Andy McDonald MP for Middlesbrough and Shadow Secretary of State for Transport speaking on the decision of the Tees Valley Combined Authority to approve the budget plan to buy Durham Tees Valley Airport and to further support for the South Tees Development Corporation plans says that we have to go into all of this with our eyes wide open and informed by the best possible evidence.
The Labour leaders of our 5 local authorities, who set up the Tees Valley Combined Authority and who negotiated the Tees Valley devolution deal, are tasked with acting in the best interests of the Tees Valley and I have every confidence in them.
The harsh reality is that have had to approve the “all or nothing budget” of the Tees Valley Mayor covering both, on the one hand, the former SSI site and the South Tees Development Corporation and on the other, the airport proposition. In all the circumstances, the local authority leaders have my full support for supporting the budget but there are still some significant issues that warrant attention and scrutiny.
I totally get the emotional case for Tees Valley having its own airport. In the wider sense, there is also a powerful economic case. Undoubtedly there is a case for saying that it make us more attractive for investment. I want us to have an airport and I want it to succeed.
That is what my heart says but I would be failing in my duty if I did not voice my concerns, not only at the deal itself in terms of the commercial and financial case, but also how the deal has been fashioned by Mayor Ben Houchen.
Indeed, I was extremely disappointed that Ben Houchen, on taking up office as Tees Valley Mayor, saw fit to block the proposed support of the airport that was agreed by the Tees Valley Combined Authority Labour Leaders to the tune of £500,000 to bring additional flights to Teesside. Had he done so, we could have had those additional flights by now.
But we move on. Let’s get one thing out of the way straight away. The name. It was ridiculous to change it from “Teesside” to “Durham Tees Valley”. I’m entirely content to a change it back to “Teesside” or to “Tees Valley”. We’ve been messed around for decades around names and identity in our region and the “Durham” bit makes no sense at all. That was the name change extracted by the airline BMI, which of course ultimately failed when they withdrew from the airport, and the current operator Peel has, for far too many years, lived off the compensation ordered by the court when they pulled their services.
Looking closely at the proposed airport deal, I don’t think we can simply suspend proper scrutiny and due diligence here.
From a high point of over 900,000 passengers, the airport has dwindled to around 130,000 passengers a year. Just to get some perspective, that’s about how many people use Gatwick in the course of a single day. And in regional terms, Newcastle by comparison has some 5.2 million passengers a year. It’s of course good to be ambitious but there has to be a sense of realism here.
The aviation market itself is facing some significant difficulties and we’ve seen recently the announcement by Ryanair effectively saying there’s already over capacity in the market and airlines are facing some very significant challenges.
Of course in the eye of the current Brexit storm, and the reckless and persistent threat by Theresa May of a “No Deal”, many in the industry, including major players in the airport business are fearing caps being imposed on flights from the UK into mainland Europe if we crash out with “No Deal”. So the timing is not exactly perfect.
No operator for Teesside Airport has been announced yet – but we all know who it is. They, and the current operators Peel, must be laughing all the way to the bank. Peel are getting out from under a £2m plus a year loss making business which is a drain on them. They’re not just walking away, they are taking to the hills with over £40m of taxpayer’s money.
The new operator couldn’t be happier. They’re going to get 25% of the new company which includes all the land; £800,000 a year for running the airport and, if it all goes wrong, they will get off scot free leaving the public purse – the taxpayer –picking up the tab.
I’ve got to say to all those truly wonderful business people – and I mean this with great sincerity and heartfelt appreciation– brilliant people like Bill Scott of Wilton Engineering, who are so passionately committed to our region and who have so understandably signed up to support buying the airport. I share your passion and ambition for our region but I sincerely and respectfully ask you, would you really use your own money on a deal like this in your own business? I’m not saying for one minute that you take this view, but we can’t just say it doesn’t matter because it’s only tax payer’s money. It does matter because we have to ask, is it the best use of that precious resource?
What else could we be doing with this money? What impact will the use of these monies have on our ability to grow the skills base of the Tees Valley that is so desperately needed? In transport terms alone what else might these sorts of sums achieve? The reality is that for a very significant proportion of the citizens of our 5 Boroughs, whether they ever fly or not (and many don’t), they are more concerned about having a decent bus service that gets them to their place of work and back again or to College or the Hospital or to the shops.
And let’s get this right, the exposure is not just the £40m plus sum to buy the airport, the sum set aside for this project is £74.6m.
I get it. Ben Houchen made a manifesto pledge to buy the airport and he won the election. That is valid, but I do ask the question, should we doing this at any cost whatsoever?
Turning to how he goes about his business: I’d just point out that it was the 5 Labour leaders of the Tees Valley who came together to not only form the Tees Valley Combined Authority but who then negotiated with a Tory Government to establish the City Region Mayor and to get the best devolution deal possible.
That was Labour politicians sitting down in difficult circumstances with the very Tory Government that has visited such dreadful austerity on our city region and our country. Those Labour leaders did that for the good of the Tees Valley and its people. Yet ever since his election Ben Houchen has cloaked everything he has done in secrecy and kept important information from the very people who made his position possible in the first place. He has not engaged with fellow members of the TVCA and has hidden behind numerous nondisclosure agreements keeping vital information away from those elected leaders, delivering ultimatums at will.
And the public have been similarly kept in the dark. Mr Houchen has only shared the information that he has been happy to share. For example, we know that the TVCA commissioned a report from aviation consultants York Aviation about the viability of the airport. I understand that the report is not supportive but is critical yet Mr Houchen has decided not to share it and relies instead on a separate report that backs his plan.
It seems clear to me reading the TVCA’s own 70 page report it is extremely difficult to justify this deal on sound commercial, financial and business lines. I’m surprised that the TVCA officers have been so certain that this deal stacks up.
I hope they’re right, but I’ve run a number of businesses in my time. In my role before entering Parliament I was a partner in a business that employed over 1200 people across 27 sites around the UK and I would not have been able to approve a proposition that came to me with so little prospect of success and return.
That said, there is still an argument for the authorities agreeing to subsidise a loss making airport in return for wider economic benefits but I respectfully suggest that this would have to be within acceptable limits. I have my very serious concerns that those reasonable limits have been well and truly exceeded with this proposition.
But it is even more complicated than that. The Mayor has linked the airport deal together with the proposition for the South Tees Development Corporation to bring jobs to Tees Valley in the wake of the demise of SSI and the closure of the blast furnace at Redcar.
Undoubtedly, there is not only a great opportunity to bring manufacturing and industrial jobs back to Teesside there is a real imperative that we do so and the wealth that is to be created has to benefit the people of the Tees Valley. I don’t want to see value shipping out into the coffers of remote multi nationals- who employ accountants to avoid paying what pathetic rates of Corporation Tax still obtain – and I know many share my view.
I want to pay tribute to the many people who have put their shoulder to wheel in this endeavour. Whilst this isn’t an exclusive list, I pay particular tribute to Steve Gibson who has devoted thousands of hours of his precious time and much more besides, to bring these plans to fruition without any thought as to personal gain. He does it solely because he wants to see prosperity in Tees Valley for its people. And similarly Paul Booth, whose commitment to this endeavour is total and unwavering.
The same goes for all our local leaders and in particular Sue Jeffrey Leader of Redcar and Cleveland Council and Dave Budd Mayor of Middlesbrough who have devoted so much of their energy and expertise over many years to redress the damage caused by the blast furnace closing. And of course Anna Turley MP, in whose constituency the STDC site sits. She is entirely right to ask searching questions and no one spoke up more loudly in Parliament than Anna to urge this neo liberal, free market obsessed Government to intervene and “Save our Steel”. National Governments across Europe intervened in their steel industries in France, in Germany and in Italy in similar circumstances and they didn’t cite EU State Aid rules as a reason for standing aside as did Tory Ministers Anna Soubry and Sajid Javid. They could have saved our steel. They didn’t. And we won’t forget.
But Ben Houchen’s pre-occupation has been in pursuing his own agenda, deliberately not working with colleagues and publishing press release after press release, which are readily lapped up, often without question and without any real examination of the substance.
The reality is that the former SSI land is yet to be wrested from the clutches of SSI Thailand and their bankers.
The reality is, that despite Mr Houchen’s pronouncement, Jim Radcliffe of Ineos couldn’t have brought his proposed Land Rover type car factory to the site if he wanted to because the STDC didn’t own, and still don’t own, the relevant piece of land.
I think the STDC will own that land in due course but for goodness sake let’s stop announcing deals that haven’t been done and counting our chickens before they hatch and, instead, let’s first concentrate on securing the land. Pop the champagne corks then if you want to, but only then.
To the nub of this. The two elements – the Airport and STDC- have been linked by Mr Houchen into one budget that has been presented to the TVCA meeting this week. To secure the STDC project – including making sure that the critically important Sirius project happens – our local leaders had to vote once on a single comprehensive budget despite their serious misgivings about very important parts of it.
I know that Sue Jeffrey and Dave Budd were far from content with both issues being rolled up together. Mr Houchen in effect has held a gun to the heads of the Borough Leaders, who have given their all to bring devolution to the Tees Valley and have also given their all to bring development and prosperity to our city region. If they hadn’t voted for it all, both elements would have fallen with the threat of this Tory Government walking away scuppering any prospect of revitalising the site for years ahead.
From the outset, Mr Houchen has made it abundantly clear that he wasn’t going to work collectively and I simply say to him, as this budget gets the go ahead, please press the pause button on the fanciful and premature press releases and sit down and work collaboratively with the duly elected leaders for the good of the Tees Valley.
Currently what he is doing is the exact opposite of cross party cooperation and collaboration. In these circumstances, those Borough leaders have had to make their decisions against the deal that they were presented with.
I have not envied them their task but in the final analysis, in my view, there was too much at stake and in their shoes I would, with considerable unease, have done as they did and voted this budget through. So let us all move on with the singular focus on bringing prosperity to the people of Tees Valley.