Tees Valley Combined Authority has a skeleton in its cupboard- Teesside Airport Foundation LTD.
On 14 March there was a debate in The House of Commons.
The debate discussed the proposals for the creation of a Middlesbrough Development Corporation.
The initiative from Tees Valley mayor, Ben Houchen has met with considerable alarm in certain circles.
The debate was led by one of the alarmed – Middlesbrough MP, Andy MacDonald.
Much of the concern has centred around the appropriation of certain assets in the town.
Concern also surrounds the lack of accountability of the board of directors who will run the new corporation.
Those who have raised concerns about the management of the TVCA by the mayor have tended, in recent months to focus their attention, not unreasonably, on Teesworks, and the profitability of that to two local property developers and their friends and family, among other things.
Houchens strategy for the management of Teesside Airport, bought by the TVCA from its private owners in early 2019, offers insight into how scrutiny is avoided.
One aspect of that is Teesside Airport Foundation, a registered charity set up by the Tees Valley Authority in 2021.
Discussed previously in Part 2 of this series
Part 2 of this series explained that Houchen set up the airport as a joint venture with Stobart Aviation.
Stobart Aviation renamed Esken.
One of Esken’s subsidiaries was then contracted as airport operator.
It was announced in July 2021 Esken was departing, and the joint venture partnership was being dissolved.
So, how much disruption did this event cause?
There is no doubt that Eskens departure was a major blow to the airport’s business.
Passenger traffic, according to the business plan, was to increase from 131,000 a year to 1.4 million.
The job of attracting the passenger and the airlines to serve them was in the hands of the airport operator.
Take them away, and all the insider knowledge, the contacts with airlines, people with negotiating skills, marketing skills, people who understood risk management within the industry, all disappeared overnight.
There was therefore an urgent need for a recruitment drive to find people with the necessary skills.
But there was another issue.
By making the airport a joint venture, its shares were not 100% publicly owned.
This meant it was not subject to freedom of information legislation, and could, in effect, operate without scrutiny.
At the point at which Esken handed back its shareholding, there was the possibility that the gift of secrecy was about to be lost.
This, as it turns out, was intolerable to the mayor.
For the development of the airport as a public good, the priority was wholly to recruit suitably qualified people to replace the airport operator.
Neither before nor after Esken’s departure did such a recruitment drive occur.
What did occur was that in March 2021, four months beforehand, a company was set up – Goosepool 2021.
Goosepool had two directors, both of whom worked to TVCA.
In May 2021 two more directors were added, and the company changed its name to Teesside Airport Foundation.
When Esken left the partnership, they handed their shareholding directly to this company, by-passing the TVCA.
At no point did the TVCA have a 100% shareholding, and the gift of secrecy remained undamaged.
Issues with the foundation
The foundation is entirely bogus.
At the point of Esken’s departure, Houchen announced that the foundation was being set up as a charity, to provide grants to help people in the region reach their full potential.
According to The Charity Commission, it was not registered as a charity until May 2022.
Anyone wishing to make a donation will find, when they consult the foundation’s website , that “the organisation is currently ineligible to receive donations”.
Anyone wishing to apply for a grant will find “The Teesside Airport Foundation will soon be making grants of between £500 and £2,000 available to eligible groups across the Tees Valley.”
So, it neither accepts donations nor grants funds.
All of which contradicts what appeared on the airport’s website at the time:
“Funds will initially be set aside to support the trust, with these increasing as the airport moves into profit in line with its 10-Year Turnaround Plan. The trust will deliver financial support and assistance to charities running projects, schemes, and initiatives to improve the lives of people across the region.”
If the foundation has money, it is not using it, at least not for charitable purposes.
Time will tell when it must publish its first set of accounts…
Teesside Airport Foundation LTD
The company set up in March 2021, is dormant, and its accounts show that it has no assets.
None of its directors are employees of the TVCA.
Now it is normal for company directors to be paid, while trustees of a charity are not. However, one of the trustees, Emma Dixon, has since become a director of airport Holding company, Goosepool 2019.
It is currently unknown whether the other directors of the dormant company are paid, and by whom.
The foundation therefore serves one purpose only, which is to ensure that Goosepool 2019 continues to be beyond public scrutiny.
For Houchen it reveals that his priority at the time of Esken’s departure was not to attempt to maintain the commercial viability of the airport, but to ensure that he could continue to operate under cover.
The airport’s losses are vast.
That it should be losing money we can take as entirely expected.
But in the 2021 – 2022, Norwich Airport, which is of a similar size to Teesside, lost just over £500,000.
In the same period, Teesside’s losses were £11.8 million.
The public has no access to information on how this came about and how money is being spent at the airport.
What we do know is that the airport is funded by loans from the TVCA.
At the time it was bought from Peel, the amount set aside to fund its operation was £74.6 million – which included the purchase price of £40million, plus £34.6 million for operating losses and capital investment over the following ten years.
In 2022, that was increased by a further £20 million.
The total fund set aside by the TVCA for the airport currently stands at £94.6million.
Unless its fortunes change dramatically, the airport will never make good on those loans.
The money will be permanently lost to the public purse.
When Esken announced its departure, Houchen made a further announcement.
He determined that the airport couldn’t be closed down without a local referendum being held first.
This was pure theatre.
“When I pledged to bring our airport back into public ownership and save it from closure, I said I would secure it for the future. That means making sure the great progress we’re making can’t be undone by rogue politicians.
“With the requirement of a referendum, never again will our airport face the prospect of being sold off without the express permission of local people. This is the people’s airport run for local people by local people. So, it’s only right that local people should decide its future.
“Establishing the Airport Foundation goes even further in making our airport give back to the people of Teesside, Darlington, and Hartlepool. When in profit it will provide support to local people; helping them get into work or education or back projects that will transform our area. It will be made up of local champions with a strong desire to see our airport and the Tees Valley succeed and, to make it free from political bias, we have put in place rules so politicians like me aren’t allowed near it!”
No mention of making it more accountable to local people, given the foundation has precisely the opposite effect.
Yet the foundation is part of the protection measures to ensure that local people supposedly have a say in the airport’s future.
“To provide these protections Mayor Houchen is establishing The Teesside Airport Foundation, a new independent charitable trust that, along with safeguarding the future of the airport, will focus on education, employment, welfare and regeneration across the region.”
The news that the foundation has this additional political aim hasn’t been passed on to the Charity Commission who publish the foundation’s stated aims. Its role in securing a future referendum is nowhere mentioned.
So for those who are observing the progress of the Middlesbrough Development Corporation, one thing is certain, the mayor very probably find ways to ensure that it conducts its business away from prying eyes.
That, it appears, is always his priority.