A new inquiry into the Teesworks site has been ordered by the government – but concerns are being raised about the powers the probe will have.
Levelling Up Secretary Michael Gove has written to the Conservative mayor of the Tees Valley, Ben Houchen, to say that he will “appoint a panel, in line with established practice, to undertake an independent, external assurance review”.
This comes following allegations of “corruption” – including from Labour MPs – at the site of the former Redcar Steelworks, which is being redeveloped into an industrial site and a freeport with thousands of jobs in the pipeline.
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Concerns have been raised around claims the private companies which now own the majority of the Teesworks project have profited to the detriment of the taxpayer.
It had been expected that a statutory National Audit Office (NAO) inquiry would be instructed by Mr Gove, but this has not materialised.
There was confusion after Prime Minister Rishi Sunak announced that an investigation had been ordered – but one had not publicly been revealed previously.
Mr Houchen, shadow levelling up secretary Lisa Nandy, levelling up committee chair Clive Betts and Labour MP Andy McDonald had all called for an NAO probe.
Mr Houchen wanted one as he is adamant there is no corruption. The Labour MPs want one as they want to know more about what is going on.
A spokesman for the NAO said: “In discussions with government officials last week, the NAO indicated that it was willing and able to carry out an examination of the South Tees Development Corporation and the redevelopment of Teesside Steelworks, if the necessary agreement was in place.
“The government has decided to make alternative arrangements for looking into these matters, as is its prerogative.”
In his letter, Mr Gove said: “I have considered calls for such an investigation to be led by the NAO.
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“It is not, however, the NAO’s role to audit or examine individual local government bodies and its powers would not normally be used for that purpose.
“I do not think it would be appropriate to expand so significantly the role of the NAO by asking them to lead this inquiry. Nonetheless, I would welcome the NAO updating its review of government’s funding arrangements for STDC.”
Writing to the NAO, Sarah Healey, the most senior civil servant in the Department for Levelling Up, Housing and Local Communities, said the decision was made “not because the department considers that there is evidence to recommend such a review, but to answer the mayor’s understandable request”.
Mr Houchen said: “I welcome the government agreeing to my request for an independent review into the Teesworks project, including the involvement of the NAO.”
He added: “I feel that an independent review is necessary to show investors, businesses and local people that there is no corruption, wrongdoing or illegality in what has become and continues to be an incredible project for jobs and investment in our region.”
Mr Gove says he would “welcome the NAO updating its review of government’s funding arrangements for STDC”.
Without an order from Mr Gove, the NAO will rather look into the central government funding reportedly continuing into the next financial year.
The South Tees Development Company was set up to run the development of the site after the steel plant shut in 2015, and it is now 90% privately owned.
In his letter, Mr Gove outlined how he made the decision to appoint a panel as the soon-to-be-created Office for Local Government (Oflog) watchdog is not yet operational.
Ms Nandy said: “This is bizarre. The secretary of state’s letter refers to an organisation that doesn’t yet exist to hide the fact that there has been a complete breakdown in accountability on his watch.
“The National Audit Office has the experience, capacity and independence to carry out an investigation, and Michael Gove has the power to order that investigation. Why, then, is he setting up a review where the terms and members will be chosen by him?
“The government must not hide from proper scrutiny, and there is no clear justification for not ordering a comprehensive, independent investigation from the NAO.”
Mr McDonald, the Labour MP for Middlesbrough said the announcement “falls way short” of what is needed.
In response, the Conservative MP for Middlesbrough South and East Cleveland Simon Clarke said: “I warmly welcome the independent inquiry launched by the government into Teesworks.
“The truth will come out and all those who have attempted to discredit a project that will deliver tens of thousands of good jobs for Teesside will have to answer for their cynical campaign.”