Tees Valley Authority cleared of illegality
But review says questions on Teesworks project remain
BEN Houchen’s Tees Valley Combined Authority (TVCA) has been cleared of illegality by a Government review, but it concludes huge questions about governance, transparency and decision-making of the Teesworks regeneration project remain.
In its executive summary, the report states “a number of decisions taken by the bodies involved do not meet the standards expected when managing public funds”, and makes 28 recommendations for the Government and public bodies responsible for the brownfield site of the former Redcar steelworks.
Tees Valley mayor Lord Houchen, inset, said: “I welcome the recommendations of the panel and my team and I are already working to review the recommendations to improve our processes and procedures in line with the report’s findings.”
Among the recommendations is that South Tees Development Corporation (STDC), chaired by the mayor, should “renegotiate a better settlement for taxpayers under the [joint venture] agreement.”
The report was commissioned by Michael Gove, Secretary of State for the Department for Levelling Up, Housing and Communities, after accusations in Parliament from Labour’s Middlesbrough MP Andy McDonald in May of “industrialscale corruption” at Teesworks.
Lord Houchen followed calls from Labour’s Lisa Nandy at the time for the National Audit Office (NAO) to investigate the allegations.
The report took seven months to complete, with its authors criticising TVCA for presenting evidence “in an unstructured way and lacking a cohesive narrative”, leading to “drift and delay in the process and reduc[ing] our confidence that we have been given access to all relevant materials”.
They also write: “In the time available to the panel, we have not been able to pursue all lines of evidence or examine all transactions,” instead focusing on six areas, including the establishment of the joint venture (JV) and the share transfer from 50-50 to 90 per cent privately-owned.
“To the best of our knowledge,” the report states, “there is no formal partnership agreement that sets out the obligations of the JV partners, although it is clear [they] are heavily influential within the operations of the Teesworks site.”
It continues: “The JV partners have put no direct cash into the project and have received nearly £45m in dividends and payments, and hold £63m of cash.”
The panel said they were “surprised” a report ahead of the 5050 venture’s establishment in 2020 contained “so little detailed explanation and implies there aren’t any material implications directly arising from this change in approach”, even though the result of the venture was “that two or three privately owned companies would likely receive significant financial returns”.
There was also the risk of “group think”, according to the report, due to the limited number of people making key decisions about the project. “The core group of officers and mayor held senior appointments in a number of relevant corporate bodies which in some cases gave rise to potential conflicts of interest.”
The mayor and officers were “required to wear several hats due to their multiple appointments”. “This gives rise to a risk of ‘group think’ due to the absence of challenge,” according to the panel’s report.
Labour deputy leader Angela Rayner said: “This long-delayed report provides a scathing assessment of Conservative mayor Ben Houchen’s mismanagement and bad governance at Teesworks.
“It’s delivered such poor value for money for taxpayers that it is no wonder the Tory Government wanted to bury it. Michael Gove must finally take responsibility and urgently refer this case to the National Audit Office.”