Ben Houchen's Tees Valley misses financial audit deadline for second year in a row

Tees Valley Combined Authority will miss today’s backstop deadline for its 2024-25 accounts, despite saying as recently as December that it was “confident” of submitting them in time.

At the latest audit and governance meeting, Jo Moore, TVCA's interim director of finance, described missing the backstop deadline as “not great” but said: “We did everything we absolutely could to meet that statutory backstop.”

These deadlines were brought in by the Labour government after it came into power, to deal with the nationwide public sector auditing backlog.

The accounts have to be assessed by external auditors to provide assurances to taxpayers and the authority that its finances are soundly managed.

Last year, TVCA also missed the deadline for its 2023-24 accounts, and the combined authority is still working to get these finalised.

It comes after consultancy Ernst & Young (EY) said it was unable to sign off TVCA’s 2024-25 accounts, saying it uncovered “material misstatements” and “material inconsistencies”.

A report published in December last year said these included differences between the opening balances and corresponding closing balances.

EY also said “there was a general lack of responsiveness to our audit enquiries”, and TVCA failed to inform the accountants of significant governance changes.

Following this, Middlesbrough and Thornaby East MP Andy McDonald wrote to Local Government Secretary Steve Reed calling on him to probe the “staggering” internal audit by the consultants.

A TVCA spokesperson said: “Significant progress has been made in dealing with issues raised by the auditors however, there remains outstanding questions relating to arrangements in 2023/24 and 2024/25 relating to complex long-term regeneration which the authority is continuing its work to address with the external auditor.

“This does not mean that there are still material errors, but that further technical assessment is required.

“The external auditor agrees that the authority should engage specialist technical advice to ensure the current accounting treatment follows the correct standards.

“TVCA officers will continue to work quickly to resolve these issues as soon as possible.

“It is important to highlight that these continue to relate to issues that are historic in nature and do not consist of new or additional issues relating to the authority’s work.

“Overall, in their latest update report, the external auditor has noted the progress made since the new statutory team has been in place.”

This is the latest in a string of controversies around Tees Valley’s finances and governance, particularly around Teesworks.

The freeport, which covers the former Redcar steelworks site, was initially a 50-50 joint venture between public body South Tees Development Corporation (STDC) and businessmen, Chris Musgrave and Martin Corney.

A transfer of shares in November 2021 saw the businessmen take control of 90 per cent of Teesworks Ltd, the company vehicle for the scheme, which was supported by Lord Houchen, who has been mayor since 2017.

More than £500m of taxpayers’ money has been spent, with Mr Musgrave and Mr Corney extracting at least £120m via dividends and other payments.

A Government review in January 2024 found “no evidence of illegality” but made 28 recommendations for improvements in governance and transparency with Teesworks and TVCA.