MPs call for audit office to scrutinise Teesworks

The regeneration of the former Redcar steelworks aims to create thousands of jobs

MPs have called for the National Audit Office (NAO) to scrutinise the government's flagship freeport.

The Commons Business and Trade Committee said the NAO "must" look at the use of public funds at Teesside Freeport and associated organisations.

The cross-party committee called for urgent improvements in governance at investment zones across England.

But the government said it is not the NAO's role to examine individual local authorities.

The latest report follows an independent investigation into financial decision making at Teesworks, one of the largest brownfield industrial sites in Europe with more than £560m of public funds spent on or committed to it.

That investigation found no illegality, but made 28 recommendations and highlighted concerns including a lack of transparency.

Prime Minister Rishi Sunak made freeports a flagship policy

Published on Friday, the cross party committee report focuses on the performance of investment zones and freeports across England and highlights the "flagship status" of Teesside Freeport.

Trade zones within it include the Teesworks regeneration project, Teesside Airport and the ports of Middlesbrough and Hartlepool.

Allegations of cronyism and corruption at Teesworks, which is managed by the Tees Valley Combined Authority (TVCA), were investigated after 90% of the site was transferred to two private businessmen.

Ben Houchen, the Conservative Tees Valley Mayor and head of TVCA, consistently denied any wrongdoing and urged the government to commission the Tees Valley Review.

Among its conclusions was that systems of governance and finance in place within TVCA and the South Tees Development Corporation - the body set up to manage the redevelopment of Teesworks - did not provide enough transparency and oversight to "evidence value for money".

'Limited' remit

The Business and Trade Committee report asks the government to "urgently improve" governance and transparency at freeports and investment zones, calling on Michael Gove, the Secretary of State for Levelling Up, Housing and Communities, to arrange further investigation of financial decision making.

It urges Mr Gove to direct the NAO to "scrutinise the expenditure of public funds associated with Teesside Freeport, Tees Valley Combined Authority and South Tees Development Corporation".

The report said such scrutiny was necessary to address the gravity and breadth of the concerns raised by the Tees Valley Review, to extend scrutiny beyond its "limited" remit and to assure the public that "taxpayers' money has been disbursed appropriately and legally".

Ben Houchen, Chris McEwan and Simon Thorley are vying to be Tees Valley's next mayor

Labour's candidate in the upcoming Tees Valley mayoral election, Chris McEwan, backed the recommendation.

"The Tees Valley is crying out for more openness, transparency and scrutiny and for that it's vital that the NAO come in," he said.

Liberal Democrat candidate Simon Thorley added his support, saying: "It is important that, in the future, the same mistakes that have been made at South Tees Development Corporation are not repeated."

The BBC has approached Mr Houchen for comment.

Michael Gove's department rejects calls for an NAO investigation

The Department for Levelling Up, Housing and Communities said it was not the National Audit Office's role to audit or examine individual local authorities and that Mr Houchen had already accepted all the recommendations of the independent report.

A spokesman said: "As this report recognises, freeports are key to levelling up and in just two years have generated nearly £3bn investment that will create thousands of jobs - with Teesside generating the most jobs and investment, as the Secretary of State highlighted in his response to the committee earlier this year."

Analysis

Ian Reeve, BBC Look North business correspondent

The cross-party Business and Trade Committee has come to the conclusion that the National Audit Office "must" concern itself with affairs at Teesworks, the South Tees Development Corporation and the Tees Valley Combined Authority. But can it?

The committee asked for NAO help in compiling its just-published report on freeports and investment zones.

That request to look at Teesside freeport transactions was rebuffed by the NAO’s comptroller and auditor general Gareth Davies, who said he did not “have the statutory power to conduct examinations of individual local authorities and associated bodies”.

He is limited by the legislation laid down in the National Audit Act of 1983 and to become involved he would need a request from a government minister. This would then need an agreement between that minister and the relevant bodies to be examined.

The government thinks that the independent review published in January into allegations of corruption at the former Redcar steelworks site was sufficient, with Tees Valley Mayor Ben Houchen accepting all 28 recommendations (mainly over transparency and oversight) in the report.

The question will be asked what purpose another investigation would serve. Those in favour say it will be a more rigorous process.

An NAO report would inform the Public Accounts Committee which can hold individuals to account in evidence sessions. Audited bodies are then required to respond to recommendations made by the committee.