Tees Valley Mayor Lord Ben Houchen must resign as chair of troubled South Tees Mayoral Development Corporation (STDC) if he is to comply with official guidance issued this week by the government. He should also stand down as chair of Middlesbrough and Hartlepool mayoral development corporations (MDCs).
“The mayor should not be the chair of an MDC,“ says the guidance to Acts of Parliament and Orders (secondary legislation) affecting MDCs, and specifically the Tees Valley Combined Authority (Functions) Order 2017.
Though there is no legal ban on a mayor chairing an MDC, the assumption is that he or she will not do so to avoid any potential conflict of interest with the combined authority, which mayors also chair.
Not compatible
The crucial section in the guidance from Deputy Prime Minister Angela Rayner’s Ministry of Housing, Communities and Local Government states:
“[T]he role of the mayor of a combined authority is to establish an MDC, make appointments to the MDC board, and provide oversight through the provision of guidance and directions on the exercise of the functions of the MDC and the provision of consent to decisions, such as compulsory purchase and disposal of land below value.
“Whilst legislation does not prevent a mayor from being the chair of an MDC, their oversight role is not compatible with them also taking the role of chair. The oversight function should be clearly separate from decision making to avoid conflicts of interest. As the mayor provides oversight of the MDC and has powers in relation to the issuing of guidance and direction to an MDC, the mayor should not be the chair of an MDC.”
Tees Valley Combined Authority (TVCA} has been asked whether Lord Houchen intends to resign as chair of South Tees, Middlesbrough and Hartlepool MDCs.
This is not the first attempt to remove Houchen from the chair of STDC. TVCA audit and governance committee attempted to oust Houchen in September 2024 on grounds of potential conflict of interest, but he carried on as if nothing had happened.
The Mayor of London is chair of the two MDCs in the capital but Andy Burnham, Mayor of Greater Manchester, is not chair of Stockport MDC; that is Lord Bob Kerslake.
Although this week’s guidance is newly published as part of the government’s response to the Tees Valley Review alongside its issuing of a Best Value Notice to TVCA, reported in North East Bylines, the Order it refers to, as we have seen, dates from 2017. So it is arguable that Houchen should never have been chair of STDC in the first place.
Joint venture agreements
If that is the case, it is further arguable that the mayor was acting beyond his powers when he negotiated or helped to negotiate deals to hand over a 50% and then 90% share of the Teesworks regeneration site at Redcar from STDC to two local businessmen in a joint venture partnership (the JV Partners). And if the mayor was acting outside his powers, lawyers – of which this author is not one – might argue that the deals were invalid.
The decision to enter into a 50/50 agreement between SDTC and the JV Partners is described in the Tees Valley Review as a decision of the mayor and STDC, and to enter into a 90/10 agreement as a decision of the mayor/STDC officials.
Recommendation 22 of the Review says that STDC should, if possible, renegotiate a better settlement for taxpayers under the JV agreement. When it tried to do that it failed to change the 90/10 share, though the JV Partners did agreed to reduce their option period on the land from 30 to 15 years and made some other concessions.
Independent lawyers consulted by TVCA advised in August 2024 that the JV agreements were legally binding, and though ministers would presumably like to recover some of the £560mn public funding invested in the site, the new guidance does not raise that possibility when discussing MDC governance.
But even if renegotiation of the deal is not possible, TVCA and STDC will probably take a more robust line with private partners in future, under the pressure of a Best Value Notice and the watchful eye of the government, than they have with the JV Partners in the past.
Scrutiny
This week’s guidance could also see improvements in the way scrutiny is conducted at TVCA and its subsidiary bodies. Scrutiny was never robust, dating back to the municipalisation of Teesside International Airport in 2019.
It reached a low point on 15 September 2021 when the TVCA Overview and Scrutiny Committee (O&SC) was told by its monitoring (legal) officer that: “Whilst [the committee’s] remit extends to the decisions of the combined authority including the decisions in relation to funding given by the combined authority and the role the combined authority takes in monitoring those investments, the O&SC’s reach ends with the combined authority’s decisions and does not extend inside some of the principal funding recipients such as STDC and Teesside International Airport.”
Houchen and his officials were still holding to that position as far as they could in September 2024. When members of the O&SC tried to carry out their function in relation to the STDC and Teesworks they were told they had no powers in relation to Teesworks as it was a private entity, though they were offered some sops.
But the new guidance tells a different story. The Scrutiny Protocol for English Institutions with devolved powers sets out a wide range powers for O&SCs in relations to MDCs. O&SCs:
- may scrutinise the decisions of a mayor or combined authority that relate to MDCs;
- have a right to see documentation relating to mayoral and combined authority decisions on an MDC;
- may require the mayor to attend a meeting to answer questions in relation to mayoral decisions relating to an MDC; the Scrutiny Protocol makes it clear that the mayor should commit to engage regularly with the committee both informally and formally and must attend the committee when requested;
- may require combined authority members who are on the board of an MDC to attend a meeting to answer questions about their role on the MDC;
- have a right to see documentation relating to the monitoring (legal) officer’s role in respect of an MDC;
- may require the monitoring officer to attend a meeting to answer questions about their role in respect of an MDC;
- may invite officers and board members of an MDC to a meeting of the O&SC to discuss the MDC.
The O&SC of a combined authority, says the guidance, should engage in all these activities and the mayor, combined authority members and officers, and MDC board members and officers should facilitate such scrutiny, in order for local residents to be confident that public assets and money are being used for public benefit.
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