The government is expected to make a decision soon on whether to order a value-for-money investigation by the National Audit Office (NAO) into South Tees Development Corporation (STDC) and the troubled Teesworks regeneration site.
A source in Tees Valley has told North East Bylines that a decision could come from Angela Rayner, Secretary of State for Housing, Communities and Local Government, as early as next week, and the Financial Times has reported that Whitehall officials have been urging Rayner to order an investigation.
If the NAO does carry out a probe it would be the second into Teesworks, which has been described as Britain’s biggest brownfield regeneration site. Though that claim has been questioned, it is certainly a project of national significance, including for the government’s green agenda, and has had £560mn of public funding pumped into it.
Background
Teesworks was established by STDC, which in turn had been set up by Tees Valley Combined Authority (TVCA). STDC subsequently negotiated away a 90% interest in the site to two local businessmen. TVCA and STDC are both chaired by Tees Valley Mayor, Lord Ben Houchen.
In 2023 the then Levelling Up Secretary, Michael Gove, commissioned the Tees Valley Independent Review in response to allegations of corruption in the House of Commons by Middlesbrough MP Andy McDonald. It did not find evidence of corruption but did report issues of transparency and governance that needed to be addressed and that standards expected when handling public funds had not been met.
The Review made 28 recommendations, mostly for organisational change at TVCA and STDC, though two – on landfill tax and regulations on combined authorities and mayoral development corporations generally – required government decisions.
An action plan to implement the recommendations of the Review was agreed by councillors in September, and Houchen wrote to Rayner on 27 September with the details. Members of the TVCA overview and scrutiny committee (OSC) will be told at a meeting on Wednesday that no reply has yet been received from Rayner.
In addition, Rayner’s response is still awaited to a report by the House of Commons Business and Trade Committee (BTC) on investment zones and freeports, including Teesport, in which the BTC recommended a Tees Valley investigation by the NAO. The government’s response is now seven months overdue.
Houchen’s Letter to Rayner
Houchen’s letter to Rayner, which will be presented the Tees Valley Overview and Scrutiny Committee (OSC) on 15 January, contains nothing we do not already know. It sets out in Houchen’s characteristic positive terms the national and local importance of the Teesworks site and the economic benefits already achieved or, it is said, to be achieved. It concludes: “I look forward to hearing your response and welcome the opportunity to continue to work positively with this government to bring success to Teesside, Darlington, and Hartlepool.”
An accompanying report by the TVCA chief legal and monitoring officer says: “Despite writing to HM Government on 27 September 2024, neither the Tees Valley Mayor nor the TVCA has received a response in respect of the Tees Valley Review recommendations.
“Notwithstanding the lack of response from HM Government, the TVCA continues to ensure the implementation and monitoring of the proposed response to each of the recommendations.”
Teesside Freeport
At another meeting next week the board of Teesside Freeport will be told in a Finance, Risk and Accountability Update that the Freeport Risk Portfolio is managing 15 general risks, 24 security & Illicit threat risks and 27 digital test bed risks. A number of these potential risks are said to have strong mitigations and only become prevalent as the Freeport operations are developed.
The Update by TVCA’s group finance and resources director, rates the overall risk for the Freeport as medium and the security and Illicit threat as low.
The report states: “The risks that have been identified and mitigated within this report relating to finance are primarily the accountability for the use of public funds. The arrangements for accountability of public funds have been covered in detail both within the Teesside Freeport bid submission approved by government and the subsequent governance proposals also approved by government.”
Comment
The government is in a difficult position because, as North East Bylines has pointed out, Teesworks is of importance to the national as well as the local economy and ministers are looking to metro mayors like Houchen to help drive their growth agenda. They will not want to see a repeat of the disruption caused by the Tees Valley Review.
Cross-party support for Tees Valley’s pivotal role in the government’s upcoming industrial strategy was emphasised when local Labour MPs met Industry Minister Sarah Jones recently. Luke Meyer, MP for Middlesbrough South and East Cleveland said after the meeting:
“The government’s focus on key sectors such as advanced manufacturing, clean energy, and digital technologies is a perfect match for Teesside’s capabilities. Teesside, with its skilled workforce, established industries and green innovation projects, is well-positioned to be at the forefront of this ambitious agenda.
“I will keep pushing for the investment and support we need to ensure our region plays a central role in the industrial strategy, delivering thousands of high-quality jobs and a stronger, greener economy for our communities.”
An additional difficulty for Rayner is that, because TVCA and its associated bodies are not under direct government control, ministers would require Houchen’s consent to order a NAO inquiry.
Gove’s Department of Levelling Up said on 26 April: “It is not the NAO’s role to audit or examine individual local authorities. The [Tees Valley] Review was independent and expert, and Mayor Houchen has accepted all recommendations in the report.”
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