been thrust back into the spotlight this week as new accounts revealed the controversial scheme’s profits surged during its latest financial year.
The scheme, which started out as a 50-50 joint venture between the public and private sectors, is now only 10 per cent owned by the UK taxpayer.
With an independent government inquiry overdue to report back on the finances and decision-making underpinning the project, the accounts have again raised eyebrows over a deal struck towards the end of 2021.
Below, City A.M. has taken a look at the flagship project and why it has become so controversial since it was launched in 2020.
What is Teesworks?
Teesworks is a flagship regeneration site in the North East of England and is located on the banks of the River Tees.
It is run by Teesworks Ltd, a public-private initiative aiming to redevelop 4,500 acres of brownfield land. The site used to be occupied by steelworks but the new site will be open to a range of industrial users, including wind turbine manufacturing and carbon capture.
It was set up in 2020 with a public body overseen by local Conservative mayor Ben Houchen, the South Tees Development Corporation (STDC), owning 50 per cent while the rest was held by businesses controlled by developers Chris Musgrave and Martin Corney.
According to its website, Teesworks is the UK’s “largest and most connected industrial zone, unrivalled in size, scale and opportunity.”
Why is Teesworks controversial?
Teesworks is currently the subject of an independent government inquiry investigating the finances and decision-making behind the project. The inquiry was ordered in May 2023 and has not yet reported its findings – it was expected to report the findings by the end of 2023.
It was set up after STDC transferred an extra 40 per cent of the shares it owned in the project to the developers for zero cash consideration.
At the time, the public body said the deal would move £172m in future liabilities to the private sector partners.
However, the move raised concerns about Teesworks’ value to the UK taxpayer.
Why is Teesworks back in the headlines?
The project found itself back in the spotlight this week after its latest set of financial accounts were filed with Companies House.
It is the first time Teesworks Ltd’s full accounts have been published. Its previous set of results, for the year to March 2022, were ruled to be exempt from being audited under the UK’s small company rules.
The latest accounts showed that turnover jumped from £53.9m to £142.8m in the 12 months to March 31, 2023, while its gross profit rose from £20.6m to £68.3m.
On a pre-tax basis, its profit surged from £18.9m to £67m while its net profit rose from £15m to £54.2m.
The surge in its turnover has been attributed to £93m in “lease premium and land option income’, according to the public accounts, as well as £49.5m from the sale of scrap.
The sale of a long-term lease on 90 acres of land to Australian investor Macquarie also formed part of its income.
The Companies House accounts also show the company paid out a total of £3m of dividends during the year, down from £21m in the prior 12 months.
What has Teesworks Ltd said?
Why the company has not responded to requests for comment, in its accounts it said: “The performance of the company during the year ending 31 March 2023 was exceptional, having exceeded all major milestones and performance ambitions in terms of land clearance, land availability and lease negotiations.
“The company achieved a turnover of £142,889,169, which including the long-term lease disposal of 90 acres of land to a key anchor tenant, which has been achieved 18 months ahead of schedule.”
