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Gove dodges questions on Teesworks controversy and defends freeports

The Levelling Up Secretary refused to confirm a date for reporting on potential wrongdoing in Tees Valley.

By Jonny Ball

Westminster’s polite assassin, aka Levelling Up Secretary Michael Gove, was back in the hot seat at the Business and Trade Committee on Wednesday, discussing freeports and investment zones. Ever modest, Gove “would never claim any great novelty for the idea”. This isn’t, after all, the first time the brainboxes of Whitehall have tried to woo investors to economically depressed regions, each time with some variation of tax breaks; customs, duties and tariff exemptions; and the promise of lax regulation. And yet, the UK’s geographic inequalities continue to widen.

This round of freeports, announced when Boris Johnson was prime minister, has been somewhat marred by allegations surrounding a flagship scheme in the north-east. The Red Wall Conservative poster boy Ben Houchen, the metro mayor of Tees Valley, is accused of presiding over a redevelopment deal that has left the taxpayer out of pocket.

The chair of the committee, Labour’s Liam Byrne (the former Treasury minister who left his successor the infamous “no money left” note in 2010), quizzed Gove over the deal. Published accounts from Teesworks, the company overseeing the development of the freeport showed, he said, that it was handed 110 acres of public land for £1 pound an acre, helping to triple the firm’s annual profits. The company, responsible for land remediation, will lease a freeport site back to a South Korean wind farm manufacturer through a complex arrangement with Australian investors.

[Read more: Michael Gove – the polite assassin]

But the company is 90 per cent owned by what Byrne described as “friends and close associates” of Houchen’s, after the public body, South Tees Development Corporation, handed 40 per cent of shares to developers for free. In fact, the directors of the joint partners in the works include two Conservative donors. In response to these reports, the Levelling Up Secretary ordered an “independent review” into the affair last year, which is yet to be published.

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Given this background, the first hour of the committee was an anodyne affair. Tory members of the committee questioned Gove’s commitment to free market philosophy, and there were questions over timescales for delivery and the necessity of having a mayoral model to oversee the creation of investment zones. It’s usually been Conservative politicians who have favoured creating what Mathew Lawrence, director of the think tank Common Wealth, has described as “enclaves of market radicalism”. But Labour administrations, too, have been no strangers to enticing private enterprise to move operations to places central government has identified as in need of improvement. The party may be rhetorically opposed to freeport-style strategies today, but that didn’t stop Labour-run bodies such as the Liverpool City Region successfully bidding for freeport status – “if you can’t beat ‘em, submit a strong application to join ‘em”.

“London, the south-east, and the Golden Triangle,” Gove told the committee, referring to the space between the capital, Oxford and Cambridge, where a lot of high-value research takes place and high-wage jobs take root – “operate at a globally admirable level.” But, he continued, in “significant parts of the UK, productivity and investment is lower than it should be. And there is a fundamental economic inequality that needs to be addressed, and that’s something that governments across the generations have acknowledged.”

Indeed, this has been a multigenerational task that nobody has quite got to grips with. And yet even as governments, ministers and well-intentioned expert advice comes and goes, no amount of tweaks and ad hoc, piecemeal stimuli have managed to bridge deeply entrenched structural inequalities.

The Conservatives, for their part, have often tended to emphasise the positive pull of tax incentives, arguing that they stir the animal spirits of the Great British entrepreneur. Labour has been more likely to favour subsidies and grants – it’s all about “industrial strategy”, planning and state-backed “partnerships” to boost development. But both approaches point in a similar direction: invest here, the government tells industry, and we’ll make it worth your while.

“This is very much in line with some of the thinking that Michael Heseltine was responsible for in the 1980s and early 1990s,” the Secretary of State told gathered MPs, “and it also reflects some of the work that was done under the coalition by David Cameron and George Osborne.” In 2016, Rishi Sunak, then merely a humble back-bench MP, wrote an enthusiastic report for the Centre for Policy Studies, a think tank founded by Margaret Thatcher and her fellow monetarist ideologue, Keith Joseph. In The Freeports Opportunity, Sunak cited the success of the Chinese “special economic zones” established by Mao’s successor, Deng Xiaoping, to argue that the UK should follow suit.

Liz Truss talked up freeports as part of her “supply-side reforms” and a “dash for growth” that never was. Boris wanted his version – “green freeports”. But this time around, the freeport cause has been hampered by the Teesside controversy. 

You can always rely on Labour’s Ian Lavery to liven up a committee session. Before entering parliament, the Wansbeck MP succeeded Arthur Scargill as president of the National Union of Mineworkers. He opened his questioning by telling the Secretary of State that he hoped “you feel better than you perhaps look”. It was meant sincerely, but it couldn’t be heard as anything other than caustic. Gove was visibly suffering with a skin condition on his forehead and face. “I normally feel a lot better than I look,” he replied, “but that’s particularly true today – so it’s very kind of you to ask.”

Lavery proceeded to push Gove on whether the Tees Valley arrangement represented best value for taxpayers, and, crucially, when the report into the matter would be published: “You know there’s a big feeling that this is being kicked into the long grass because of the mayoral elections in May. Can you confirm that is definitely not the case, because that’s what people generally think.” 

The Secretary of State obfuscated. The report was independent. Nobody wanted it published more than he and Mayor Houchen himself. But Lavery pushed: would it be published before May’s local elections?

“I’m doing everything I can… I always wanted it to be as quick as possible,” Gove replied.

Has there been an attempt to dilute the recommendations?

“I have no reason to doubt the integrity of the author, the integrity of their team, or the integrity of my officials.”

In the end, Gove would give no commitment on a date for publication.

Earlier, he started a response to a committee question with a wry smile: “after we win the next general election…”, queueing chuckles all round. He knows the game is up. He’s going through the motions. Last week, Ed Davey and his Liberal Democrats launched campaigns in Gove’s safe seat of Surrey Heath – they’re feeling bullish about knocking down even the strongest bricks in the so-called Blue Wall.

Gove knows that not only has the government failed to make a dent in inequality in wealth, health and economic opportunity, but the Conservatives have presided over the first parliament ever which will end with disposable incomes lower than they were at the beginning of the parliament. Even with all the success in the world, freeports will do little to alter that, and even the crusading minister, the polite assassin with a reputation for ruthless efficiency and Leninist zeal (he reportedly has a picture of the Soviet leader on his wall), won’t have to worry about these committee sessions for much longer.

[Read more: Can freeports be progressive]

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