Good afternoon. You wait eight months for further news on a rolling controversy, then hundreds of pages of it land at once.
The year had seen little in the way of public updates following January’s critical independent review into Teesworks, the country’s largest regeneration project, and the devolved public governance underpinning it.
That was until last Friday, when some of the intended response to ministers from Conservative mayor Lord Ben Houchen’s Tees Valley combined authority found its way to me.
More detail on that below.
Crucially its contents will not only pose challenges for Houchen but also for the Labour party now in Downing Street.
“Unfocused, unproductive and bad-tempered”
January’s Tees Valley Review was prompted by fierce controversy over Teesworks Ltd, the four-year-old public-private partnership between Houchen’s South Tees Development Corporation and two local developers. The venture is intended to regenerate the vast former SSI steel site in Redcar.
At the heart of the row were questions over transparency and value for money — specifically, whether the taxpayer had short-changed itself by handing the businessmen the deal of a lifetime.
The resulting review’s tightly-controlled scope meant it could not make an explicit pronouncement on the latter point.
But it did recommend the deal be renegotiated. Meanwhile it raised questions about procurement, recruitment, decision-making, transparency and democratic scrutiny at the Houchen-chaired Tees Valley combined authority.
It was a long laundry list for the body tasked with overseeing the economic development of one of England’s poorest post-industrial areas.
The TVCA is parent body to three out of the country’s four mayoral development corporations — local regeneration bodies tasked with fast-tracking delivery — and a major shareholder in the publicly owned Teesside International Airport, all of which are in receipt of public money. So shortfalls in its governance could have wider taxpayer implications.
Its response to January’s report now shows several further external reviews have since identified additional problems.
Some of them go beyond Tees Valley, across the relatively immature system of English devolution.
The Centre for Governance and Scrutiny (CfGS) noted that scrutiny functions at many combined authorities, which have existed as a model for barely a decade, have yet to find their feet.
Meanwhile the Chartered Institute of Public Accountants highlighted a “structural” problem where audit is concerned: there is a “relatively constrained” market in the north east of England capable of servicing a public body of the TVCA’s size and risk profile.
Nonetheless some problems are about the organisation itself — political culture being key among them.
The CfGS highlighted “combative” behaviour between the mayor and those councillors meant to be scrutinising his activities, noting that mistrust and antagonism has resulted in “unfocused, unproductive and bad-tempered” exchanges.
This is a particular feature of Tees Valley politics and the CfGS is clear that this has, in considerable part, hampered the necessary democratic oversight of decisions and expenditure.
There have been issues with the mayor’s attendance at meetings, it found, while there has also been entrenched disagreement over whether councillors can directly scrutinise the activities of the South Tees Development Corporation.
It has long been the position of the mayor and his executive team that as an arm’s length, quasi-commercial body, the corporation is beyond the scope of their questions.
And yet it is still in receipt of more than £500mn in taxpayer money and accounts for £450mn in forecast borrowing from the combined authority, which is responsible for it. That, combined with the mayor’s often eye-catching claims about the benefits of the Teesworks project, has exacerbated the desire for information.
New legal advice contained within the latest documents largely sides with the councillors, finding they are well within their rights to request information from the corporation, within certain parameters.
The response documents also show that several auditing issues — delays, cancelled audit meetings, non-existent paperwork, breach of national standards — have been identified by the CIPFA.
This may all sound parochial, but it also poses a wider policy challenge for ministers.
Perhaps most pressingly, what will they do once they receive all this paperwork next month?
The Tees Valley review raised a number of questions in relation to how risk and reward is distributed in the Teesworks deal, one that has proved highly lucrative since the developers took 90 per cent control of it.
But as the businessmen point out, that was a legally binding deal freely entered into by the public sector.
The new government, keen to keep investment off its books, is enthusiastic about public-private partnerships. Teesworks represents, potentially, a cautionary tale.
Meanwhile during spring’s mayoral election campaign Rachel Reeves was not shy in making promises and vowed to send the NAO into Teesworks.
Since she entered the Treasury, such rhetoric has receded, despite Teesside’s Labour MPs repeating that promise during the general election.
A “best value” review of the authority — a local government inspection which would be more straightforward to implement than an NAO intervention — may be more likely.
But will a government keen to further devolution and regional growth want that fight on day one, with the country’s only Conservative mayor?
The other challenges relate to devolution in England more broadly.
Quite clearly, not everywhere has the culture of collaboration upon which the emerging mayoral system outside London is predicated.
Both local government and audit are also in a notoriously weakened state.
None of which makes devolution a lost cause, since there are potential solutions to these problems, some of which may already sit in the overflowing in-tray of new deputy prime minister Angela Rayner.
Currently, however, they pose challenges for a government intent on growth — but still identifying its chosen levers.
Britain in numbers
On the subject of regional growth and public-private partnerships, the results of a review originally commissioned by Labour while in opposition made for interesting reading last week.
A panel of experts headed up by ex-Siemens UK chief executive Juergen Maier, now the boss of GB Energy, looked at how the incoming administration could deliver the transport infrastructure needs that have evaded the country for so long — and particularly the north of England.
They concluded that a new generation of public-private partnerships, mirroring some of those used in France and elsewhere, would be needed to help close a “deep and growing productivity gap”.
As highlighted by the above chart, rail demand to major regional cities is forecast to rocket in the coming years, a point noted by the National Infrastructure Commission in its May annual update.
Yet the National Audit Office found in July that in the absence of HS2’s cancelled northern leg, the Department for Transport only really has two options for capacity on the West Coast main line: deter passengers, or build some infrastructure.
The public-private suggestion has echoes of that mooted by the mayors of Greater Manchester and the West Midlands following HS2’s cancellation.
Even back in the spring, when those mayors were pitching the premise, their intention was probably more about keeping the idea alive ahead of a new government than it was changing the minds of incumbent ministers.
So it is now over to Labour to decide how to meet those political and economic demands, which will certainly not be going away.
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The State of Britain is edited today by Darren Dodd. Premium subscribers can sign up here to have it delivered straight to their inbox every Thursday afternoon. Or you can take out a Premium subscription here. Read earlier editions of the newsletter here.
