Teesside Freeport: Multi-million pound tax break could be granted for major development

The publicly-run South Tees Development Corporation (STDC) is responsible for the remediation work on the Teesworks site and is concerned it may have to spend millions of pounds on Landfill Tax.

The project aims to transform around 4,500 acres of disused industrial land on the bank of the River Tees into a manufacturing hub that will create thousands of jobs.

However, the site is contaminated by waste produced by the businesses which were based there and STDC said it cannot accurately predict how much the remediation will cost, but it is likely to range between £120k to £300k per acre.

The corporation, led by Tees Valley Mayor Ben Houchen, has claimed the current Landfill Tax Levy (£96.70 per tonne) could make the redevelopment unviable.

However, Chancellor Jeremy Hunt has decided to introduce a scheme that will allow public bodies running redevelopment projects to apply for Landfill Tax refunds, following a public consultation.

A Government spokesman said: “It is important that landfill tax does not act as a barrier to regeneration.

“Our new Landfill Tax Grant Scheme, announced as part of this year’s Spring Budget, will help to cover these costs for councils across the country.

"This will reduce the amount of land affected by contamination, benefit the environment and unlock sites to regenerate local communities.”

The redevelopment is part of the Teesside Freeport zone, where businesses enjoy tax breaks and lower tariffs, and has received more than £200m of Government funding.

STDC has stated £207m is due to be spent on the Teesworks site in 2022/23. It said £41m will be provided by the Government, £73.7m will come from a UK Infrastructure Bank loan and £92.7m will come from an “other” source.

But Mr Houchen said that money will come from “private sector investment”, long-term borrowing and the sale of scrap metal and land.

A company called Teesworks Limited was set up to deliver the ambitious project in 2019. STDC owned 50 per cent of the company until December 2021, when a share transfer took place, and private developers now own 90 per cent.

Two property developers, Christopher Musgrave and Martin Corney, and Tees Valley Combined Authority Chief Executive Julie Gilhespie are listed as directors.

Labour MPs have called for an inquiry into the arrangement, claiming taxpayers will lose millions of pounds because valuable assets have been transferred to two businessmen without a full procurement process.

STDC is responsible for the remediation work but Teesworks Limited will take care of “commercialisation”.

Remediation has already been completed on a 90-acre plot of land, which will be leased to SeAH Wind so it can build a £400m wind turbine monopile manufacturing facility.

According to STDC, Teesworks Limited, which will exercise its option once the remediation work has been completed.

BP Exploration Operating Company Limited is also expected to agree an option for lease agreement with Teesworks Limited and STDC, so it can build a gas-fired power plant and carbon capture facility on a 100-acre plot, as part of a £1.5bn project.

STDC has not revealed how much Teesworks Limited (90 per cent owned by developers) will make from the lease agreements, but the company receives around half the money made through scrap metal sales.

By July last year, £63m had been made by selling 205,774 tonnes of scrap metal. One assessment, commissioned by Tees Valley Combined Authority, found there could be more than 370,000 tonnes on the site.