Ben Houchen has left the building
Tees Valley Mayor Ben Houchen has relinquished the chairmanship of the boards of his three mayoral development corporations. This follows the publication of government advice suggesting mayors in such roles should resign “to avoid conflicts of interests”. September brings the first meetings of these boards under the new leadership. This also includes Annual General Meetings of all three boards.
Hartlepool Development Corporation (HDC)
The HDC board was first out of the blocks on 2 September. The board has switched venues from the Civic Centre to the Town Hall Theatre, just round the back. I’ve written about my recent visit to the three separate HDC zones here. The new chair of the board is Mark Robinson. The Tees Valley Combined Authority (TVCA) was represented by, among others, Jo Moore, the Interim Director of Finance and Resources.
The new kid in town
Mark thanked Jo for getting up to speed after the sudden departure of her predecessor Gary Macdonald in July. Mark noted that the board is now receiving ‘good data’ from finance officers. Which suggests that it wasn’t getting good data previously.
Medium Term Financial Plan (MTFP)
Financial discussions turned to the MTFP. The plan incorporates several transfers of cash between current and revenue budgets. These transfers may be the work of the previous finance director, but they’re not good practice. This is also a feature over in Middlesbrough, of which more later.
Urgent and delegated decisions
Several board members questioned the need for officers (effectively the TVCA) making ‘urgent’ decisions that should have been left to the board. The TVCA’s CEO Tom Bryant agreed that this was unacceptable and that, in future, better forward planning would reduce the need for this.
Middleton Grange Shopping Centre
Mark Robinson confirmed that he’s going to arrange an ‘action day’ to discuss plans for Hartlepool’s main shopping centre, which is owned by the HDC. Mark is the former chair of the UK’s High Streets Task Force, and he admits that, among other things, the centre will have to shrink in size. Yet another retailer, The Entertainer, pulled out of Middleton Grange at the end of August.
Middlesbrough Development Corporation (MDC)
The Mandela Room at Middlesbrough Town Hall hosted the MDC board on 5 September. Tony Parkinson, former chief executive of Middlesbrough council, is the new chair. I’ve written about the challenges facing the MDC here. The Annual General Meeting was a tick-box exercise, and was over in six minutes. At the start of the main board meeting, Middlesbrough mayor Chris Cooke criticised the premature announcement of ‘town guards’ for the town by the Tees Valley Metro Mayor Ben Houchen. This announcement had been made by Houchen during his monthly BBC Tees phone-in two days earlier.
Who speaks for the MDC?
Ben Houchen followed his phone-in comments with an MDC statement. Chris Cooke refused to put his name to the statement. Tony Parkinson said that the mayor doesn’t speak for him, which begs the question of why he allowed Houchen to put out a statement in the MDC’s name. Matt Storey, the Cleveland Police and Crime Commissioner noted that this is an episode of poor governance by the TVCA. Matt reminded the board that the TVCA is still subject to a Best Value Notice from the Ministry of Housing, Communities and Local Government (MCHLG).
Neither a borrower nor a lender be
The TVCA has made a loan facility of £75mn available to the MDC. Hartlepool has a similar £75m loan facility. Jo Moore reminded both boards that any request for cash must present a robust business case. Independent member Martin Raby commented on the recent rise in interest rates on Government borrowing. Any loans made by the TVCA to the development corporations over the medium term will be subject to these interest rates, which have climbed to their highest rate since the late 1990s.
Premises costs
Chris Cooke questioned why the MDC, effectively only a planning authority, was spending £266K per annum for premises. Chris was also concerned about the blurred line between capital and current expenditure. Jo Moore agreed to provide a more detailed analysis within a four-week timeframe. Chris Cooke insisted that this analysis should be brought to the board. This would require an additional meeting, as the next one isn’t scheduled until December.
Black hole
Bev Bearne, the Chief Operating Officer of both the HDC and MDC was optimistic about the future of the new Gresham development close to the town centre. She confirmed that contractors have started to replace scaffolding on the former Crown pub. However, I had visited the site prior to the meeting, and this isn’t the case. A pre-acquisition report on the Crown, prepared in July 2024, indicated that it will cost in excess of £4mn to repair the building. Demolition must remain an option, but that would be expensive too.
Dust hazard
The survey revealed extensive amounts of asbestos throughout the Crown. Neither the repair nor the demolition options appears to have been factored into the MTFP. I made a Freedom of Information request to the MDC regarding this on 4 September. Hopefully these costs will be taken into consideration in the upcoming analysis.
South Tees Development Corporation (STDC)
The STDC board will meet on Thursday 11 September. Papers related to the board meeting can be found via this link. Finance will be a key area for discussion.
Cliff Edge
As it stands, the STDC is facing a cliff edge starting in April next year. Right now it is having to service debt of £159.9mn, with interest costs of £4mn this year. From 1 April 2026, the serviceable debt will increase to £313mn, and interest costs will rise to £9.29mn. The following year, the debt will increase to £405mn, with interest costs of £15mn per annum.
Put it on the tab
As can be seen from the table below, one of the loans was from the UK Investment Bank. This £107mn loan relates to the financing of South Bank Quay. It’s worth remembering that Able UK offered to invest £130mn in the quay. If the STDC had accepted Able’s offer, the loan wouldn’t have been needed. But Ben Houchen inexplicably rejected this deal. The remaining six loans were advanced by the TVCA.
Always get it in writing
Incredibly, three of the loans from the TVCA were advanced without formal loan agreements. Jo Moore has confirmed that these agreements are now in progress and will be finalised shortly.
Take a holiday? It’s not what you’re thinking
“Options are being considered as to whether interest payment holidays (interest is paused rather than deferred) could be granted by TVCA to STDC. The ability for TVCA to provide interest payment holidays will be dependent on local authority accounting rules and the CIPFA code, as well as the ability for TVCA to bear the c£10m of borrowing costs during the holiday period.” Just a friendly reminder that the TVCA is publicly funded. Here’s the TVCA’s forecast debt profile. It will owe over £1bn by March 2027.
Jumping the gun
In fact, the interest payment holiday had already been assumed by previous finance officer Gary Macdonald when he published the first version of the TVCA MTFP back in March 2025. Jo Moore now confirms that “this has to-date not been formally requested or agreed by the TVCA Cabinet.”
Get Out of Jail Free
But the proposed payment holiday isn’t a “Get Out Of Jail Free” card. The report notes that “the projected increase in borrowing….will place exceptional pressure on STDC’s revenue position from 2026/27 onwards. Whilst the proposal to request a further interest rate holiday would provide relief in the shorter term, it will be essential to ensure that income streams….are aligned to support the servicing of debt as costs.”
Reserves
Cash is already tight at the TVCA. Under the MTFP, it is already planning to reduce reserves from £166mn in 2024/25 to £2mn in 2028/29. According to Jo “Ongoing strategic discussions are taking place” between the STDC and the TVCA. I bet they are.
Something’s got to give…
In times like these, sacrifices have got to be made. The Lackenby Transport Hub, only recently considered vital to the Teesworks project, has been “descoped” from the 2025/26 capital expenditure. This provides a saving of £2.4mn. Apparently there is now “no immediate requirement for the facility”. One of the customers of the hub would have been Teesside’s Electric Arc Furnace (EAF). This is a tacit admission that the EAF is never going to happen.
…but it’s all in vain
However, the £2.4mn saving on the transport hub has been almost completely offset by an overspend of £2.1mn on the Redcar Park + Ride facility, just up the road. You can read about that white elephant here.
Business rates
Jo Moore’s report then goes on to discuss business rates. These are intended to be the STDC’s chief source of income going forward. Jo notes that “the business rates forecast was reviewed during the 25/26 budget process and significantly reduced to reflect a realistic value and timing of business rates” This is a prudent decision.
One trick pony
The SeAH factory, in South Bank, is the only game in town right now. And, despite repeated photo opportunities and press releases related to other projects, it is set to be for the next couple of years at least. Contrast Jo Moore’s realistic appraisal with the bombastic optimism of Ben Houchen, promising £1.3bn in business rates:
South Tees Developments Limited (STDL)
How are things going at the STDC’s 100% owned subsidiary company STDL? Well, “in 2024/25, STDL delivered an operational deficit of £9.8m and STDC provided financial support to STDL to enable the company to continue until the developments unwind. A matter has been raised in this respect and the accounting for this is currently being reviewed. Any significant matters arising will be reported back to the Board.”. Will these matters be reported back by Thursday 11 September? We’ll soon know, but “a further contribution by STDC of £5.79m will be required to balance (the) STDL financial position for 2025/26”
South Tees Site Company (STSC)
The STDC’s other subsidiary, STSC is faring better than STDL. It only needs funding of £0.24mn from the STDC in 2025/26. But, overall, there’s a lot of borrowing.
Skating on thin ice
Following the forecast financial contributions, STDC’s remaining reserves as at 31 March 2026 are forecast to be £0.882mn.
Demolition overspend
The confirmation of a small overspend on demolition reveals a game of musical chairs with 78,000m3 of silt dredged from the river Tees in 2022. The material was removed as part of the construction of South Bank Quay, but was too toxic to be dumped at sea.
Metals Recovery Area
The silt was initially dumped in the former ‘metals recovery area’, just west of Tees Dock. This article by Julia Mazza includes a drone shot of the dump. According to the TVCA, the silt has been stabilised with lime. Teesworks recently needed to shift 25,000m3 of this material in a hurry. The STDC hasn’t stated the reason why. It had planned to move it to sites within the South Bank and Dorman Point zones, but finally decided to move it to the Long Acres zone.
How to attract investors
In an article that I wrote on 3 September, I mentioned the decision by NatPower to relocate its planned Teesside Gigapark from Long Acres to Wilton. I speculated that one of the possible reasons for NatPower’s decision was the delay in remediating the site. The dumping of 25,000m3 of toxic silt won’t have expedited this.
There’s no rush
Teesworks’ initial decision to dump material at the South Bank and Dorman Point zones indicates that it is in no rush to prepare these sites for future investors. In this photo that I took last week, you can see dumped material, possibly blast furnace slag, towering over the new SeAH factory in the South Bank zone.
Bring your own popcorn
The STDC board meets at the Teesworks Skills Academy, Dorman Point Way, Middlesbrough, TS6 6BD at 10:00am on Thursday 11 September. Any member of the public can attend. Refreshments are not provided.
Thanks to James Waterson for providing graphics and additional research for this article
CLICK HERE TO SUPPORT THE BYLINES NETWORK CROWDFUNDER!
