Combined authority publishes legal advice in “novel” dispute over scrutiny of development corporation
The Overview and Scrutiny Committee (O&SC) at the Tees Valley Combined Authority (TVCA) does have oversight of a development corporation set up by the authority, despite advice from a monitoring officer saying otherwise, independent legal advice has concluded.
The independent advice from Bevan Brittan is set to be considered by the authority's Overview and Scrutiny Committee on Wednesday (4 September), alongside a separate report from the Centre for Governance and Scrutiny (CfGS) that found "significant" mistrust between members and officers.
The authority’s monitoring officer commissioned the legal advice earlier this year, in order to bring clarity on what the CfGS described as a “novel” situation regarding scrutiny over the combined authority’s development corporation.
Concerns were first raised in January 2024, after a Government-commissioned panel – the Tees Valley Review - set up to examine corruption allegations concerning the combined authority criticised the advice of a former TVCA monitoring officer who said the combined authority's Overview and Scrutiny Committee did not have oversight of the development corporation.
The monitoring officer's advice stated: "Whilst the [committee's] remit extends to the decisions of the Combined Authority, including the decisions in relation to funding given by the Combined Authority and its role the Combined Authority takes to funding given by the Combined Authority and its role the Combined Authority takes in monitoring those investments, the O&SC's reach ends with the Combined Authority's decisions and does not extend inside some of the principal funding recipients such as the South Tees Development Corporation and Teesside International Airport.”
It later added: "The role of the committee does not extend to the decisions of other bodies, even when they are significantly funded or closely related to the authority.
"As such, it is legitimate for the committee to examine TVCA's decisions in relation to its funding and the monitoring of its funding of those organisations.
"However, these organisations have their own organisation and governance, and the remit of the Committee does not extend beyond the decisions of the Combined Authority."
The Tees Valley Review said that the legislation is "clear" in its intent for TVCA to have an oversight or supervising function of the development corporation.
The panel reported seeing "no evidence that any of the monitoring officers have advised TVCA that they can review their delegations and directions to STDC at any time".
It added that monitoring officers had not reminded the combined authority of its duty of oversight of the development corporation.
Bevan Brittan's advice has since concluded that the Overview and Scrutiny Committee's remit "most certainly" includes scrutinising any activity of a development corporation established by the combined authority.
The law firm found that the committee is "fully entitled to review and consider all matters concerning the Corporation and in accordance with its powers to make reports or recommendations to the Authority or its Mayor on matters that affect the authority's area or the inhabitants of the area. Indeed, in our view, this is an expectation of the constitution of the Corporation and entirely in keeping with Statutory Guidance".
It added: "In this, we disagree with the statement of the former monitoring officer to the Authority that the Committee's reach “ends with the Combined Authority's decisions and does not extend inside some of the principal funding recipients such as the South Tees Development Corporation and … it is constrained to examining only the decisions of the Combined Authority'.
“We do, however, agree with the former monitoring officer to the Authority if this advice is applied purely in terms of the Committee’s direct use of its additional powers as they apply only to the decisions of the Authority and Mayor.”
It continued: "Given that the Corporation is obliged to act in accordance with a directive of the Authority and Mayor, we view this distinction as one that is arguably academic. As stated by the Tees Valley Review, the Authority and Mayor can review their delegations and directions to the Corporation at any time and have a duty of oversight of the Corporation.
"Accordingly, it is our view that the Committee can then review the delegations and directions to the Corporation as made by the Authority at any time and have a duty of oversight of the Authority and Mayor."
The advice said that while there is a chain of bodies whose legal independence "is to be respected", there is potentially "no real impediment to the committee or the authority in being able to undertake or require appropriate oversight by the Overview and Scrutiny Committee to enable value for money to be delivered and evidenced through effective scrutiny of significant decisions" concerning the corporation and its activities".
The combined authority-commissioned CfGS review – also set to be considered by the Overview and Scrutiny Committee on 4 September – commented on these issues, noting that disagreement remains between the committee and the mayoral and officer leadership of the combined authority about the scope of the committee's ability to "scrutinise" STDC.
It said the issue "has become totemic, and the failure to resolve it has become a major barrier to improvement".
CfGS added: "We recognise that TVCA is in a novel space here. The use of [Mayoral Development Corporations] continues to be rare in English local governance and as such oversight arrangements are subject to contention and disagreement.
"We make no comment on the conflict in formal opinion on this subject but note that a practical solution is needed. A systematised approach is needed that provides for scrutiny's oversight over STDC's work.
"This recognises that STDC is an independent institution, but that it has been explicitly established to deliver the priorities of the Mayor, and that its operations therefore reflect the priorities of the TVCA."
CfGS added that it thinks it is possible to develop a narrative for TVCA OSC's review and scrutiny of STDC's activities that "respects, supports and complements STDC's own governance arrangements".
"This will be a two-stage process – using the Tees Valley Review report as a source to map the existing governance and oversight arrangements for STDC and then using that understanding to build a complementary systems of oversight that provides what we consider to be necessary public, political assurance."
Elsewhere, the CfGS's review revealed "significant" mistrust between members and officers at combined authority, alongside an "antagonistic" relationship between Mayor Ben Houchen and some members of the authority.
The CfGS review also said TVCA suffers from challenges that CFGS often observes in other combined authorities, which included a "tendency for scrutiny's business to focus on receipt of updates, and the oversight of operational matters".
Another such challenge included a "lack of recognition amongst some members that the focus of scrutiny at the combined authority needs to be different to the focus at a local authority" and difficulties in carrying out work that delivers an impact.
It also highlighted problems with member engagement.
The review also found three TVCA-specific issues which have caused "further tension and difficulty".
Firstly, it highlighted an "antagonistic relationship between the Mayor and some members of the committee, which has degraded the overall environment in which scrutiny is carried out".
Secondly, there is a mistrust on the part of some members towards officers of the authority, the report said.
Finally, there is a disagreement on the core principle of the committee's role concerning bodies beyond the CA's institutional boundaries, relating to the South Tees Development Corporation (STDC) and other bodies in which TVCA holds a stake or interest.
"These additional issues have significant practical consequences, the report said.
It continued: "As noted by the Tees Valley Review, a central point of difficulty is the access by members of the scrutiny committee to information held by the combined authority.
"Access to, and use of, information by scrutiny is fundamental, and action needs to be taken to address this that engages pragmatically with members' needs and the wider governance needs of the CA."
The review set out five 'action areas' in which the combined authority can improve its scrutiny and governance.
These areas included:
1. finding clarity on scrutiny's fundamental role
2. regularising relationships between key actors in a way that supports and protects this role
3. ensuring that members are able to access the information they need in order to carry out their role
4. ensuring that the work programme is informed by evidence, and by members' political judgement
5. ensuring that members are supported and empowered to lead and direct the scrutiny function
Commenting on member-officer relations, the review said: "There is a significant degree of mistrust on the part of some scrutiny members towards officers of TVCA.
"This mistrust derives from a lack of a meeting of minds on responsibilities, and as such some of the actions in action area 1 will help to resolve matters. However, separate work will be needed subsequently to ensure a regularisation of relationships."
In addition, the report described a "combative relationship" between the Mayor and some scrutiny members.
It said issues around Mayoral attendance "and the behaviour of the Mayor and members of the committee on those occasions when the Mayor does attend" have become a "dominant" feature of the relationship, leading to tension and disagreement.
It went on to call for a more productive relationship between scrutiny and the Mayor, and recommended the authority design a process that reflects agreement on scrutiny's wider role, "and hence refocuses the OSC's work on the Mayor alongside other actors in the governance system".
Adam Carey
