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South Tees – The Single Biggest Development Opportunity in the UK

South Tees – The Single Biggest Development Opportunity in the UK

In October 2017, an ambitious 25-year plan to redevelop a huge area south of the Tees and create 20,000 jobs was announced by Tees Valley Mayor, Ben Houchen. Hailed the beginning of a new era of economic development in Tees Valley, the transformation of the 4,500-acre former SSI steel works site would lead to a hotbed of new industry and pump an additional £1 billion into the Teesside economy, creating well paid jobs in new industries.

Spearheaded by the South Tees Development Corporation (STDC), the Master Plan proposed growth to the Tees Valley economy through the creation of a world-class industrial park on the River Tees. And, with a focus on industrial investment, would create skilled jobs, heavily focused on manufacturing innovation and advanced technologies within a high value, low carbon, diverse and circular economy.

In addition to the four industrial zones identified for potential development, the Master Plan’s vision also incorporates significant transport connectivity and infrastructure proposals, along with costal community zones, heritage preservation and the enhancement of environmentally important habitats.

Announcements and developments

Since Prime Minister Theresa May officially launched the South Tees Development Corporation, the first Mayoral Development Corporation outside of London, significant developments have been achieved. First came the Autumn Budget announcement that saw a £123 million cash boost to support the ongoing maintenance and clean-up of the former SSI site, which provided a significant kick-start to proposals.

Since then, STDC revealed that over 100 expressions of interest had been received from global companies looking to base themselves here. During a key-note speech in May 2018, the Mayor disclosed that we will soon see the first announcement of private investment on this site since the South Tees Development Corporation was written into statute. This anchor project of “national significance” is a multi-billion-pound energy plant set to create thousands of jobs and many more across the supply chain.

South Tees Development Corporation welcomed a VIP delegation from Heathrow as part of its bid to become a logistics hub for the London airport’s proposed expansion. Logistics hubs will help to make sure that businesses from across the UK can be part of the supply chain for Heathrow’s new third runway. At these hubs, components of the airport will be pre-assembled before being transported to the London site. Heathrow expansion is considered to be a critical infrastructure project for the UK that is expected to deliver up to £5billion in economic benefits and 5,100 jobs across the North East.

Furthermore, Sirius Minerals was reported to be the first company to sign up to taking a lease on land for storage facilities, as it builds its £3.2bn polyhalite mine and Wilton processing facility, and industrial giant, Ineos, has indicated that the site may be in the running for its new UK car manufacturing plant.

A landmark partnership agreement with energy and utilities firm, Sembcorp, has too been signed to maximise investment opportunities across both the STDC and Wilton International Sites. Both sites have seen massive interest from global investors, with Wilton securing more than £1.5billion of new investment in the past 15 years.

To ensure that both areas fulfil their potential and attract the right kinds of businesses to the most appropriate sites, STDC and Sembcorp have now signed a Memorandum of Understanding – an agreement to jointly promote investment and direct businesses to the most appropriate site for their requirements.

Ownership and responsibility

However, as businesses line up to invest, the final piece of the jigsaw – securing ownership of the land – is required and Mayor Houchen has “every confidence we will find a solution”. The former SSI site is currently owned by the Official Receiver and charged to three Thai banks. An in-principle agreement was made between the STDC and the banks to buy the land.

A final agreement will need to be agreed by the Official Receiver and the boards of the banks, which is hoped can be progressed before the end of 2018. A significant milestone for the corporation, these developments would allow the site to be bought back and speed up regeneration efforts and get spades in the ground sooner than previously thought.

The UK government currently pays for the safety, security and upkeep of the former SSI steelworks site, through the South Tees Site Company that manages the site on behalf of the Official Receiver.

A draft transition plan has been put to the Cabinet of the Tees Valley Combined Authority for approval to transfer the long-term responsibility of the former SSI steelworks site from London to Teesside.

In preparation for the transfer of ownership and responsibility, STDC is developing a business case to government which outlines how much cash will be required from central government to allow the STDC to manage the financial risks of taking responsibility of the land.

About South Tees

Situated at the mouth of the River Tees, the area benefits from river access and encompasses the major port facilities of Teesport. Importantly, the area includes significant operators such as PD Ports, Redcar Bulk Terminals, British Steel, BOC and Northumbrian Water, and it also benefits from the major industrial complex of Wilton International, operated by Sembcorp, all of which are critical to realise successful outcomes for the redevelopment and regeneration programme.

The South Tees area has some of the lowest operating costs in the UK, with rents and rates about half of most major cities, and a quarter of those in London and Aberdeen. The area is also home to a large, experienced and highly skilled workforce, with the lowest staff turnover of any UK region, guaranteeing companies investing in South Tees access to a secure, highly efficient workforce.

One of the key commitments of the Devolution Deal, which was signed in October 2015, was the opportunity to be given the authority to create new Mayoral Development Corporations (MDCs) within the Tees Valley area. MDCs can draw on a wide range of powers, covering infrastructure, financial incentives, regeneration and land acquisition, devolving powers from central government to the local area. The decision to create a Development Corporation for South Tees was part of the area’s response to the closure of the SSI Steelworks and the wider strategy to drive forward growth and investment, create jobs and support local communities.

Ensuring local procurement

Ensuring local procurement is a key part of the Master Plan and vitally important. The vision of the Development Corporation will see the area completely transformed and businesses must be ready for the supply chain opportunities that will present themselves.

NEPIC fully endorses the South Tees Development Corporation’s vision and ambition, which has the potential to transform the entire local economy, providing substantial numbers of well-paid jobs and modern and innovative manufacturing facilities that could compete with anywhere on earth.

Having engaged NEPIC members via an industry specific consultation event with STDC, and formally fed into the process, we will continue to keep members informed about the exciting prospects taking place and help them to make the most of those opportunities for their own businesses.

www.nepic.co.uk