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Middlesbrough Development Company to be wound up by council

BBC Work starts on apartments to replace Tollesby Shops, in Acklam, Middlesbrough, in August 2021BBC
The council heard there were issues with governance over Middlesbrough Development Company's work to replace Tollesby shops in Acklam

A council-backed housing development company criticised in a damning audit report is to be wound up.

The Middlesbrough Development Company (MDC), which was described by one councillor as "a lesson on how not to do it", has received nearly £12m from Middlesbrough Council since 2019.

The authority has now set out a plan for closing it down.

The council said it was taking steps to improve practice and minimise "financial and reputational risks".

MDC is separate from the Middlesbrough Development Corporation, which is attempting to regenerate the town centre and Middlehaven by the end of the year.

The audit, which was described by councillors as "scary", "shocking", "shameful" and "worrying", said it was unclear whether the company had effective control over its work, the Local Democracy Reporting Service said.

Dave Allen New development at Tollesby shopsDave Allen
Councillors heard there were outstanding decisions to be made regarding some of MDC's work

An authority executive meeting heard concerns from councillors about guidance, non-compliance, outstanding projects, risks, conflict of interest issues and unlawful decisions relating to MDC.

Director of regeneration and culture Richard Horniman said there had been "lots of potential for conflict of interest".

"There's clarity about how you would do that now that wasn't there when it set up," he said.

He reassured councillors the authority would get all its £10.6m loan funds back.

But he said he could not answer "with certainty" whether £4.7m in Section 106 development money had been spent and whether the authority would "recover much, if any, of it".

Mr Horniman told councillors there was some outstanding paperwork to be completed and decisions still to be made regarding work on Tollesby shops in Acklam and the future management of the site.

There was also a contractual dispute going through arbitration regarding the Boho Village in Middlehaven and MDC would not close until that was resolved, he added.

Councillors have approved recommendations to suspend use of the MDC board in response to "complex conflict of interest issues" and replace it with meetings between the managing director and council staff to manage the closure.

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