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Meetings between mayor and contractors without officers over £21m regeneration project contrary to council constitution, report finds

A “failure of leadership at a very senior management level” allowed Middlesbrough Borough Council’s elected mayor to carry out personal negotiations with a contractor, a council investigation has found.

The report to the Corporate Affairs and Audit Committee said mayor Andy Preston, an independent, held meetings with third party contractors on the Boho X project without officers present and without these meetings being documented.

Boho X is a £21m office regeneration project funded jointly with Tees Valley Combined Authority.

Mayoral involvement with contractors had been agreed by the former Executive Director of Growth. But no power had existed to do this as it was contrary to the council’s constitution.

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Middlesbrough’s Directors of Finance and Legal and Governance Services commissioned the report from internal audit.

It found there appeared to have been a perception by the contractor BCEGI that the mayor was making decisions and formal instructions for the project, “while the mayor does not perceive that he made those formal decisions. This may have led to decisions and design changes being made without appropriate input or transparency or being communicated efficiently.”

The report said change control notices were not submitted, reviewed and authorised in line with the council’s procedure although BCEGI logged them as having been agreed with the mayor but with no officer involvement.

This approach “resulted in changes to the project design and cost…not in line with the council’s constitution or programme and project management framework”.

Seven design changes outlined in BCEGI’s change log between June and August 2020 were perceived by the contractor as authorised by Mr Preston and recorded as such, but the report said “there is no evidence that these changes were attributable to Covid-19 as identified public communications and as such the decision-making on the change was not transparent”.

The “conscious non-compliance with corporate policy” found on project governance represented “a failure of leadership at a very senior management level, regardless of whether this arrangement was requested by the mayor or an assumption was made that the mayor wanted such an arrangement – in either instance the arrangements should not have been put in place”, the report said.

There could have been “significant adverse impacts on the project, and equally importantly, could have resulted in an ‘opt out’ culture – when officers at a junior level see senior officers consciously disregarding policy, it increases the likelihood that they will become less diligent or act in a similar way, undermining good governance across the organisation”.

Mr Preston had since been advised by the monitoring officer not to meet with third party contractors or potential tenants on any project without officers being present.

Responding to the report, the mayor told the Northern Echo: “As the mayor, the people of Middlesbrough expect me to be hands-on with projects that are important for the town’s future – ensuring progress and making sure money isn’t being wasted. That’s what I do. Every meeting I had about Boho X was explicitly sanctioned by senior council staff and that will continue to be the case as we deliver this and many other transformational projects across Middlesbrough.

“This landmark project will change the town’s skyline, help create jobs and make a huge profit for Middlesbrough Council. We will be doing more of this going forward. It’s sad that some people want to try to distract from the massive progress by sniping from the sidelines. It terrifies them that Middlesbrough is on the rise after years of failure under their watch.”

Mark Smulian

Sponsored Editorial

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