There is an Opposition day debate on 7 June 2023 on “Accountability and scrutiny of Teesworks”.

Allegations relating to Teesworks

Teesworks, South Tees Development Corporation’s (STDC) regeneration project, is part of the Teesside freeport. There have been a number of recent press reports raising concerns about Teesworks, in particular, over its governance, accountability and value for money:

These claims are contested by Ben Houchen, the Conservative Mayor of Tees Valley. The Department for Levelling Up, Housing and Communities has said that it has “seen no evidence of corruption, wrongdoing or illegality.

There have been calls for the National Audit Office (NAO) to investigate.

Government sets up independent inquiry

On 24 May 2023, Michael Gove, Secretary of State for Levelling Up, announced an independent review to be carried out by a Panel which he would appoint. The Panel would investigate allegations of corruption, wrongdoing and illegality and report on governance arrangements and value for money.

Gove said that he did not think it appropriate to ask the National Audit Office to lead the inquiry. He said that it was not “the NAO’s role to audit or examine individual local government bodies and its powers would not normally be used for that purpose” and that he did not think “it would be appropriate to expand so significantly the role of the NAO by asking them to lead this inquiry.” He did, however, say that he “would welcome the NAO updating its review of Government’s funding arrangements for STDC.”

The report will be published.

Houchen had written to Gove on 16 May supporting an independent review, arguing that “grossly unfounded and inaccurate statements” were having a negative effect on investor confidence.

Lisa Nandy, the Shadow Secretary of State for Levelling Up, criticised the Government’s decision not to allow a full investigation by the NAO. The Labour Party has called for Government correspondence relating to the establishment of the independent review to be published.

Business and Trade Committee inquiry

The Business and Trade Committee has announced an inquiry into the performance of investment zones and freeports in England. It requested assistance from the NAO to look into transactions at Teesside freeport. The Comptroller and Auditor General stated that:

I do not have the statutory power to conduct examinations of individual local authorities and associated bodies. I can agree to carry out such work following a request by a Minister. This would require an agreement between the Minister and the relevant bodies to be examined, under Section 6(3)(d) of the National Audit Act 1983. I have not received a Ministerial request to consider undertaking such work.

Role of the South Tees Development Corporation

The Mayor of Tees Valley established the South Tees Development Corporation in April 2016 as a Mayoral Development Corporation (MDC).

Amongst other things, MDCs may:

  • Acquire, develop or regenerate land;
  • Provide infrastructure or buildings;
  • Take on the role of the planning authority for the area that it covers;
  • Adopt private roads;
  • Make compulsory purchase orders (with consent from the Secretary of State);
  • Carry on any business, or acquire interests in bodies corporate.

An MDC holds a ‘functional power of competence’, whereby it “may do anything it considers appropriate for the purposes of its object or for purposes incidental to those purposes”, according to the Localism Act 2011 s201 (2).

Financial Accountability

The Tees Valley Combined Authority (TVCA), and its connected entities, including the South Tees Development Corporation, falls under the local audit regime established by the Local Audit and Accountability Act 2014. This regime replaced the Audit Commission.

Combined authorities must appoint an auditor, who must audit their accounts annually. The auditor has the power to issue a public interest report if they uncover matters of concern, and to apply to a court to block spending that appears to be unlawful.

Combined authorities are also required to make copies of their accounts available for electors to inspect for a period in each financial year. In respect of the 2021/22 financial year, the accounts were made available for public inspection from 1 August to 9 September 2022.

Local electors also have the power to object to an item in the accounts, and the auditor must investigate this unless they believe that the objection is vexatious, it has already been investigated, or investigating would be disproportionate to the sums at stake (see section 27 of the 2014 Act).

TVCA’s most recent statement of accounts (for 2021/22) and governance statements are available on their website.

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