22OCT

Tees Valley faces Best Value inspection

2 min read

16:26UTC

Ministers appointed Laura Shoaf on 15 October to lead a Best Value inspection of the Tees Valley Combined Authority, citing its debt, borrowing and falling reserves.

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PoliticsAssessed

Key takeaway

Ministers ordered a Best Value inspection of the authority over financial concerns, naming no individual.

The Secretary of State appointed Laura Shoaf on 15 October to lead a Best Value inspection of the Tees Valley Combined Authority (TVCA)⁠¹, the body through which neighbouring councils share powers under an elected mayor. Its mayor is the Conservative Ben Houchen⁠², an office now elected by the Supplementary Vote that Parliament restored for English mayors in April. The Best Value duty requires an authority to secure continuous improvement in how it uses its money and powers. Local government minister Jim McMahon cited "material concerns about the Authority's long-term financial sustainability, given its high levels of debt, increasing borrowing and interest costs, and declining revenue reserves".

He also wants "direct, independent assurance" on new loan repayment arrangements with the South Tees Development Corporation. The external auditor is considering further powers over delays in signing off the 2023/24 and 2024/25 accounts. "I consider there are signs of potential Best Value failure," McMahon wrote.

McMahon's statement names no individual and makes no finding against one. TVCA said it welcomed the inspectors and had "more work to do", the Yorkshire Post reported⁠³. Bedford's inspection, commissioned in February, is the route by which the same minister reached commissioners there.

Deep Analysis

In plain English

A combined authority lets several neighbouring councils share big decisions, such as transport and regeneration, under an elected mayor. Tees Valley covers Darlington, Hartlepool, Middlesbrough, Redcar and Cleveland, and Stockton-on-Tees. The Government has sent an inspector because it is worried about the authority's money. Debts and interest costs are rising, and savings are falling. Best Value is the legal duty on public bodies to manage money and services well. An inspection checks whether that duty is being met. If not, ministers can take further steps.

Deep Analysis

Root Causes

Tees Valley took on a novel structure. The South Tees Development Corporation, set up in 2017, was the first mayoral development corporation outside London, so the loan arrangements between it and the combined authority had little precedent to follow.

Interest costs changed the arithmetic. Bank Rate rose from 0.1% in December 2021 to 5.25% by August 2023, so any borrowing on variable terms, or refinanced in that period, now costs far more than when projects were planned.

The external auditor has not signed off the 2023/24 or 2024/25 accounts, part of an England-wide local audit backlog, which leaves ministers without assured figures to judge.

What could happen next?

Consequence
Laura Shoaf's report will tell ministers whether to use further powers, which could include commissioners.
Precedent
A statutory inspection of a combined authority tests how Best Value powers apply to mayoral bodies rather than councils.

Source Landscape

This story draws on neutral-leaning sources

Primary parallel: Thurrock Council borrowed heavily to fund commercial investments, and in September 2022 ministers made Essex County Council its commissioner before Thurrock issued a section 114 notice that December. Thurrock still works under commissioners on a debt estate of about £1.5bn.

Counter-parallel: The 2023 review of Tees Valley, ordered by Michael Gove, stayed non-statutory and ended in recommendations rather than intervention. A section 10 inspection is the step beyond that, and its report can lead to commissioners.

Rising debt, higher interest and falling reserves are among the measures in CIPFA's financial resilience index for councils. A combined authority showing all three at once has less room to absorb a loss on any single regeneration scheme.

If the South Tees Development Corporation's revenue from land and leases arrives later than planned, the authority must cover interest from reserves, and those reserves are already falling.

Consensus view: The independent Tees Valley Review, which reported in January 2024, found no evidence of corruption or illegality but called for stronger governance and transparency around the South Tees Development Corporation. The inspection tests whether the authority acted on that advice, and the non-statutory Best Value Notice of 3 April 2025 shows ministers were not yet satisfied.

Counter-view: Under CIPFA's Prudential Code, a local body may borrow for capital projects so long as the borrowing is prudent, affordable and sustainable. That test looks at affordability over the full life of the borrowing, so a high debt figure alone does not show a breach.

Key tension: Whether the authority's borrowing passes the Prudential Code's affordability test over its full term while its reserves are falling.

Sources:Ministry of Housing, Communities and Local Government·Yorkshire Post

Mentions:Jim McMahon →Ministry of Housing Communities and Local Government (MHCLG) →Supplementary Vote →Essex County Council →Parliament →Bedford →Essex →Thurrock Council →Tees Valley Combined Authority →South Tees Development Corporation →Laura Shoaf →Ben Houchen →Bank Rate →Chartered Institute of Public Finance and Accountancy (CIPFA) →Local Government Act 1999 →Michael Gove →

First Reported In

Update #19 · ITV footage drives Reform councillors out

Ministry of Housing, Communities and Local Government· 22 Oct 2026

Read original →

Different Perspectives

Scottish National Party / John Swinney

Swinney told the SNP conference in Aberdeen on 17 October that Scotland is ready for independence, but set no referendum date, bill or Section 30 request. He launched a new campaign instead and extended the £2 bus fare cap to the north east from April 2027.

Liberal Democrats / Ed Davey

Davey ruled out a national partnership with the Greens on 19 October after their Brighton conference passed a "Zionism is racism" motion, and wrote to two Jewish community bodies. He left untouched the councils the two parties already run together.

Reform UK / Richard Tice

Tice alleged ITV's reporter used false details to get a press-office job and said ITV had "likely broken the law", telling members not to speak to it until it apologises. Reform also opened investigations into members, with some suspensions, so the party is contesting the broadcaster and disciplining councillors at once.

Rhun ap Iorwerth / Welsh Government (Plaid Cymru)

Ap Iorwerth presented six priorities to the Senedd on 22 September without numeric targets or a named partner party, promising to work across the chamber where there is common ground. He says his government will be judged on results.

Michael Marra / Scottish Labour

Marra won the leadership on 19 September, and three days later his 17 MSPs backed Swinney's right-to-decide motion once their child-poverty amendment was written in. He says Scottish Labour's task is to tell voters what it stands for.

Andy Burnham / Labour Party

Burnham told conference in Liverpool on 29 September that Labour's next manifesto will commit to changing the electoral system, and invited every party into a National Commission on Electoral Reform. He has not named a replacement system, and no chair or remit has been published.

Written with AI from Lowdown's published reporting. Not individually reviewed by an editor. Editorial standards.