Teesworks: Accountability and Scrutiny

Lisa Nandy Excerpts

Wednesday 7th June 2023 Commons Chamber

[Lisa Nandy (Wigan) (Lab)]

I beg to move,

That an humble Address be presented to His Majesty, that he will be graciously pleased to give directions that the Secretary of State for Levelling Up, Housing and Communities provide all papers, advice and correspondence involving Ministers, senior officials and special advisers, including submissions and electronic communications, relating to the decision by the Secretary of State for Levelling Up, Housing and Communities and the Prime Minister to commission a review into the Tees Valley Combined Authority’s oversight of the South Tees Development Corporation and the Teesworks joint venture, including papers relating to the decision that this review should not be led by the National Audit Office.

Let me start by saying that I am really disappointed that it has come to this. Devolution was meant to empower people in every part of Britain to “take charge of their own destiny”. This Government were elected on exactly that promise and exactly those words, and here we are standing in the House of Commons trying to persuade the Government to come clean about why they have chosen to block an independent inquiry that would help us get to the bottom of the use of public assets and funds on Teesside in the wake of some of the most serious allegations I have ever seen in my time in Parliament.

For nine years, since the Government accepted Greater Manchester’s case for greater devolution, I and many others on all sides of this House have been pressing the Government to respect the right of people in every part of Britain to know how their assets and money are being used and to close the gap that currently exists by inviting people back into the conversation, and by building a system of local and national scrutiny and accountability that is fit for purpose, backed by a Government who are willing to open the books.

[Mr Simon Clarke (Middlesbrough South and East Cleveland) (Con)]

I think the key point in this debate was aired in what the hon. Lady said a moment ago, when she said that some of the most serious allegations she has ever heard aired in this House have been made. Will she stand with those allegations? At the moment, the hon. Member for Middlesbrough (Andy McDonald) has alleged “industrial-scale corruption”. The hon. Lady has been very careful in all her public utterances, as indeed has he outside this Chamber, to avoid repeating that claim. Does she agree with him, or does she not?

[Lisa Nandy]

The problem, as the right hon. Member well knows, is that Members of this House and, more importantly, people on Teesside simply do not know the answer to that question. Serious allegations have been raised not just by Members on the Opposition Benches, but by respected national journalists who have conducted meticulous investigations, and the point of holding an independent inquiry is that these serious allegations and the questions that have been raised need to be answered.

At every juncture and at every level of Government, when it comes to fair and reasonable questions about the South Tees development corporation, accountability, scrutiny and democratic control have broken down. It is only because of my hon. Friend the Member for Middlesbrough (Andy McDonald) and some tenacious, meticulous journalists, such as Jennifer Williams of the Financial Times, that we even know the bare facts of what has unfolded. People on Teesside should not have to rely on a national newspaper to discover what has been done with their assets, their community and their civic inheritance.

[Sara Britcliffe (Hyndburn) (Con)]

rose—

[Lisa Nandy]

If the hon. Member wants to say otherwise, she is very welcome to do so now.

[Sara Britcliffe]

Just for clarification, is the hon. Lady confirming that she will not repeat outside this Chamber the allegations made by the hon. Member for Middlesbrough (Andy McDonald)?

[Lisa Nandy]

Honestly. It is about time that hon. Members stopped chirping and started paying attention.

The Secretary of State for Levelling Up, Housing and Communities has accepted that an investigation is needed to give investors confidence. I saw him walking through the Chamber a moment ago, Madam Deputy Speaker—he could not get away quick enough. This is why we want to see an investigation launched without delay: to restore investor confidence and the confidence of the public in both the project and the devolution model itself.

The Secretary of State’s decision to block the National Audit Office from investigating these allegations is nothing short of bizarre. It is an investigation that is backed by the Tees Valley Mayor, by the official Opposition and by three Select Committee Chairs. The National Audit Office has the experience, capacity and independence to carry out an investigation—it has said itself it was able to do so and that the Secretary of State has the power to order that investigation—so it beggars belief that the Secretary of State has blocked that inquiry and now set up a review where the terms of reference and the members have been hand-picked by him. Then to come to the House on Monday and be unwilling—or perhaps unable—to answer basic questions about why he chose to do that is completely unacceptable. Saying that consultations were had and that the Government do not wish to set a precedent will not do. For decades, people on Teesside have made a major contribution to the UK through the steel industry. The Teesworks belongs to them and they have the right to know what is being done with it in their name.

[Catherine West (Hornsey and Wood Green) (Lab)]

The shadow Secretary of State is making an excellent speech to open the debate. Does she agree with me, as a member of the all-party parliamentary group on devolution, that we all want our regions to prosper and grow, but that things have to be done properly and be seen to be done properly?

[Lisa Nandy]

My hon. Friend is absolutely right and has been a huge champion of this for communities across the country. Most importantly, our regions will not prosper and will not grow unless we can have confidence that decisions are being taken in the right way and in the public interest, and the people of that region need to know that they will benefit from those decisions. That is the point of devolution.

[Sir Robert Goodwill (Scarborough and Whitby) (Con)]

Would the hon. Lady not agree that Teesside did not prosper or grow for decades after the demise of heavy industry and that it was only when Ben Houchen came along and started delivering for the people that people started realising that the Conservatives on Teesside were delivering, when Labour had failed for generations?

[Lisa Nandy]

I will take absolutely no lessons from a representative of a political party that stood aside and watched as the Tees works collapsed in 2015.

Labour is therefore asking the Government to provide all papers, advice and correspondence, including Ministers, senior officials and special advisers, relating to the decision by the Secretary of State and the Prime Minister to commission a review into the Tees Valley Combined Authority’s oversight of the South Tees Development Corporation and the Teesworks joint venture, including papers relating to the decision that the review should not be led by the National Audit Office.

[Helen Morgan (North Shropshire) (LD)]

The hon. Member is probably aware that, in addition to the scandal that she is outlining in her excellent speech, Woking Council has today issued a section 114 notice, following its having run up £1.9 billion of debts under a Conservative-led administration, when it has core spending power of just £14 million. Does she agree that a National Audit Office investigation is important for the people of Woking as well, because there is clearly inadequate scrutiny of decision making on public money?

[Lisa Nandy]

There is a wider point here, which is that devolution matters but it matters for a reason. It matters because decisions taken closer to people, driven by the people of the place they call home and for the benefit of those people, have the ability to transform lives. We need and deserve proper robust scrutiny arrangements and accountability in every part of the country, not just some, in order to ensure that.

I am sick and tired of hearing Conservative Members making accusations at our doorstep about unfounded allegations and naysaying about regeneration in the north-east. They are wrong and I suspect that they know it. The Labour Front-Bench team has not made allegations against Teesworks and the development corporation, and we will not do so before any investigation reports back. What we have asked for is honesty, transparency and clarity about what appears on the face of it to be an incredibly murky situation. It is the clear breakdown of local accountability that is sufficiently alarming that an investigation by the National Audit Office is required. We want to see this resolved. Conservative Members should want to see this resolved for the benefit of people on Teesside. The South Tees Mayor believes that is the case, as do three Select Committee Chairs, the Prime Minister and the Secretary of State—if he did not, no investigation at all would be forthcoming. Let me be clear that the Humble Address today is about ensuring that a proper, full and independent investigation can take place in terms sufficient to provide the public with confidence in the process and the outcome of the investigation. In hand picking a panel and terms of reference, the Secretary of State has done a disservice to the principle of independent scrutiny and to his commitment to devolution, which until today I believed to be sincere. He has made it harder for confidence and transparency to return.

[Brendan Clarke-Smith (Bassetlaw) (Con)]

I thank the hon. Lady for giving way and for being so generous with her time. Some of the claims she makes are quite serious and in this House we always want to act in the spirit of transparency and openness, but with these very serious claims, I would ask: where is the evidence—what is the basis of this in the first place? Perhaps she could outline some of the evidence she is using as the basis for making these claims in the first place.

[Lisa Nandy]

The hon. Gentleman might want to take that up with his colleague, the Mayor in question, who has referred himself and asked for a National Audit Office investigation. I do not know why Members on the Government Benches think his judgment is so poor that he should not have done that, but we believe he is absolutely right to have done that and we stand firmly behind him in asking for a proper investigation.

Incredibly, even by the standards of this shambolic Government, the terms of reference and the names of the panel members for this inquiry were sent to me seven minutes before this debate began. That genuinely is no way to conduct government. I assume that is where the Secretary of State is right now: sitting behind his desk knocking out terms of reference on the back of a fag packet. Clearly, I have not had much time, Madam Deputy Speaker, to read them, but on first sight what he has sent me looks like a system-focused review, rather than an investigation into what has happened. Ministers have still failed to give us an explanation as to why the National Audit Office cannot conduct its own investigation, a body that has capacity, resources and expertise, and is widely respected across the political spectrum. Instead, we are having a bizarre argument about the remit of a respected organisation that is patently able to conduct the investigation required. Can the Minister not see why the public would rightly raise an eyebrow?

It is completely unacceptable for the Government to hide from proper scrutiny. I remember a time when the Secretary of State could not wait to get to his place in this House. Nowadays, we barely see him. Where is he today? There is no clear justification for not ordering a comprehensive independent investigation from the National Audit Office. It cannot be right that hundreds of millions of pounds of public money have been handed over to a company that is now 90% in private ownership, and it appears that the Department has handed over that money and then simply walked away. This is a matter that has profound implications for people on Teesside, who rightly expect this site, through which they contributed so much to our country over so many years, to continue to benefit them and their community for years to come.

There is much we do not know about what has happened—that is the reason we need an independent investigation—but here is what we do know. When the 140-year-old steel industry on Teesside collapsed in 2015, thousands of jobs were lost along with a key political, social and economic asset for the communities of the north-east of England. In 2017, the South Tees Development Corporation began to collate over 4,500 acres of industrial land, including the site of the former steelworks, off the back of a Conservative Government promising hundreds of millions of pounds in taxpayer funding for the project, something we had championed and welcomed. In the face of losing that key economic and social asset, it is absolutely right that all options were considered about how to build a wide programme of regeneration around the site and that the combined authority was given the autonomy to determine the strategy to regenerate the site. Even where we have strong disagreements about policy, strategy and direction, that point is not, and will never be, in dispute.

However, in May, an extensive report by the Financial Times detailed how the Government had spent hundreds of millions of pounds of taxpayers’ money to support a project in which two private developers now hold a 90% stake. The deal never went through a public tender process. There was no consultation. There was no announcement. It also reports that those developers have secured £45 million already in dividends, despite failing apparently to invest a single penny of their own money in the project. In return for their role in securing the site, the South Tees Development Corporation awarded companies owned by the developers a 50% stake in the joint venture that would operate the project—a share transfer that also took place without any public tender. The new operating company, eventually named Teesworks Ltd, controlled the entire 4,500-acre site and its assets, including 500,000 tonnes of scrap metal. It was also given the option to buy any parcel of land on the site at market rate.

The announcement that freeport status was being awarded led the South Tees Development Corporation to fundamentally change its business model, according to documents obtained under freedom of information laws and published by Private Eye. Following that, in a complex two-stage process, the two developers ended up with a 90% stake in the project, also without ever going through public bidding. According to emails received again under freedom of information from the Department for Business, Energy and Industrial Strategy—the Department with responsibility for the project in Government—one official only became aware of the deal via the media in January 2022 and expressed “concern” and “surprise”. The Financial Times reports that an official at the Department’s office in the north-east responded that he had received “verbal” assurance locally that the deal was value for money. Can the Minister see why such serious concerns have been raised on both sides of the House, including by respected Members such as the Chairs of the Select Committees?

It is at this point that we called for the National Audit Office to investigate this matter in its entirety, to restore confidence for investors and the public in what was an increasingly murky affair. Indeed, the former chief executive of the Audit Commission, a public body that examined local government entities before it was disbanded by the Conservative Government, says the evidence

“calls for a full and thorough investigation by the National Audit Office and the Public Accounts Committee, as the situation now appears far remote from the business case originally agreed with Government”.

[Mr Simon Clarke]

It is important to be clear that he is himself a former Labour councillor. The point in this debate is that we are offering an independent inquiry. As we have heard, an inquiry is under way and the reasons the NAO is not the appropriate body were set out very clearly by the Secretary of State in his letter.

--- Later in debate ---

[Lisa Nandy]

Can I just correct the right hon. Member? As he well knows, this is not an independent or full investigation. Perhaps he also has not had the courtesy of having been given the time by the Secretary of State to look at the full terms of reference, but it genuinely beggars belief to try to claim that this is somehow politically motivated. If Conservative Members believe that the call for a NAO inquiry is politically motivated, they might want to ask the Mayor what on earth he is doing calling for one himself.

[Dame Meg Hillier (Hackney South and Shoreditch) (Lab/Co-op)]

In all of this heat, it might be wise to be clear about the independent role of the NAO. The Comptroller and Auditor General has letters patent from the King and reports to this House, not to Government. He is independent and makes his own decisions, and it was his independent decision that it would be appropriate, because of the size of the site, to offer the opportunity to do an audit. It is then a matter for the Secretary of State to decide whether or not he asks for that to happen. It is a three-legged stool, because then the local organisations have to agree to open their books, too. It is important to be clear on the record that the NAO is not making political decisions here; it is a very independent decision by the chief auditor of this country.

[Lisa Nandy]

I thank my hon. Friend for making that point, which absolutely concurs with my experience of the NAO. Members on both sides of the House will have had experience of having written to the NAO to raise concerns, and all of us are treated with decency and impartiality by the NAO when it seeks to respond.

Unbelievably, the situation gets even more complicated. Questions were raised at that point about whether the NAO even had the ability to investigate. It turns out that it did, subject to the preparation of a suitably worded agreement between the Minister and the relevant body into which the examination is to be conducted. We called on the Secretary of State to provide such an agreement, which was met with radio silence. Into that void stepped the Prime Minister, who confirmed at Prime Minister’s questions on 24 May to my hon. Friend the Member for Washington and Sunderland West (Mrs Hodgson) that the Levelling Up Secretary had already announced an investigation into this matter, much to the surprise of our Front Benchers and Government Front Benchers, too. However, the Secretary of State has decided not to do so, instead preferring to hand-pick a panel of his own to investigate. Given that the Tees Valley Mayor has asked for an investigation and the NAO has the capacity and remit provided by statutory powers, we deserve to know why Ministers have decided to block that investigation, beyond what we have been told so far—that they consulted and decided against it.

Now that we have the terms of reference, let me say this to the Minister: it is utterly unacceptable to establish an inquiry that fails to ensure that all decisions that have led to the current situation are on the table, with no exclusion of factors that would impact a complete and fair assessment of whether the public interest has been protected. It must have expert support, administrative capacity and resources to ensure the same level of access that the NAO would have had. Any officials who worked at South Tees Development Corporation or public bodies on Teesside must be free to comply with an investigation, regardless of any non-disclosure agreements that exist.

The investigation must report back on what assessment the Department and wider Government made of the South Tees Development Corporation’s decision to transfer a 50% stake in the joint venture without any public tender process. [Interruption.] I am grateful to the Minister for clarifying that from a sedentary position. Presumably, he has had a chance to read those terms of reference. It would have been nice if Members had been afforded the same courtesy. [Interruption.] The Minister is chuntering again from a sedentary position. That is precisely what we are attempting to do—establish the facts. That is what the Tees Valley Mayor is attempting to do—establish the facts. That is what the Chairs of the Select Committees in this House are attempting to do—establish the facts. And that is what the people on Teesside are attempting to—establish the facts. It says something about the extraordinary arrogance of this Government that they think that is an unacceptable request.

The investigation must confirm when Ministers were first made aware of the decision to increase the share to 90% and if an assessment of value for money for taxpayers was made in advance. Could the Minister confirm whether there was any discussion of the terms of reference with the relevant Select Committee Chairs—including the Chairs of the Public Accounts Committee, the Business and Trade Committee and the Levelling Up, Housing and Communities Committee—or are the Government determined to show the same contempt for Members that they are showing for people on Teesside?

[Matt Western (Warwick and Leamington) (Lab)]

My hon. Friend was going through the events of the past week or so and the actions of Government, which smack of a cover-up. That is the fear and concern of the people of the Tees area and the wider public.

[Lisa Nandy]

I studiously avoided trying to prejudice any terms of the inquiry in advance of their announcement, but I was given seven minutes for a cursory glance at the terms of reference. If the Minister wants to tell people on Teesside that they deserve two minutes to understand the terms of reference, he is very welcome. That is arrogant and shows utter contempt for people in this country. Having looked at the terms of reference, I share my hon. Friend’s view. To many people in this country, it increasingly looks like an utter whitewash.

As far back as 2015, I raised concerns with this Government that democracy must not be an afterthought in the devolution model. Where the public have been let into the conversation, it is because of some of our brilliant Mayors across the country, such as the Mayor of Greater Manchester and the Mayor of West Yorkshire, who have chosen to go out proactively and involve the public in conversations about the things that matter deeply to them and to their lives. As has been so often said, it is our right to have that information and to be in charge of our own destiny; it should not be in the gift of whoever happens to be elected. When the respected Chair of the Public Accounts Committee says that the measures that we have around transparency, scrutiny and accountability are not sufficiently robust, Ministers must take that seriously.

On the Opposition Benches, we believe that the people on Teesside are just as deserving of safeguards to ensure that the public money and assets spent and used on their behalf are used for their benefit and in their interests as the people in London, Greater Manchester or the west midlands. These are our communities; they are our assets; it is our money; and it is about time this Government started to show some respect for a country that belongs to us.

[Several hon. Members rose—]

--- Later in debate ---

[Lisa Nandy]

rose—

[Lee Rowley]

The hon. Lady has already had a significant amount of time in which to speak, and I am not willing to give her more time to produce similar innuendo. On 20 April the hon. Member for Middlesbrough was very clear about industrial-scale corruption, but provided no further information. If Opposition Members cannot provide specific information, specific allegations and specific concerns in this debate, that will show how little interest they have in the truth rather than innuendo.

[Lisa Nandy]

rose—

[Madam Deputy Speaker]

Order.

[Lee Rowley]

I will give way to the hon. Lady.

[Lisa Nandy]

Thank you very much, Madam Deputy Speaker, for intervening to make sure that some basic manners and courtesies are respected.

May I ask the Minister to stop this ridiculous politicking? I have just set out for him a series of concerning points that have been raised by a respected national newspaper, with evidence behind them, many of which are not disputed by those involved in the proceedings. I have explained to him why an independent investigation is needed, and I answered those questions on the radio this morning, as he well knows. He may not agree that the National Audit Office is the best body to investigate, but if he disagrees with that, why will he not tell us the reason? That is all we are asking for.

[Lee Rowley]

I believe the hon. Lady said on LBC this morning that no allegations of corruption were being made. In the spirit of being willing to accept interventions, I am happy to take a further intervention from her. What specific allegations is she actually concerned about?

[Lisa Nandy]

We are concerned about the fact that no value for money is being achieved in this project, because of allegations raised in the report in the Financial Times, which set out that hundreds of millions of pounds have been put behind a project that Ministers appear to have handed over and then walked away, in a company 90% of which has been transferred into private ownership, where two investors have taken—apparently; allegedly—£45 million out but put not a penny in. We want to ensure that that constitutes value for money for the public and that this asset, which belongs to the people of Teesside, will be used for the benefit of people on Teesside for generations to come. If the Minister can reassure us in detail on those points, it would be absolutely wonderful. If he cannot, why will he not commit to an independent investigation?

[Lee Rowley]

That is, finally, extraordinarily helpful. For the first time in multiple questions to the hon. Lady, she has actually given an answer. She is concerned about value for money. Excellent! We are all concerned about value for money across local government. That is why we have a best value regime, which means that the Secretary of State announces inquiries and reviews, and appoints people to undertake them. The hon. Lady and her Front Bench team know that, because we have talked about it on numerous occasions in this place. They are completely aware of the best value regime that this Government use, because in 1999 it was the Labour party that endorsed that regime as part of its legislation.