Tees Valley

Authority

to be issued with

Best Value Notice

meeting of TVCA cabinet, 28 March

Scott Hunter

3 April 2025

The Financial Times has reported that The Tees Valley Authority is being issued with a Best Value Notice today (Thursday). It’s been a long time coming. Last summer the government refused to commit to any action in relation to the Authority until it had presented its plans for improvements in governance, which it did at the end of September 2024. There followed six months of paralysis, with government remaining tight-lipped and local MPs being effectively excluded from the conversation about what to do next.



The Best Value Notice  (here) asserts concerns over governance, as detailed in the Tees Valley Review, as well as value-for-money issues both at the TVCA and the South Tees Development Corporation as detailed in reports by external auditors and others. The official oversight will last for 12 months in the first instance, and a Local Government Association panel will be appointed to oversee it. For the first time the mayor and the Authority will be subject to the one thing that Houchen is most intolerant of and that is proper scrutiny.  This is the start of an uncomfortable year for Houchen.

In the meantime, Julie Gilhespie, the CEO who came in for particular criticism from the authors of the Tees Valley Review, has jumped ship, taking with her an eye-wateringly generous severance payment. Teesside Airport director, Kate Willard, famous for regularly awarding herself consultancy fees from that organization as it limped from distress to financial crisis, has also now decided that the time has come to hang up her boots (although she still shows up as a director of the airport holding company, Goosepool 2019). Both have now been replaced by one Tom Bryant.

As the Best Value Notice published this morning dwells on issues of governance. In this respect, the multiple roles of Tom Bryant may be of some interest. One of the many criticisms levelled at Julie Gilhespie was that of conflict of interest in the directorships she held. In her case it was that she was a director of Teesworks Ltd while being CEO of the South Tees Development Corporation, and she could not adequately oversee the work of a company that she had a vested interest in. 

Giving Tom Bryant the job of airport director may save some cash but puts him in the same position that Gilhespie was in, as the TVCA should have scrutiny powers over the company it regularly awards vast amounts of public money to. As happened, for example, last Friday (28 March), when the TVCA cabinet agreed to award it a grant of £12.5 million. That Bryant has been elevated to this position reflects just how relaxed Houchen has been until now about the outcome of the Tees Valley Review. Things that were criticized there have continued unabated.

As far as we are aware, no one from Ministry of Housing, Communities and Local Government (MHCLG) turned up to watch the proceedings that day, which was a pity, as they would have obtained first hand experience of how the Authority malfunctions.

Most of the meeting was devoted to discussion of the Authority’s so-called “Investment Plans Refresh” but preceded by discussion of a plan to curtail the right of members of the public to submit written questions to cabinet and other committees. Or ‘idiots’ as the mayor referred to them as he ranted about the number of questions and FOI requests the Authority receives.

The Investment Plan Refresh includes plans for investment zones, the Youth Trailblazer programme, bus service improvements and developments at Teesside Airport. Funding for these programmes comes, in part, from the UK Shared Prosperity Fund (UKSPF). Around the table were the leaders of the five constituent local authorities and CEOs, as well as key personnel from the TVCA.

Much of what was contained in the ‘Refresh’ was uncontentious and attracted little criticism from the assembled cabinet. Until it came to bid funding when leader of Redcar and Cleveland Council, Alec Brown, asked where the £1.6 million was that he’d submitted a bid for. He was told that this bid had been unsuccessful and this was clearly stated in the Refresh document (it wasn’t). He pressed on and inquired whether the bids of any other councils had been accepted only to be informed that no other councils had submitted bids. 

Councils, it turns out, had been given a very narrow window of opportunity to submit their bids, and the rest hadn’t had time. So, the only proposal that had been accepted by the Authority was the one from Teesside Airport. Leader of Darlington Council, Stephen Harker, asked how the airport managed to put their proposal together in such a short time, but was told that they had one ready to hand. The Tees Valley mayor thought that councils should always have an oven-ready proposal to hand that can be submitted as the opportunity arises. And so, discussion moved on to the contentious proposal that the cabinet approve a £12.5 million grant to the airport.

The proposal was firstly to assist Teesside Airport to build a second hangar for Airbourne Colours at a cost of £7.1 million, having already funded the construction of one in 2024. This is to be paid for out of money granted the Authority by the UK Shared Prosperity Fund (UKSPF). The second proposal was to pay the £5.4 million cost of infrastructure improvements, viz. new aprons and taxiways, for the benefit of Willis and Draken, who will then invest a further £16,500 million between them in new facilities. The TVCA will fund this through borrowing. 

The assembled council leaders were manifestly uneasy about the whole thing. And kept on raising questions. Cllr Harker asked why the airport couldn’t borrow the money itself on a commercial loan, to which Houchen replied that it can’t find commercial lenders. What would happen if the cabinet rejected the funding proposal? The region would lose out on 250 jobs.

Then there were the questions that weren’t asked, For example, where does the figure of 250 jobs come from? Is there evidence to support it, or commitments from the companies involved?

And why is a director of the airport sitting here? Shouldn’t he have recused himself from this part of the meeting? How come the mayor is claiming that the UKSPF grant will pay for the Airbourne Colours hangar when the ‘Refresh’ states that this grant is only for £6.5 million and the hangar is due to cost £7.1 million? Where will the other £600,000 come from?

How come the airport didn’t plan for the infrastructure improvements that would now be needed? After all, in 2018, a firm of consultants, ICF, prepared a report on the potential for commercial viability of the airport in which it advised that funding would be needed for precisely this kind of improvement and should be set aside? That report also stated that, as the airport had previously handled up to 900,000 passengers a year, it could do so again without major refurbishment of the terminal building. Yet, significant sums have been spent in the past four years on precisely on terminal refurbishment (and an unwillingness to spend unnecessarily may go some way to explain why Humberside Airport, with fewer flights than Teesside, declared a small profit in its latest set of accounts, while Teesside lost £13.4 million).

A further point that the council leaders failed to raise is that all of the grant is to be spent on the estate which is controlled by Teesside Airport Business Park Ltd (TIABPL). But TIABPL is a joint venture with property developers, Martin Corney and Chris Musgrave. Why have their names not been mentioned in relation to funding for these infrastructure improvements? (and why, we might add, has there never been any sign of them making any financial contribution either of the joint ventures they have with the TVCA/STDC?)

When Houchen asked if everyone agreed the package of measures in the “Investment Plan Refresh”, everyone did. How did this happen? The airport is losing millions every year with little sign of there being a major improvement in its commercial viability. So why, having asked a series of tough questions, did the cabinet agree to this latest round of controversial funding? One clue to this is in a comment made early in the discussion by Middlesbrough mayor, Chris Cooke. He observed that it would have been preferable if each of the funding proposals in the “Refresh” had been presented to cabinet as separate items. But they weren’t, the investment proposals were presented as a bundle – accept all or reject all. The contentious and the uncontentious. And risk throwing the baby out with the bath water.

Could this situation have been avoided? That the mayor included the controversial proposals for airport funding in a bundle of non-controversial ones should not have taken the cabinet by surprise, as it is a technique he’s used before. It’s only twelve months since he used the same device in plans for transport and infrastructure investment (the one billion that was to come to this region following the abandonment of HS2) where he bundled sensible proposals with some truly outlandish ones.

So, Chris Cooke’s comment was both pertinent and irrelevant. Pertinent as it would have allowed the council leaders the opportunity to deal differently with the airport proposition. Irrelevant as the comment could not be acted upon as it needed to be made and followed up well in advance of the meeting. We believe that council leaders only received the “Refresh” document a couple of days in advance of the cabinet meeting, but Houchen had announced on social media some time earlier that he was looking for airport funding.

Council leaders, by only bringing their concerns to the meeting rather than airing them in advance, make the job of dismissing their concerns all the easier. In so doing they fail to provide accountability and offer only performance instead. It has been pointed out before that council leaders attend the TVCA cabinet in addition to their full-time responsibilities in their own authorities. Houchen, on the other hand, is doing his day job. In terms of governance, this inequality makes it easy for anyone seeking to game the system to operate with relative impunity.

The set up fails because of this inequality, and the recent White Paper on Devolution does not dwell on how it might be resolved. Perhaps the Local Government Association panel will be able to help them out once they have had a good look around the Tees Valley Authority.