Lord Ben Houchen’s Tees Valley Combined Authority is to be issued with a formal notice that it must make improvements because of concerns over its governance and value for money for taxpayers.
The TVCA, which is chaired by Houchen and responsible for the Teesworks regeneration scheme, is to be handed a “best value” notice by ministers on Thursday, according to two people familiar with the matter.
Such notices are used when ministers have concerns about a local body’s governance and use of public money.
They have previously been issued to Birmingham, Bradford, Liverpool and Woking, among other councils, as well as to two combined authorities.
Downing Street signed off on the latest move after months of internal debate about how best to address concerns about the TVCA, particularly the use of state funding at the Teesworks public-private project. The huge site is a former steelworks near Redcar which has received £560mn in government money.
Early last year an independent government review into Teesworks found a catalogue of governance failures at the TVCA, as well as at the South Tees Development Corporation.
STDC is an arm’s-length mayoral development body, also chaired by Houchen, England’s only Conservative metro mayor. It borrows and spends public money for the Teesworks project via the TVCA.
The findings of the Teesworks review included board papers, formal decisions and legal advice that were missing; a lack of political scrutiny and oversight; and “excessive confidentiality”.
It also raised questions about procurement processes, the taxpayer value of the public-private deal and the TVCA’s understanding of its liabilities.
The TVCA provided its formal response to the review’s findings in September, including making a number of changes to processes. But the government has remained unsatisfied with governance improvements, according to one person familiar with the matter.
Over the past year the Chartered Institute of Public Finance and Accountancy has also identified further concerns about audit arrangements, while the TVCA’s external audits for 2022-23 and 2023-24 were both unable to provide assurance over value for money.
The resulting improvement notice is not expected to involve the nuclear option of sending in commissioners to run the TVCA, as happened in Birmingham.
But it will place the TVCA under closer monitoring by Whitehall. The body will be expected to provide further clarity on its improvement strategy, particularly where governance is concerned.
The government is also intending to publish clearer guidance on oversight and financial arrangements for mayoral development corporations, one of the recommendations of the original Tees Valley review.
The Ministry of Housing, Communities and Local Government said it would communicate any best-value updates “in the usual way”.
A spokesman for the TVCA said the body remained “absolutely confident in the value we deliver for local people every single day — thousands of good jobs, rising wages, billions in private investment, and major global companies now setting up on Teesside”.
The body said it would work constructively with the government on any best-value process.
In opposition, the Labour party was vocal about concerns in relation to the TVCA, the STDC and the Teesworks project.
Many of its criticisms centred on the decision to hand two private developers 90 per cent of the Teesworks steel site’s development vehicle at zero consideration, alongside no investment obligations and the option to buy up land at short notice.
However, since entering office last summer Labour has yet to follow through on threats of a National Audit Office investigation.
The government’s latest intervention, according to people familiar with the situation, has had to be balanced against the need for inward investment in a post-industrial area at a time when it is seeking to boost growth outside London.
