Tees Valley Combined Authority: Best Value Notice

Jim McMahon Excerpts

Thursday 3rd April 2025 Written Statements

[The Minister for Local Government and English Devolution (Jim McMahon)]

Taxpayers expect and deserve well-functioning local and combined authorities which provide essential statutory services for local residents. This Government’s manifesto committed to rebuilding local government and handing control back to local leaders. To achieve this, we must get the basics right and ensure local and regional government is fit, legal and decent. Government will continue to work directly with a small number of authorities in difficulty as a responsible steward for the sector, and this should be done in a way that is based on genuine partnership to secure improvements.

Today, I would like to update the House on the steps we are taking in relation to the Tees Valley combined authority. The people of Tees Valley must have confidence that every penny of their money is being spent appropriately and today’s announcement is about ensuring that is the case.

In May 2023, the previous Government commissioned an independent review to consider the specific allegations made and Tees Valley combined authority’s oversight of the South Tees Development Corporation and Teesworks joint venture. This review was published in January 2024.

In February 2024, the Tees Valley combined authority Mayor, Lord Houchen, responded to this review. His response was published on gov.uk. The then Secretary of State, the right hon. Michael Gove, requested a further update on progress in six months’ time and my Department received this update in September 2024. The authority’s auditors then published reports covering financial year 2023-24, which identified significant weaknesses in value for money arrangements, meaning auditors declined to sign off accounts.

After having carefully considered the relevant evidence, my Department has today issued the authority with a best value notice.

This notice is not a statutory intervention. It is a formal notification that the Department has concerns regarding the authority and requests that the authority engages with the Department to provide assurance of improvement. The Department expects authorities that have been issued with a best value notice to continue leading their own improvement. I note that the Tees Valley combined authority is already supported by an independent assurance panel established with the Local Government Association. I encourage the authority to make full use of the panel’s expertise and guidance and to strengthen its role in day-to-day operations, and will be looking to the panel for updates on the authority’s progress.

We are committed to removing barriers to growth in the region, as well as supporting the development of new industries and creating new jobs in the region. That is why this Government have confirmed the allocation of up to £21.7 billion of funding over 25 years for net zero clusters in Teesside and Merseyside, and why we are finalising development of the Tees Valley investment zone. This notice today is about rebuilding trust in the combined authority after a long period of uncertainty, so that it can continue its journey towards deeper devolution.

Today’s announcement offers the opportunity to provide the foundations for future investment into the area oriented towards the public good, underpinned by good governance and careful management of taxpayers’ money. I recognise that today’s decision will have implications for the authority’s progress towards enhanced mayoral strategic authority status, and the granting of an integrated settlement. We are committed to working closely with the authority to enable swift progression once improvements have been made.

The independent review also made recommendations for Government. I am today publishing non-statutory guidance to address a key recommendation. This guidance clarifies the governance, oversight and legislation of mayoral development corporations. It is relevant to all mayoral combined authorities and mayoral combined county authorities in England. In due course, I will publish an updated version of this guidance to address the relationship between stranded liabilities and mayoral development corporations.

The Government remain of the view that, while the independent Tees Valley review was thorough within its terms of reference, it was by nature not designed to answer all the questions raised, but instead to focus on the governance and finance elements of the best value regime. The residents of Tees Valley cannot afford to live under a shadow of uncertainty for any longer, and investment in the region demands full confidence from both the public and the private sector. I hope that this process will offer the opportunity for a reset, providing the foundations for future investment into the area oriented towards the public good, underpinned by good governance, transparency, and accountability. Authorities must demonstrate robust financial management, effective decision making, and meaningful engagement with communities to uphold best value principles.

The focus now must be to ensure that the improvements needed are not only secured but also sustained, embedding a culture of continuous improvement and responsible stewardship in line with statutory best value obligations.

I will deposit in the House Library copies of the documents I have referred to, which are also being published on gov.uk today.

I will keep the House updated if any further steps are taken.

[HCWS576]