Teesworks Project: Audit

Question

Asked by

To ask His Majesty’s Government what assessment they have made of the audit arrangements for the Teesworks project, and of whether they are effective for the scale of the work being carried out.

The public and private sector bodies engaged in the Teesworks project are responsible for ensuring that they comply with all relevant audit requirements. Additionally, the Government commissioned an independent review of the project, which we published in February. The Tees Valley Mayor is implementing its recommendations, including recommendations 27 and 28, relating to the internal and external audit functions.

My Lords, I thank the Minister for her Answer, but I honestly think that the people of Teesside deserve better than to be fobbed off like this. The independent review published in January said:

“Based on the evidence from the review the governance and financial management arrangements are not of themselves sufficiently robust or transparent to evidence value for money”.

We are told by Ministers that the NAO does not look at individual authorities, so we questioned on 30 January and 7 March just what the arrangements are for auditing this project, so local people can be reassured about the return their significant investment is giving them. We were promised an answer in writing, which has not appeared. In view of the parlous state of local government audit generally, and the nature of the 28 scathing recommendations set out in the review, an NAO financial investigation seems appropriate. Why are the Government still resisting that?

I thank the noble Baroness for her supplementary question. I assure her that the letter is on its way; I thought that it was already sent, so I apologise if she has not received it yet. As I outlined in my response to the debate on the regeneration of industrial areas on 7 March, it is not the NAO’s role to audit or examine individual local authorities, and its power would not normally be used for that purpose. I have since looked into this, and expanding its remit previously required the Chief Secretary to the Treasury to grant statutory powers. Therefore, given that we have had a thorough independent review, it is time that we learned from it and implemented those lessons rather than repeat it.

My Lords, two businessmen are making multi-millions of pounds of profits on the back of £0.5 billion-worth of taxpayers’ investment, without them putting any of their own cash at risk or taking any liabilities until they are negated against guaranteed income streams. The Tees Valley Review said that these generous contractual arrangements should be renegotiated, as the businessmen are making super-profits at the expense of local taxpayers. Do the Government agree with that finding and the suggested change that needs to be made?

I can assure this House that the mayor has accepted all the recommendations in that report and is enacting them now. We have asked for a report in six months’ time on how much progress has been made. We expect that there will be significant progress, including any renegotiation of those contracts.

My Lords, I am disappointed by the Minister’s response. In the debate, I thought that we had established that the mayor was dealing with only a limited number of the recommendations, particularly on governance. There is a whole raft of others that he did not address in his letter. Neither we nor the public in Tees Valley have heard from the Government on what they will do to ensure that proper procedures, which have been undertaken by other local authorities for generations, are adhered to in Tees Valley. Can the Minister reassure us that there will now be a tendering and procurement process that is understandable in the public sector, even though this is a public/private arrangement? Will that take place, particularly given that the Secretary of State just last week transferred to two of the development corporations set up within the Tees Valley money from the local authorities without consulting them?

I assure the House that all procedures are being followed and, where necessary, they are being tightened as a result of the review. Therefore, where the recommendations need changes to be made, they will be made. Indeed, one of the recommendations affects DLUHC and another, more broadly, affects departments in central government. We are dealing with those now, including one for new systems of governance.

My Lords, this project relates to the Government’s wider levelling-up agenda. We heard last week that only 10% of the Government’s levelling-up funds have been spent. What assessment does the Minister make of that?

I thank the noble Lord for his question. I already have an outstanding question from one of his colleagues on his Benches from the debate last week. I am trying to find the exact numbers for how much is in progress, given that there is lag between the money being allocated and being spent. I am chasing that and will come back to the House as soon as I have the number.

My Lords, returning to the Teesworks project, in writing to the mayor—the noble Lord, Lord Houchen—the Secretary of State said:

“Improvement takes time, and where the recommendations related to cultural change especially it is important that sufficient time is given”.

But is it really right to leave a six-month hiatus? Should the Government not monitor what is happening much more regularly than that, given the level of concern expressed by the independent inquiry into what is happening at Teesworks?

Again, I can only give an assurance that this will not be waiting for six months. A number of these actions are required immediately and are therefore ongoing. We will be monitoring it both centrally and locally.

My Lords, many years ago when I was leader of a council, if I had acted in this way, I would have faced a surcharge. What sanctions are open against the mayor for the activities he has been involved in?

I need to be very clear that the review did not find any wrongdoing. Some governance issues need to be fixed; they are being fixed. On whether commissioners needed to be put in because there was wrongdoing, that is not the case in this instance. Therefore, time has being given to the combined authority to get its house in order. I am sure, as I have been assured, that it is doing so right now.