Just because there has been no corruption found by those involved in regeneration of the Teesworks site, as we are told by the independent Tees Valley Review established by Levelling Up Secretary Michael Gove, does not mean it is not a scandal.
Actually, it is the biggest political scandal in North East local government since Dan Smith, the Newcastle politician, went to jail in the 1970s.
What else can you call an episode in which 90% of the UK’s largest brownfield redevelopment site has been signed over from the public to the private sector for little or no tangible benefit?
An episode in which the private sector partners have so far made £45mn profit and hold £63mn cash while the public sector has invested around £500mn, including £257mn of borrowing and £246mn in government grants?
What is more, all this has been done by one man, Tees Valley Mayor, Lord Ben Houchen, enabled by small group of senior, statutory officials, by-passing the checks and balances and scrutiny obligations built into the system.
Even if – a big if – it was right for South Tees Development Corporation (STDC) to form a joint venture (JV) with the partners it did for the reasons it did – to incentivise the private sector and, it was hoped, avoid the need for a risky compulsory purchase order (CPO) – it was this wilful disregard for the safeguards that is so scandalous.
One big question remains, which the review touches on but does not explore in detail. While Houchen and his enablers were failing, as the review says, to meet the standards expected when managing public funds, what was the rest of the Tees Valley political and official class doing?
How come the Tees Valley Combined Authority (TVCA) cabinet failed to exercise any control over the mayor? How come the Overview & Scrutiny Committee (OSC) allowed itself to be hoodwinked into accepting that its remit did not extend to the STDC?
The answer seems to lie in the shock and awe tactics the mayor had used to bulldoze through his earlier decision to purchase Teesside Airport against the initial wishes of his entire cabinet. As one member of the OSC said at the time: “We should have done better”.
After the airport, the cabinet seemed to be politically terrorised by the mayor while the back-benchers on the OSC (and perhaps the Audit and Governance Committee) were led to believe that the big issues were beyond their reach.
They were also pleased, as were the people of Tees Valley as whole, to see the area put back on the map – attracting prime ministerial visits for example – after decades of being overlooked in favour of Newcastle, as they saw it.
What next for Tees Valley?
The starting point now must be the 28 recommendations for reform set out in the Tees Valley Review. Houchen has told Gove he stands ready to accept them “in principle”. Gove should insist that he implements them in practice or know the reason why.
This will result in the mayor’s power to act alone being significantly curtailed. Members of his cabinet will be much better briefed by top officials at their own councils, and the rights of back-bench councillors to scrutinise STDC will be restored. The self-confidence of both cabinet and OSC to challenge the mayor will hopefully be raised again to an appropriate level after their bruising experiences of recent years.
Whether anything can be done at this stage to undo the damage to the public interest caused by the agreements with STDC’s JV partners handing over a 90% stake in Teesworks Ltd is a much more difficult matter.
No evidence has been offered that the partners have done anything illegal. They have apparently valid agreements with STDC and the review states that “the partners see no prospect of renegotiating a deal that rebalances their relative advantage over STDC” (10.13). Indeed, why would they?
So are the taxpayers of Tees Valley stuck for decades with Houchen’s bad deal? Probably, but not quite certainly. The review panel still thinks renegotiation is worth a try. Their Recommendation 22 says that STDC should “if possible renegotiate a better settlement for taxpayers under the JV agreement.”
That might be possible if, while the JV partners acted lawfully in signing the deal, STDC itself did not. We have already reported how STDC may have acted beyond its powers by not getting the authority of TVCA, or breached subsidy controls or state aid or public contract regulations.
North East Bylines is no expert on these matters, but as the review panel mentions them it must be worth seeking legal advice about their implications for the JV agreements. Are the deals still valid?
What will the voters say?
Andy McDonald, MP for Middlesbrough, went too far in alleging corruption before the facts were established. But he did the people of Tees Valley a service by causing a spotlight to be shone on what was going on at STDC and Teesworks. While his corruption allegation continues to lie on the table it only serves as a distraction that enables attention to be diverted from the very real mismanagement of public funds. McDonald would be better able to occupy the moral high ground if he apologised for the corruption charge and concentrated on the scandalous mismanagement. There’s plenty of it.
The call in the House of Commons by the Conservative MP for Middlesbrough South and East Cleveland, Sir Simon Clarke, for McDonald to resign is not be taken seriously. It was disgraceful political opportunism: kicking a man when he thought he was down.
The members of the TVCA cabinet, OSC and Audit Committees need to do better. They have allowed Houchen, with his bluster, to get away with too much for too long. It is time for them to be more robust in asserting their legitimate rights.
Tees Valley’s statutory officers – the chief executive, director of finance and resources and monitoring officer – must remember that their duty is to the people of Tees Valley, not to one individual, the mayor. Their responsibilities include ensuring, as the Tees Valley Review says, that legal budgets are set, value for money obtained, statutory obligations fulfilled and codes of conduct followed.
Finally, Tees Valley voters will soon have a chance to decide whether Houchen, having through a mix of political high-handedness and business ineptitude, created the mess uncovered by the Tees Valley Review and reported in these articles, is the right man to clear it up. We will find out what they think on 2 May.
CLICK HERE TO SUPPORT THE BYLINES NETWORK CROWDFUNDER!
