A number of decisions taken by organisations involved in the Teesworks project in north-east England “do not meet the standards expected when managing public funds”, a UK government review has found.
Investigators have concluded that the systems of governance and finance in place within the Tees Valley Combined Authority (TVCA) and the South Tees Development Corporation (STDC) “at present do not include the expected sufficiency of transparency and oversight across the system to evidence value for money”.
Both bodies are involved in the redevelopment of the site, which features an under-construction offshore wind quay and SeAH Steel’s new monopile factory.
Some £560m has been spent to date, including £246m in government grants and £257m in prudential borrowing.
The review was set up by the government in response to allegations of corruption, wrongdoing and illegality. Investigators “found no evidence to support” these allegations.
However, on governance and transparency, the review makes 28 recommendations including that that TVCA and STDC develop a full understanding of their liabilities in relation to Teesworks Limited, a joint venture between STDC and two local businessmen Chris Musgrave and Martin Corney.
This would help to “ensure appropriate management arrangements are in place to manage and mitigate the consequential financial risks to both organisations and the constituent authorities”.
A further £238m investment including £40m for Net Zero Teeside, is potentially to be incurred by STDC utilising prudential borrowing. Prudential borrowings are due to be repaid over the next 50 years from a combination of retained business rates, Teesworks Limited profits from operating the Quay, and contractual commitments from Teesworks Limited, the report found.
A statement has been issued on behalf of the South Tees Development Corporation Board in response to the Government’s recent independent review.
In the statement the board said it recognises the review’s findings on governance and transparency.
“We will work at pace to review our governance and make the necessary changes to implement those recommendations that relate to STDC” and welcomed the review’s key findings that there was “no corruption or illegality”.