Committee calls for further investigation into Teesworks finances

The Department for Levelling Up, Housing and Communities has rebuffed a parliamentary committee’s call to instruct the National Audit Office to investigate the Teesside Freeport, Tees Valley Combined Authority (TVCA) and the South Tees Development Corporation.

MPs sitting on the Business and Trade Committee made the request in a report titled 'Performance of investment zones and freeports in England', which also made a "key" recommendation to urgently improve transparency and governance at such bodies.

However, responding to the Committee, a spokesperson for the Levelling Up Department said an independent investigation into the TVCA and Teesside Freeport had already been conducted, adding that it "is not the National Audit Office's role to audit or examine individual local authorities".

The Teesside Freeport is home to a 1000-acre brownfield site known as Teesworks, which receives both tax and customs benefits and public investment.

Teesworks has received a total of £560 million of public resources to date, including £246 million in Government grants and £257 million in prudential borrowing, with a further £238 million investment planned

The project has been mired in controversy, which led Gove to commission an independent review of the site's operation last year.

The independent review found no evidence of corruption or illegality, but it did uncover "issues of governance and transparency" that it said needed to be addressed.

It also concluded that "a number of decisions taken by the bodies involved do not meet the standards expected when managing public funds".

The mayor of TVCA has accepted, in principle, all the recommendations for the combined authority and development corporation.

In its report published last week (26 April), the Committee said all recommendations in the Tees Valley Review should be implemented in full and called for Gove to direct the National Audit Office to investigate Teesworks.

It recommended: "To recognise Teesside Freeport's flagship status, to address the gravity and breadth of the concerns raised by the Tees Valley Review, to extend scrutiny beyond the limited remit of the Tees Valley Review and to assure the public that taxpayers' money has been disbursed appropriately and legally, the Secretary of State for Levelling Up, Housing and Communities must direct the National Audit Office to scrutinise the expenditure of public funds associated with Teesside Freeport, Tees Valley Combined Authority and South Tees Development Corporation."

The Committee also agreed with the independent review that the TVCA should ensure appropriate checks and balances are in place "such that any venture with the public sector reflects the Nolan principles of openness and transparency as well as value for money and public returns."

The Committee's report also made broad recommendations on freeports and investments zones, which included a number of governance and transparency related concerns.
In response, a spokesperson for the Department for Levelling Up, Housing and Communities said: "The Secretary of State already commissioned an independent report into the South Tees Development Corporation and Teesworks joint venture which found no evidence of corruption or illegality.

"It is not the National Audit Office's role to audit or examine individual local authorities. The review was independent and expert, and Mayor Houchen has accepted all recommendations in the report."

On governances, the Committee called for all freeports and investment zones to be linked to a single regional leader, such as a Metro Mayor, who should be held accountable for those projects.
In addition, it recommended that the Government enhance scrutiny and audit of mayoral combined authorities "as an important check and balance to ensure value for money is being achieved for the taxpayer".

On transparency, the Committee recommended that central Government "lead by example" by publishing the following:
(a) ex-ante assessments of the impact of investment zones and freeports,
(b) the dashboards created to monitor freeports and investment zones, (c) final evaluation reports and;
(c) binding guidance on how freeports and investment zones should communicate with the public.

The report made overarching recommendations on the running of freeports and investment zones, which included prioritised access to energy, extended planning freedoms, access to enhanced skills, improved customs arrangements in freeports, and connection to wider government economic security policies, including the potential of relocation incentives for smaller firms.

Mayor Ben Houchen has been approached for comment.

Adam Carey