Yahoo Finance Select committee calls for Teesworks deal scrutiny
A parliamentary committee has called for further scrutiny of financial deals linked to a flagship freeport.
A House of Commons Business and Trade Committee report said the National Audit Office "must" scrutinise expenditure of public funds linked to Teesside Freeport and the organisations responsible for it.
The report follows an independent investigation into financial decision making at Teesworks, a former steelworks site being regenerated within the freeport.
The Tees Valley Review found no illegality, but made 28 recommendations after highlighting concerns including a lack of transparency.
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.
The freeport opened in 2021, with the aim of creating more than 18,000 jobs across five years.
Trade zones within it include Teesworks, Teesside Airport and the ports of Middlesbrough and Hartlepool.
Allegations of cronyism and corruption at Teesworks were investigated after 90% of the site was sold to two private businessmen.
One of the largest brownfield industrial sites in Europe, more than £560m of public funds have been spent or committed to the Teesworks site, much of which is under the control of the South Tees Development Corporation, part of the Tees Valley Combined Authority.
Conservative Ben Houchen, Tees Valley Mayor and head of TVCA, consistently denied any wrong-doing and urged the government to commission the inquiry.
The inquiry's panel concluded 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 the site - did not provide enough transparency and oversight to "evidence value for money".
Addressing concerns
Friday's report from the Business and Trade Committee, which includes Labour's Middlesbrough MP Andy McDonald among its members, urges the government to "urgently improve" governance and transparency at freeports and investment zones across the country.
Expressing support for a number of recommendations, it addresses the Tees Valley Review in detail and calls on Michael Gove to arrange further scrutiny of financial decision making.
The Secretary of State for Levelling Up, Housing and Communities is urged to 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 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".
Labour's candidate in the upcoming 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, also welcomed the recommendations, but said urgent action was still needed.
He said: "The implementation of such improvements will do little to address the existing situation at Teesworks, where – unless urgent steps are taken – around £1bn in profits from £560m of public investment will be transferred to the private sector."
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.”
Mr Houchen has been approached for comment.
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.
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