Tees Valley Combined Authority’s (TVCA’s) auditors Ernest and Young (EY) have challenged a claim made by Mayor Lord Ben Houchen to ministers that the Authority had completed the process of restoring good governance following the Tees Valley Review by September 2024.
The Review had been set up by then Levelling up Secretary Michael Gove in 2023 following allegations of corruption around the regeneration of the former steelworks site at Redcar. The Review did not find evidence of corruption but did report issues of governance and transparency that needed to be addressed and decisions taken that did not meet the standards expected when managing public funds.
It concluded: “Based on the evidence from the Review, the governance and financial management arrangements are not of themselves sufficiently robust or transparent to evidence value for money.”
In response, TVCA established an Action Plan to ensure, according to the auditors, Ernst and Young (EY), “that the Authority and its constituent local authorities undertake the work required to both agree the actions necessary to incorporate the recommendations made by the Review panel and to ensure that they are incorporated both into the culture and governance structures of the Authority.”
The Action Plan was approved by the TVCA cabinet in March 2024 and from then until September 2024 the Authority provided progress reports to the cabinet and audit and governance committee (AGC). It also commissioned an independent review of the TVCA Group’s internal audit arrangements by CIPFA (the Chartered Institute of Public Finance and Accountancy) and established an independent panel to provide ongoing scrutiny and improve governance.
Job done…
Houchen and the TVCA evidently thought that was enough, for at this point progress on the Tees Valley Review’s recommendations ceased to be a standing item on the agenda of either the cabinet or the AGC and instead was tracked through the TVCA’s existing risk management systems and controls – business as usual, as it is now characterised by the auditor.
On 27 September 2024 Houchen wrote to the government (Angela Rayner) setting out the steps that had been taken and including the “assertion”, as EY describes it in its draft annual report for 2024/25, that “I am pleased to inform you that the process is now complete and that this response has been unanimously endorsed by all committees and all involved in this process, allowing me to write to you to confirm that the required changes have been made and implemented into our governance system.”
There was to be a peer review by the Local Government Association 9-12 months later to ensure the changes been properly embedded within the organisation.
…or not?
EY does not agree with the mayor’s assessment. Improvement plans in other local authorities subjected to similarly wide-reaching and pervasive reviews, it says, have typically been multi-year exercises: “In our view, the effective closure by the Authority of its Action Plan after six months is indicative that the Authority may not have embedded the requirements in its governance structures and processes and there is therefore an increased risk that such changes will not have the lasting impact they were intended to achieve”.
The Minister of State at the Ministry of Housing, Communities and Local Government (MHCLG), Jim McMahon, took the same view when he wrote to Houchen issuing a Best Value Notice on 3 April 2025. “I require assurance of how your Action Plan will be implemented and embedded over time to ensure it has the necessary impact on governance, culture and relationships.”
In what reads like a rebuke to Houchen, the auditors conclude this section of their draft 2024/25 annual report by saying: “Given our observations around the pace with which the Authority has incorporated the remaining elements of its Action Plan into ‘business as usual’, coupled with the similar observations raised by MHCLG within the issuance of the Best Value Notice, we are unable to conclude that the Authority had proper arrangements in place with respect to governance during 2024/25.”
CLICK HERE TO SUPPORT THE BYLINES NETWORK CROWDFUNDER!
