Teesworks Programme: Audit
Lord Scriven Excerpts(2 months ago)
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Lord Scriven
To ask His Majesty’s Government whether they plan to request the National Audit Office to carry out an inspection to the Teesworks programme, and if so when.
Lord Scriven (LD)
I beg leave to ask the Question standing in my name on the Order Paper, and so doing draw the House’s attention to my interest set out in the register as a vice-president of the Local Government Association.
The Parliamentary Under-Secretary of State, Ministry of Housing, Communities and Local Government (Lord Khan of Burnley) (Lab)
The previous Government asked the Tees Valley mayor to provide a progress update in September, following the recommendations of the independent review of Tees Valley Combined Authority’s oversight of the South Tees Development Corporation and Teesworks Joint Venture. Once we have received that update, we will consider whether the questions that need to be answered have been and whether any further action should be taken.
Lord Scriven (LD)
My Lords, many Teessiders’ jaws will drop on the floor when they hear that Answer from the Minister, as every Labour candidate in Teesside promised that a National Audit Office review would take place. In the light of half a billion pounds of taxpayers’ money being used and two businessmen making multimillion pound profits without taking any liabilities or any risk to their money, does that constitute best value? Why leave the people who have created the mess to solve the mess without any enforceable action being taken by Government?
Lord Khan of Burnley (Lab)
My Lords, I pay tribute to the work the noble Lord, Lord Scriven, does in local government, and I understand the deep emotions that he talks about, because there are outstanding questions to which the public deserve answers. We understand that this issue, like all local issues, is emotive. This is evidenced by it being raised in this House and in the other place several times. In fact, the noble Lord, Lord Scriven, has asked this question before. This Government believe that scrutiny and transparency are important. However, we must carefully consider the mayor’s response, due in September, and we will consider any further action to take when we receive it. We are not ruling out any options, and one option could be requesting the NAO to review.
Lord Khan of Burnley (Lab)
That is absolutely the case. However, there are recommendations on decision-making, governance and scrutiny. I appreciate the noble Lord’s question.
Lord Scriven (LD)
My Lords, I appreciate that the Minister has said the Government have to wait for the mayor’s answers to the questions, which is different from what was being said before the Government were on the Government Benches. However, the review panel said in the report that the responses
“reduced our confidence that we have been given access to all relevant materials”.
The panel also said that it had
“not been able to pursue all lines of evidence or examine all transactions”.
Is that not why a full statutory audit is required: so that the Government convince themselves that Teessiders are getting value for money? With a response from the mayor, the report will have not seen all relevant information.
Lord Khan of Burnley (Lab)
The noble Lord again makes an important point. I remind the House that it is not the normal role of the NAO to examine or to audit local bodies. However, I understand that the NAO previously stated that it is willing to work outside its usual scope to undertake a review about Teesworks. We cannot prejudge the response of the Mayor of Tees Valley. When we get that response, we will look at it. In relation to the noble Lord’s question, that is another issue for the combined authority and the Mayor of Tees Valley to look at. Whatever happens, once that response is back with the Government, we will look at it and take further action then.
King’s Speech
Lord Scriven Excerpts(2 months, 1 week ago)
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Lord Scriven (LD)
My Lords, I, too, welcome the noble and learned Lord, Lord Hermer, to his place and thank him for a very thoughtful and calm speech, which I am sure will set a good platform for how he wishes to go forward. I also welcome the noble Lord, Lord Khan of Burnley, to his place. I am sure his knowledge of local government will stand him in good stead. I am very sad that we will be hearing the valedictory speech of the noble Lord, Lord Warner, who I have admired over many years for his insight into health. I look forward to what he has to say.
The new Labour Government’s word is “change”, but what kind of change will we see? With the majority that they have in the House of Commons, will it be bold, radical change or some tinkering at the edges? On the two issues in the gracious Speech that I am going to speak about, I feel it is more tinkering than the bold change that is needed. My view on this House is based on a matter of principle, which is that it should be elected, not appointed. That is not to deflect from the great work that many, if not all, noble Lords do around this House, but as a matter of principle, I believe that this House should have legitimacy based on a democratic process. However, I realise that that is not going to happen under the new Labour Government, at least not in this Parliament, so what we are left with is not a wholesale reform but a piecemeal approach.
In that piecemeal approach, one group in your Lordships’ House seemed to be immune from questioning until the noble and learned Lord, Lord Keen, and the noble Viscount, Lord Hailsham, spoke earlier. It is the 26 Church of England Bishops who are guaranteed a place in Parliament. In fact, the Church of England is only institution in the whole country that is by law guaranteed seats in the UK Parliament. In a modern democracy, no religious organisation should be guaranteed seats in a parliament, particularly when less than 1% of the population regularly attends a Church of England service and consistently only 15% to 16% of the population say that bishops should have an automatic place. I believe that in 2024 it is time to end the automatic rights of a particular church to have seats in this Parliament, and I would welcome the Minister’s views on this issue and on why the Government are silent on that.
I am a total advocate of a federal approach to governing the UK. Such an approach is successful throughout Europe, with fiscal and policy devolution, and not just the policy decentralisation that we have in the UK. I register my interest as a vice-president of the Local Government Association. Real devolution can be seen across Europe, whether in the Länder of Germany, the cantons of Switzerland or the regions of France. It allows local leaders to have their hands on the levers of both fiscal and policy devolution. I am interested in the direction of travel that the new Government have signalled on English devolution, but I worry that it will not have the maximum impact, as it seems to be just more of the same with a few extras added in. I feel that there may be a little bit of top-down pushing, and that the culture in Whitehall may not have changed. The Bill on English devolution will direct that each area must have a local growth plan. It will be interesting to see how prescriptive these plans are and whether they will be used to push the national Government’s agenda, rather than local priorities. Time and the detail of the Bill will tell.
What is missing from the Labour Party manifesto and the gracious Speech is fiscal devolution. That is the elephant in the room when it comes to English devolution—an opportunity missed, and one that needs to be addressed. I hope that the Government will pilot a tax assignment scheme in one area of England to examine the benefits that it could bring. They will not have to look far, as the Institute for Government has suggested a way of doing this. A small percentage of national insurance—it suggests 5% of local national insurance—could be retained to the local area, but the rates and bands still set by the Treasury. This would help stimulate growth through local initiative and help with investment pressures. Until we get some form of fiscal devolution in England, the grand words about unleashing the full potential and opportunities of the areas and regions of England will not be achieved. I hope the Minister will respond to this in a positive light.
Spending Commitments to Local Councils
Lord Scriven Excerpts(2 months, 1 week ago)
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Baroness Taylor of Stevenage (Lab)
The noble Lord is a great champion of libraries, culture and arts in this Chamber. The severe pressure that local authority funding has come under in recent years has had a particular impact there. We will want to look closely at whether we can help alleviate those pressures. Libraries provide such a fantastic resource for our communities, as do the leisure facilities that local authorities provide.
Lord Scriven (LD)
My Lords, I declare my interest as a vice-president to the Local Government Association. Will the Government support a pilot in one area, as laid out by the Institute for Government, for a small tax assignment scheme to test what it says will be the positive impact for local areas’ revenue? If not, why not?
Baroness Taylor of Stevenage (Lab)
I am sure that officials in my department are looking with great care at the report concerned. We will consider all the recommendations in it with due care, as we always would.
Tees Valley Combined Authority: Best Value Notice
Lord Scriven Excerpts(5 months ago)
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Lord Scriven
To ask His Majesty’s Government what consideration they have given to issuing a Best Value Notice to the Tees Valley Combined Authority, given the scale of the legal costs that its subsidiary the South Tees Development Corporation is likely to incur after losing a court case that it brought against PD Teesport.
The Parliamentary Under-Secretary of State, Department for Levelling Up, Housing & Communities (Baroness Swinburne) (Con)
All local authorities must comply with the best value duty to make arrangements to secure continuous improvement in the way in which their functions are exercised, having regard to a combination of economy, efficiency and effectiveness. Best value notices provide for early engagement with an authority that may be exhibiting indicators of potential best value failure. However, incurring legal costs alone is unlikely to trigger the issue of a best value notice.
Lord Scriven (LD)
My Lords, it is not just the case which is referred to on the Order Paper. The 26 recommendations of the Tees Valley Review relating to Tees Valley Combined Authority are not legally binding or enforceable. Last week, the current mayor cast doubt on his commitment to implement recommendation 22, which is to renegotiate the appalling 90:10 profit deal that favours the private sector after half a billion pounds of public sector money had been invested, when he said that it was a “great deal” and that he would do it again. Is it not time to stop relying on voluntary agreements, regardless of who the mayor is, and for the Government to issue an enforceable best value notice to protect the interests of local taxpayers?
Baroness Swinburne (Con)
The Secretary of State has requested a report on the progress with the action plan in six months, including encouragement to work with the Local Government Association and the Centre for Governance and Scrutiny. We have been encouraged by the mayor’s response that he will quickly implement all the recommendations. It is only fair and consistent that the mayor and the combined authority have the time needed to develop and implement action plans to respond to the recommendations in the review.
Baroness Swinburne (Con)
I am sure he is therefore voting for the person who is delivering for him and his local community, regardless of political affiliation.
Lord Scriven (LD)
My Lords, the Minister’s answer does not make sense. The Tees Valley Review concluded that, because of the poor governance, the lack of transparency and the deals that were done in the way they were done, value for money for the taxpayers of Tees Valley could not be guaranteed or ascertained—that is fact within the review. The mayor last week changed his commitment to implement the 26 recommendations, and he specifically said on recommendation 22 that he would do it again. Can I ask why the Minister feels it is not worth revisiting potentially looking at a best value notice in light of current events?
Baroness Swinburne (Con)
Given, as I have outlined, that there are already initiatives under way to implement all 28 recommendations, I do not feel that a non-statutory best value duty notice would achieve anything other than duplicate what is already under way.
Combined Authorities (Overview and Scrutiny Committees, Access to Information and Audit Committees) (Amendment) Regulations 2024
Lord Scriven Excerpts(6 months, 1 week ago)
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Lord Scriven (LD)
My Lords, I thank the Minister for presenting this and I see some logic in some of the provisions within the regulations. However, paragraph 10.1 of the Explanatory Memorandum raised my eyebrows. It asks:
“What is the approach to monitoring and reviewing this legislation?”
It then states that:
“The Government has no plans actively to monitor this legislation; the majority of provisions are already in operation without problems for combined authorities”.
Tell that to people who have sat on the Tees Valley Combined Authority’s overview and scrutiny committee. They would tell you that things were not working properly. It got to such a point that the dysfunctionality of that combined authority and the poor or lack of oversight of what was happening led to the Tees Valley Review, which was produced by an independent panel and made some quite interesting observations on what was happening there. The report said that:
“The former monitoring officer advised TVCA oversight and Scrutiny Committee they had no remit to scrutinise”
South Tees Development Corporation decisions. That was quite interesting because Tees Valley Combined Authority had given over £200 million-worth of loans to the South Tees Development Corporation and therefore there was a direct link to why overview and scrutiny needed to take place.
In the report, previous members of the Tees Valley Combined Authority’s overview and scrutiny committee
“expressed frustration at the lack of information provided which they felt undermined their ability to scrutinise the activity of STDC and TWL”—
Teesworks Limited—which is now a privately owned company, 90%-owned by the private sector. Two businessmen with a 90% stake are making super profits on the back of £500 million-worth of public sector investment and again, the overview and scrutiny committee has not been able to scrutinise most of that money.
Recommendations 6 and 7 of the Tees Valley Review report relate directly to overview and scrutiny and show why it was not working, what the deficiencies are and how things need to be improved. The Minister pointed out that new guidance is coming forward, but if the Government are not going to monitor actively the legislation, how will they know whether another Tees Valley Combined Authority issue could happen or is happening? What mechanisms do the Government have in place to ensure that this kind of dysfunctionality can never happen at a combined authority again? It is an important question that the Minister needs to answer, especially since this new legislation will not be monitored. If arrangements are not in place centrally to determine whether there is this kind of dysfunctionality, what arrangements will be put in place to ensure that this could not happen again in any of the existing combined authorities or the new combined county authorities?
Lord Shipley (LD)
My Lords, I will wait for the Minister to reply to the points raised by my noble friend Lord Scriven. In her introduction, she talked about the review that is taking place but not the timescale. It would help the House to know when the Government expect the response, which we all expect, to be produced.
I understand that this instrument maintains parity between combined authorities and combined county authorities and that it is necessary. However, I was concerned to read in paragraph 7.4 of the Explanatory Notes that
“several of the combined authorities with whom the draft legislation was discussed asked if provision could be included enabling committees to meet virtually or to reduce the quoracy requirement for the transaction of committee business from its current level of two thirds of committee members”.
I am very pleased that the Government concluded
“that face-to-face attendance of meetings”
of overview and scrutiny, and of audit, is important. It is and, having worked on the levelling-up Bill and moved amendments in relation to overview and scrutiny, and audit, I think that the Government’s position is correct.
It is very easy for those who are running overview and scrutiny, and audit, to want to reduce the workload and so suggest “Can we meet virtually?”—that means that, rather than all the conversations that take place before or after a meeting, people are only discussing these matters online—and, “Can committees have a lower turnout/attendance rate?” When we moved these matters in previous legislation, the figure of two-thirds mattered because overview and scrutiny, and audit, must be taken very seriously. I hope that the Government understand this.
We will see when we get the report that the Government are due to present to your Lordships’ House, but, as my noble friend Lord Scriven said, my eyes lit upon the words at paragraph 10.1 of the Explanatory Notes saying that:
“The Government has no plans actively to monitor this legislation”.
I think that this means relating only to whether people take up the option of allowances—it may mean that; however, it may mean something else. I hope that the Government do not mean the wider definition of “legislation”, because all the evidence suggests that the Government need to keep a very close eye on overview and scrutiny and audit, and how it is being carried out.
Baroness Swinburne (Con)
I thank Members for their contributions. There were some questions that I may need to come back to in more detail. With regard to the questions that in particular the noble Lord, Lord Scriven, asked about the situation in Teesdale—
Baroness Swinburne (Con)
Teesside—apologies; a lot of briefings have gone on in the three weeks since I joined this department.
As noble Lords will know, the mayor has accepted all the recommendations that the independent panel made in its review. They are in many cases substantial and therefore will take time to implement. But they are sensible recommendations and are in line with the frameworks that we have put in place and are putting in place with regard to the scrutiny protocol. From that point of view, the mayor in that region now needs time to put this into place, and the overview and scrutiny committee needs to step up to make the changes required.
Lord Scriven (LD)
There are two points to that. My question is not really about what is happening in Teesside; it is about what mechanism the Government now have in place to ensure that the things that led to the Teesside review do not happen again. In the explanatory framework, the Government state that they are not going to “actively” monitor the legislation. Secondly, the protocol is welcome but it is non-statutory, so bodies do not have to apply it to their own overview and scrutiny committee. That is the case, is it not?
Baroness Swinburne (Con)
We expect that all combined authorities and combined county authorities, where there is a significant amount of power being devolved, will adopt the best practice that we can possibly put before them. The English Devolution Accountability Framework pulls together all the existing policies and best practice, and indeed we will go further with the scrutiny protocol, plain English guidance and new published outcomes and metrics for areas to be measured by. There will be a new framework, and they will be held to account.
The intention is that this accountability framework will empower local residents and provide them with confidence that devolution is leading to improvements in their area overall. Ultimately, the mayors are accountable to the public, but we believe that the mechanisms need to be there for them to be accountable on a more frequent basis. The Government retain the ability to intervene in exceptional circumstances, but scrutiny and accountability should be led locally. Those are the principles we are applying to this—not just for one authority but for all these authorities, as we devolve the power.
I do not have an exact timetable for the scrutiny protocol; I will write to noble Lords as to when that will become operational. A lot of the work has already been done. Certainly, the scrutiny protocol will apply to all the activities and arrangements of the overview and scrutiny committees in all English institutions with devolved power, including combined authorities, both mayoral and non-mayoral, and combined county authorities—again, mayoral and non-mayoral—and with regard to all devolved powers in county councils and unitary authorities that have agreed to devolution deals. It is very comprehensive; they will all be covered by it.
With regard to the payments of allowances and the differences that may be deemed necessary in order to get good-quality people, any payment may be made only in accordance with a recommendation from an independent remuneration panel at that authority. Therefore, we would expect that panel to take the lead on this. The other side of the coin, of course, is that if an existing combined authority does not wish to make any payments, it is not required to do so, but if in the future it should change its mind, it will not need to seek further fresh legislation in order to do so.
In conclusion, these regulations are essential to ensure a robust local accountability framework for the exercise of devolved power by combined county authorities and their mayors.
Teesworks Project: Audit
Lord Scriven Excerpts(6 months, 2 weeks ago)
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Baroness Swinburne (Con)
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.
Lord Scriven (LD)
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?
Baroness Swinburne (Con)
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.
Teesworks Joint Venture
Lord Scriven Excerpts(8 months ago)
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Baroness Penn (Con)
As I said in my original response, the Government welcome the recommendations on strengthening governance and transparency. We welcome the oversight that this review has provided in those terms. I think the noble Baroness might be referring to the fact that the government official is a member of the board of the development authority. When a government official is a member on a board, in examples such as this, their role is as an observer. In this case, however, the panel noted examples of questions being raised by that government member as part of that review.
Lord Scriven (LD)
My Lords, I would like to directly quote from the report because the devil is always in the detail:
“The JV partners are clearly astute, commercial businessmen. They have a clear business model whereby they support distressed businesses and do not accept liabilities until they are satisfied they can hedge investment against secure income streams … At this juncture, the JV partners have put no direct cash into the project and have received nearly £45m in dividends and payments, and hold £63m of cash … in TWL accounts”.
This is on the back of £500 million-worth of public sector investment, which made those strips of land ready for the private sector operators to make these profits. Does this kind of approach show the principles of good and ethical public sector procurement that gives value to the taxpayer? If not, what will the Government do to ensure that this kind of deal does not happen again—not just in Teesside, but in any mayoral authority?
Baroness Penn (Con)
My Lords, as I have set out, there have already been clear public benefits to the redevelopment in Teesside. On the question of involving private partners in this work, the report sets out very clearly that the business case was clear: public sector funding would not be sufficient to complete remediation of the site and a private sector partner would be required. There are lessons to be learned from this report; the Government have been clear on that. That is why we have given the Mayor of Tees Valley time to consider the recommendations in the report, as the vast majority are for the mayor and combined authority. We will then look at those responses and consider the recommendations for the Government alongside that and take forward a process for improving accountability and transparency in this instance.
Baroness Penn (Con)
I say to the noble Baroness that we have considered the panel’s findings against the draft best value guidance, which was published in July 2023, and concluded that they do not meet the test for urgent intervention. The panel makes a number of recommendations for the combined authority, the development corporation and other partners, and some for government. We are now giving the mayor and partners time to reflect on the panel’s report. We have asked him to write to us and set out his action plan for responding to the recommendations within six weeks. One of the recommendations for government was around the clarity of legislation in this area and oversight arrangements. We will take that away and look at it carefully, because that is an area, for example, that could have read- across to other development corporations or combined authorities.
Lord Scriven (LD)
The Minister has mentioned a number of benefits—and no one disputes that regeneration benefits are required—but does she accept that those benefits have come totally on the back of public sector investment and that, as the report says, no private sector investment has gone towards them, yet still the liabilities for the land, if not used, lie with the public sector? That is the correct position, is it not?
Baroness Penn (Con)
The reality is that a project of this size will require significant public sector investment, which has taken place, but the review is also clear that remediation of this size and scale would not be able to take place without private partners also participating. We are making sure that we look at the lessons that we can learn from this review, but it is also important to consider both the option of doing nothing, which would have come at a multibillion-pound cost to the public purse, and the benefits that people in the local area are already reaping from the investment that has come in to date.
Local Enterprise Partnerships: Funding
Lord Scriven Excerpts(9 months, 3 weeks ago)
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Lord Scriven (LD)
My Lords, is the issue here not just talking about structural change to functions but the power of the functions themselves? The clear issue with saying that we are going to have proper regional economic development firing on all cylinders is that, in every country, every indicator shows that fiscal devolution is required, not just the movement of existing functions. Will the Government seriously look at fiscal devolution to ensure that proper economic development can happen in all regions across the country?
Baroness Penn (Con)
That is exactly what the Government are doing; they are seeking to combine the devolution of greater power with greater funding and greater responsibility for the funding. There are the trailblazer deals that look to integrate the different streams of funding for local areas into something much closer to a single settlement. That will allow those areas to make decisions at a local level about what should happen in their area.
Levelling Up: Project Delivery
Lord Scriven Excerpts(10 months, 2 weeks ago)
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Baroness Penn (Con)
I am afraid I completely disagree with the noble Lord. There is a choice to be made about where that investment goes, and the Government have made the choice to invest in transport projects that will connect towns and cities within the north far better. It will deliver more improvements to more people faster than the continuation of further legs of HS2.
Lord Scriven (LD)
My Lords, is not the key finding of all this that centralised Whitehall one-off bidding is not the key to level up across this country?
Baroness Penn (Con)
My Lords, we deliver funding to local authorities in all sorts of ways. We are looking to deliver more funding to local authorities. That is why we are taking forward an approach of a single departmental settlement to those mayoral combined authorities in Birmingham and Manchester. We have a commitment to roll that out further to those areas that have directly elected representatives.
Levelling Up
Lord Scriven Excerpts(10 months, 2 weeks ago)
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Baroness Penn (Con)
I absolutely reject the noble Baroness’s assertion that this funding has been allocated in an unfair or untransparent manner. Alongside the projects that have received funding, we have published a clear methodology note about how we have approached the allocations. Although I may have heard worries about the pace of delivery and the amount of money available, I think that overall both Front Benches opposite welcomed the announcement that we made on Monday. On the overall approach to local government finance, we have a system at the moment that recognises needs. It means that those councils with the most deprived households within them get 17% higher funding per dwelling than those with the fewest. I recognise the calls for wider reform to local government funding but noble Lords will know that, in the wake of Covid and other uncertainties, this Government made a commitment that while we should press ahead with that, it would not be for now but for the next Parliament.
Lord Scriven (LD)
My Lords, I welcome the Minister to her post and I will be quite parochial. As somebody who was born in Huddersfield and now lives in Sheffield, I welcome the allocation that has been made to the Penistone line. But living in Sheffield, which is the fourth-largest city in England, our eyes roll when there is talk about levelling up because in the middle of this levelling-up agenda, our direct train between Sheffield and Manchester Airport has been taken away. How does it contribute to the levelling-up scheme when a train from a main airport to the fourth-largest city is taken away in the middle of that? What pressure will the Minister now put to bear in her new role to ensure that the train is reinstated? The reason for taking it away was because of rail infrastructure issues and it is really important that the train is reinstated, particularly if levelling up is going to take place between those two great, dynamic cities.
Baroness Penn (Con)
Perhaps, given the strength of feeling that the noble Lord has on this issue, I could undertake to find out more about the rationale for that decision and write to him in particular on it. More broadly, one decision that we have taken recently, which I know has not been popular across the whole House, has been to not continue with the further leg of High Speed 2, to enable us to make sure that we are investing in transport projects that will provide greater connectivity to more people faster than would happen under the plans for the next leg of HS2. That shows this Government’s commitment to levelling up.