UK parliamentary committee chair backs call for audit of Teesside project

The chair of the House of Commons public accounts committee has backed calls for the UK’s public spending watchdog to investigate Teesworks, the flagship government-backed regeneration scheme overseen by the Conservative party’s most high-profile mayor, Ben Houchen.

Labour’s Dame Meg Hillier urged ministers to allow a full National Audit Office investigation into the scheme in north-east England after a Financial Times investigation raised concerns about value for money, governance and transparency.

In a letter to the Financial Times, Hiller said it would be “wise” if levelling up secretary Michael Gove would order a probe, adding that the existing financial oversight system for England’s directly elected mayors was not “robust”.

Her call echoes one by shadow levelling up secretary Lisa Nandy last week. Subsequently Houchen, the mayor of Tees Valley, who is overseeing the scheme, wrote to Gove and called for the NAO to investigate in order to bring a “swift, decisive conclusion” to the situation. The chair of the House of Commons business select committee, Labour’s Darren Jones, has made a similar demand.

The investigation by the FT raised concerns about the 4,500-acre Teesworks project, which involved decisions, taken in private, to hand over public assets to two local developers.

It is the country’s largest brownfield site and is overseen by the South Tees Development Corporation (STDC), chaired by Houchen. The project, which is now 90 per cent privately owned, is aimed at regenerating Redcar’s huge former steelworks and forms a large part of the Teesside freeport.

Previously, the government, STDC and the developers defended the project and the way it was being managed.

Under current legislation the government has to order the NAO to inspect the books of local bodies, whose accounts are only open to locally-appointed private auditors.

In the letter, Hillier flagged her committee’s longstanding concerns about the strength of the existing market for local public sector auditing, highlighting that just 12 per cent of council audits were completed in time for the 2021-22 deadline, while some councils have had no audit for two years.

She criticised financial oversight arrangements for the English mayoral model. It “did not include robust local audit plans” when it was introduced in 2015, she wrote.

When asked by the Financial Times in April why many of its subsidiary accounts had been filed late over the past 18 months, STDC said local auditors had been “operating in a market where there is limited resource and significant delays”.

Like Hillier, it also highlighted the government-commissioned Sir Tony Redmond review into local audit arrangements, which found the market to be “fragile”.

In response to Hillier’s letter over the weekend, however, STDC said it did “not agree” that there was a shortage of experienced public sector auditors in the market, adding that “our auditors have scrutinised our decisions that fall within their remit thoroughly”. Its own finance team had “significant public sector experience”, it added.

In the letter, Hillier also said that when she met Houchen in 2018 she had “urge[d] him to establish a stronger local audit structure to reassure his voters that he was delivering value for money and to demonstrate to government the cost effectiveness of devolved funding to local areas”. The STDC did not comment on this point.

The government said it was “carefully considering” requests for an NAO review and would “respond in due course”, adding it had seen “no evidence of corruption, wrongdoing or illegality”.