Teesworks: Government unlikely to push for NAO investigation despite pre-election pledge
The Labour Government is unlikely to push for a National Audit Office investigation into Teesworks despite Cabinet ministers calling for one ahead of the election, The Yorkshire Post understands.
Local Government Minister Jim McMahon yesterday issued a Best Value Notice to the Tees Valley Combined Authority, requiring improvements in both governance and value for money for taxpayers.
In the letter to Mayor Lord Ben Houchen, Mr McMahon said: “Having carefully considered your response to the Tees Valley independent review and the external auditor’s recent assessment finding weaknesses in value for money arrangements, I have concluded that I require further assurance.
“Specifically, I require assurance of how your action plan will be implemented and embedded over time, to ensure it has the necessary impact on governance, culture and relationships.”
The Yorkshire Post understands that the Government sees this as suitable action, instead of calling in the NAO watchdog.
Teesworks, which covers the former Redcar steelworks site, was initially a 50-50 joint venture between public body South Tees Development Corporation (STDC) and two local 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 Mayor Lord Ben Houchen.
More than £500m of taxpayers’ money has been spent, with Mr Musgrave and Mr Corney extracting at least £120m via dividends and other payments.
Many Labour figures criticised the previous Conservative government for not calling in the NAO, while Rachel Reeves told The Yorkshire Post that she would bring in the watchdog to probe the deal.
However, the prospects of that now appear highly unlikely. It comes after a Government review in January 2024 found “no evidence of illegality” but made 28 recommendations for improvements in governance and transparency.
Lord Houchen has since responded to that by establishing an independent panel, supported by the Local Government Association, to scrutinise the combined authority.
In his letter, Mr McMahon praised this and added: “The residents of Tees Valley cannot afford to live under a shadow of uncertainty for any longer, and investment in the region demands full confidence from both the public and the private sector.
“I hope that this process will offer the opportunity for a reset.”
Lord Houchen said: “I’m pleased the Government has recognised the real progress we’ve made - and confirmed there is no need for a NAO investigation.
“That’s the right call, and it reflects the work we’ve done to improve governance while continuing to deliver for local people.
“I’ve always said I’ll put politics to one side and work constructively with the Government and the Prime Minister to secure jobs, investment and opportunity for our region. That remains my complete and only focus.
“No organisation is perfect, and my fellow Labour council leaders and I must reflect on this as the Combined Authority improves.”