Tees Valley Combined Authority auditor considers writing to Angela Rayner
Plus: Council tax increases (for £ subscribers only) + Polyhalite mine to-reopen
This is the 34rd edition of The Teesside Lead, and there’s more news of TVCA being on the naughty step.
Before we get into it, I’m putting on and hosting a night of poetry, music and discussion with the authors Alex Niven (The North Will Rise Again) and Peter Mitchell (Imperial Nostalgia) in Newcastle next week.
Alex will be in conversation with Helen Charman about her brilliant book, Mother State, at The Alphabetti Theatre next Saturday. You can get tickets here.
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Leigh
Tees Valley Combined Authority’s auditor is considering writing a statutory report to Secretary of State Angela Rayner, because of a “significant weakness” in the authority’s ability to secure value for money.
Auditors EY last week issued a report for TVCA’s Audit and Governance Committee for the year 2023/24, and included a number of serious criticisms, including that it has insufficient staff to enable the authority to comply with statutory obligations.
EY also said that TVCA has potentially not complied with its legal obligations during its inspection period, by failing to publish an Annual Governance Statement alongside the draft Statement of Accounts for 2023/24. The auditor recommended TVCA that it should re-commence the 30-day period in which members of the public can inspect its accounts. But on the date of the report’s publication (18 February), EY was still waiting for a response from TVCA’s top legal officer to enquiries it made on 8 January.
Before approving TVCA’s accounts for 2023/24, EY has told the combined authority it has to make two changes. TVCA has not included a provision in its draft accounts for legal costs it will be required to pay to PD Ports after losing a High Court case it brought against the port operator over access rights. The taxpayer could end up paying over £4m for this failed action, but funds have yet to be earmarked by the authority.
Alarmingly, the auditor also noticed a difference between the closing balance at 31 March 2023 and the opening balance of the next year’s accounts on 1 April 2023.
EY suggests this is likely to be an error caused by a failure to update the position from the draft accounts which were circulated before the year’s end.
A tendency for TVCA to copy and paste is prevalent in EY’s criticism, as it raises further concerns that the authority incorrectly made reference to its previous auditors in its draft accounts. The auditor also noted “several actions occurring in 2022/23 or earlier periods referred to as future actions,” and “several performance measures for which performance in 2022/23 or earlier periods is the most recently disclosed data.”
EY wrote that TVCA also failed to report in its accounts how complying with the government review into Teesworks impacted officers in their day-to-day work.
There were also concerns that TVCA lacks the resources to manage financial risk.
“These capacity limitations have meant the Authority has not complied with its statutory reporting obligations,” the auditor wrote, “including timeliness of accounts publication, and have impacted the level of assurance the Authority has been able to obtain over the operating effectiveness of its internal controls by delaying the work of its internal auditor.
“Whilst we have not noted specific observations in these areas, it is also possible that these capacity challenges could have a wider impact, such as on the quality of information prepared to inform internal decision making and the deployment of the Authority’s resources. We are therefore unable to conclude that the Authority had proper arrangements in place for securing economy, efficiency and effectiveness in its use of resources during the year to 31 March 2024.”
The report concedes that although TVCA has put in place an action plan to address the Tees Valley Review, “implementation only began in 2024/25”, meaning “significant weakness would have been present for most, if not all, of the year to 31 March 2024.”
TVCA has provided an appendix to this report to members of the Audit and Governance Committee in which it blames “the adverse publicity” around the Tees Valley Review which made recruitment at TVCA “increasingly difficult”.
Despite this, EY finds the risk that TVCA didn’t have appropriate checks to safely manage money sufficient to consider whether or not to take action under the Local Audit and Accountability Act 2014. Under the law, the auditor could potentially publish a report and send it to the Secretary of State for their consideration.
Angela Rayner, the Secretary of State, had received a recommendation before Christmas to send the National Audit Office in to investigate TVCA.
I wrote last month about the likelihood of an NAO investigation. It’s almost impossible for a Labour government to do it without being accused of playing politics, but when the auditor is so critical, it really is starting to feel like a case of ‘when’ rather than ‘if’.
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Polyhalite mine might re-open in 2027
Mining giant Anglo American has suggested its mothballed Woodsmith mine project could recommence operations in 2027.
The unfinished mine is one of the only sources of polyhalite in the world - a potential wonder mineral which can be used as fertiliser. A 23-mile long conveyer belt will take the mineral from near Whitby to the surface at Teesside for export.
Anglo mothballed the project last year as it tried to shore up its share price in the face of a hostile takeover bid. The company divested some of its holdings and cut expenditure on projects, like Woodsmith.
It has now said it expects to re-commence operations in two years’ time. In a statement, it said: “We have made considerable progress in 2024, including through the signing of Memorandums of Understanding with two major Chinese fertiliser companies in August 2024 to further develop the market for polyhalite in China, and the signing of a new agreement to reinforce our European fertiliser partnership with Cefetra in November 2024.”
Adding: “Work is also continuing to identify and secure one or more strategic syndication partners for Woodsmith ahead of consideration by the Board for approval and subsequent project ramp-up, anticipated from 2027.”
Tees Valley set to see maximum council tax increases
Four of the Tees Valley’s local authorities have approved an increase in council tax for 2025/26, with the fifth set to also approve the increase next week.
Middlesbrough and Stockton-on-Tees councils approved their budgets and increases to council tax at meetings on Wednesday evening.
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