The Tees Valley Combined Authority’s (TVCA’s) cabinet has failed to follow up an opportunity to curb Mayor Lord Ben Houchen’s power over South Tees Development Corporation (STDC) and its Teesworks regeneration site, new documents confirm.

The TVCA audit and governance committee (AGC) had recommended that consideration be given to the appointment of a chair of the STDC other than the mayor, “to avoid any perceived conflict of interest,” as reported by North East Bylines on 24 September. Under present arrangements the mayor is chair of both the STDC and the TVCA Cabinet, which provides funding for the development corporation.

The draft minutes of the AGC of 17 September show that several members were concerned that the mayor should not chair both bodies: “[Councillor Mandy Porter (Darlington) – chair] felt that it could be seen as a conflict in some respects, and asked committee what their thoughts were. [Councillor Nicky Watts (Middlesbrough)] agreed that it is a matter of perception and felt it would be beneficial to have a different chair. [Andrew Evans (independent member)] agreed with this, and it was agreed that it should form part of the recommendations to cabinet.”

But when the cabinet met on 27 September to agree its response to the independent Tees Valley Review to be sent to the government the opportunity was allowed to slip by, even though Tory Houchen is outnumbered 5-1 by Labour cabinet members.

The draft minutes of the cabinet meeting, now published, record that: “[An official]  provided cabinet members with the opportunity to consider and agree its response to any specific areas and feedback that had been identified at recent board and committee meetings.

“Key areas were addressed in the reports from board and committee meetings to cabinet, which included a point about a perceived conflict of interest in relation to the mayor’s role as chair of TVCA cabinet and STDC. There were no further comments.”

That was enough to enable the cabinet to satisfy the AGC’s request that it “carefully considers the feedback provided when agreeing its final response to HM Government” and to agree the official recommendations in its own report, including to “consider” the report of the AGC. It is evidently the end of the matter

The Tees Valley Review

The Tees Valley Review of the Teesworks regeneration site was set up by former Levelling Up Secretary Michael Gove in May 2023, after allegations of corruption were made in the House of Commons by Middlesbrough MP Andy McDonald. They have always been contested by Tees Valley Mayor Lord Ben Houchen.

The Review found no evidence of corruption but did find that “there are issues of governance and transparency that need to be addressed and a number of decisions taken by the bodies involved do not meet the standards expected when managing public funds.”

A total of £560mn of public funding has been invested in the Teesworks site, which was under the control of Houchen’s STDC but now forms a joint venture (JV) in which the development corporation hold only a 10% interest, with 90% in the hands of local businessmen.

One of the recommendations of Gove’s Review was that STDC “should…if possible renegotiate a better settlement for taxpayers under the JV agreement”. But independent legal advice was that as the deal had already been signed it was legally binding.

The best the businessmen offered was to cut the length of their option on the land from 30 years to 15; to provide a progress report to the STDC board every 6 months; to produce a confidential detailed summary of current contractual commitments for re-investment on the site; and to provide additional funding to support local employment and community prosperity.

The cabinet’s response

The cabinet’s draft minutes record that it approved these changes to the JV agreement, though they make clear that some members of the overview and scrutiny committee (OSC) were not happy.

Apart from complaining that the information had not been provided in time for their scheduled meeting, necessitating an additional informal meeting, a number of OSC members “expressed concern at the limited number and nature of the proposed concessions from the JV partners with others thinking they represented a good deal.

“Accepting that there was never going to be unanimity of views on this matter ultimately the committee feels that it is important to look to the future. Therefore, the committee’s focus going forward will be to scrutinise the implementation of the agreement and to ensure that the promised outcomes in relation to developments, job creation, business rates etc. are not only delivered but delivered within the stated timescales. This approach being seen as the best one available to ensure the best possible value for money outcomes for the taxpayer.”

The Tees Valley Business Board had also not seen the JV partners offer at the time of their meeting on 16 September and reserved the right to comment. The Board did say, however, that they “are concerned about the negative effect adverse media has had on inward investment and …would like to see us move forwards as a region now and drive growth across the Tees Valley.”

Self-congratulation

The tone of the cabinet’s draft minutes is generally self-congratulatory, notwithstanding grumbles about shortage of time to consider the 800-plus pages of documents with which councillors were presented. A total of 89 meetings, briefings and other events held to deal with the Review is listed. The mood was set by Chief Executive Julie Gilhespie.

She “expressed thanks to officers at TVCA and STDC, statutory officers from the constituent local authorities for their input into the statutory officer working groups, committee members and colleagues from CIPFA (Chartered Institute of Public Finance and Accountancy) and various legal firms for the work they had contributed to the process.”

Councillor Steve Nelson (Labour Stockton), chair of the OSC, said: “At the outset I’d like to record my thanks to the governance, scrutiny and legal officers [first names] for the expertise and support they’ve given this new chair in what has been a hectic but rewarding period. I thought it was only politicians who sent emails at 6am and 11pm?”

He did however go on to express concerns about not receiving documents in time, non-receipt of STDC reports and accounts in spite of statutory provision, and the limited concessions from the JV partners.

Comment: the humiliation of Houchen

Mayor Houchen has succeeded in sweeping aside any idea that he should be deposed from the chair of STDC, thanks to the feeble response of his cabinet colleagues. He is putting a typically brave face on the situation and seems intent on carrying on as if nothing had happened. But make no mistake, the Tees Valley Review has resulted in a humiliation for him:

• The world can now see that he has lost control of Teesworks, Britain’s biggest brownfield regeneration project. He and the STDC are reduced to receiving a report every six months from the JV partners who hold the real power.
• The cabinet has had to approve amendments to the TVCA and STDC constitutions, assurance framework, financial and other associated regulations, and review internal audit arrangements in order to – among other things – manage its financial liabilities and risks; meet its statutory obligations including oversight; keep STDC’s existence under review; agree protocols and codes of conduct; provide training for members and officials on conflicts of interest; ensure fair, open and transparent recruitment at STDC; and review the approach to confidentiality and Freedom of Information.
• The revised TVCA constitution and JV agreement are to come back to the cabinet for approval at an unspecified date (the next scheduled meeting is on 20 December).
• All these actions are a result, in addition to the Tees Valley Review, to the advice of the host of experts who have had to be drafted in to provide advice and training to TVCA, as reported by North East Bylines on 31 August. These include the Local Government Association, Chartered Institute of Public Finance and Accountancy and Centre for Governance and Scrutiny.

It is a sign of hubris by Houchen and a mark of failure by all those who are supposed to control him – cabinet members, scrutiny and audit committees and statutory officials – that the mayor has been able to get away with so much for so long at public expense – and that so much outside supervision is found to be needed now.

Perhaps now the mayor no longer has political friends in Whitehall the picture will change. However, Teesworks is such an important site for the government’s green energy aspirations that it will not want to see its regeneration disrupted. And Houchen can point to the fact that he was re-elected by the people of Tees Valley less than six months ago, albeit with a much reduced majority.

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