Tees Valley Combined Authority faces statutory value-for-money probe

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Tees Valley Authority probe

Highlights

Angela Rayner will launch a statutory 'best value' inspection into Tees Valley Combined Authority after governance, oversight, and value-for-money concerns escalated since 2024.
EY found 'material misstatements' in TVCA's 2024-25 accounts and identified about £500 million in STDC loans—and £128 million for Teesside Airport—without written agreements, raising repayment and loss risks.
The statutory intervention spotlights accountability and financial control concerns as Labour advances devolution, with mayors set to gain increased powers over local growth and taxation.

Government inspection plan and oversight concerns

As first reported by the Financial Times, Angela Rayner is due on Thursday to launch a statutory "best value" inspection into the Tees Valley Combined Authority, chaired by Conservative mayor Ben Houchen. The intervention follows years of questions over financial management at the north-eastern authority and could ultimately lead to external officials being appointed to take control of failing functions.

The decision marks an escalation from earlier government action. In 2025, the Ministry for Housing, Communities and Local Government issued a non-statutory best value notice, leading to the creation of an external improvement board to help the authority address weaknesses identified in an earlier review.

Those concerns build on a 2024 independent review commissioned by then local government secretary Michael Gove, which identified governance and oversight failings and said value-for-money assurance processes had been too weak. Its 26 recommendations included criticism of taxpayer value in the public-private partnership established to redevelop Teesworks, the former steel site at Redcar that is being turned into an industrial cluster for investors including BP and SeAh Wind.

TVCA said it welcomes the appointment of Laura Shoaf CBE and fellow inspectors and will work with them openly and constructively. The authority added that more work remains and that it will continue making improvements where needed.

Financial exposure and wider devolution implications

Fresh financial issues have continued to emerge as the improvement process has unfolded. Last December, EY identified "material misstatements" in TVCA's 2024-25 accounts, while local officials also found that about £500 million of loans to the South Tees Development Corporation had been made without written agreements in place at the time, with the development body struggling to make repayments.

TVCA has also lent £128 million to Teesside International Airport, with much of that lending also not formalised in an agreement. According to cabinet minutes from January, that lending is not expected to be repaid "in the foreseeable future", and EY has warned the authority faces significant potential losses if the airport remains unprofitable and unable to repay the funds.

The improvement board said in an update published last month that considerable progress has been made, including a formal written loan agreement between TVCA and STDC. However, it also flagged continuing concerns over finance, legal capability and risk assurance, while a separate internal review into the airport's finances is under way.

The latest step also puts renewed focus on Labour's wider devolution agenda. With the prime minister promising to give mayors a larger role in driving local growth and potentially more powers over taxation, a statutory intervention at one of England's mayoral authorities is likely to sharpen debate over accountability and financial controls in devolved government.

In our earlier article on affordability pressures in U.S. public finance, we examined how rising living costs are tightening credit conditions for states, local governments, and essential utility sectors. We noted that growing resistance to tax and fee increases is limiting revenue flexibility, widening the gap between spending needs and funding capacity, and increasing budget and credit risks for public entities.

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