“Urgent” need to improve investment zone governance

Existing governance arrangements for freeports and investment zones “must be urgently improved”, MPs have warned.

Today the Commons’ business and trade committee published the findings from its inquiry into freeports and investment zones calling for greater transparency of the programs “if those important regeneration projects are to retain public trust”.

The committee called for a single person, such as a mayor, to be accountable for the delivery of freeports and investment zones, but said that current scrutiny arrangements for mayors also need improvement.

Freeports and investment zones form part of the government’s leveling up agenda and seek to encourage economic growth in particular areas through tax breaks, public investment and other incentives to encourage businesses.

All freeports have been established near major ports, whereas investment zones have been established in urban areas with ties to universities.

MPs heard evidence about the challenges some areas had faced without having a mayor in place and recommended that devolution should be “rolled out” so that the whole of England has a “tier of government between local and national”.

All freeports and investment zones could then be linked to a single leader “who should be held accountable for regeneration projects and link national and local government”.

Committee chair Liam Byrne (Lab), said: “The long-term success of freeports and investment zones rests on long-term political backing, and crucially, trust and confidence in the governance. This can only be achieved by enhancing governance and transparency. It’s now up to ministries to fix the missing link between the local and national leaderships to help deliver results.”

Teesworks, part of the Teesside freeport was subject to an independent assurance review earlier this year which found “no evidence of corruption or illegality” but raised concerns about governance and transparency.

MPs today said the “gravity and breadth” of the concerns should be further considered by the National Audit Office “to scrutinize the expenditure of public funds associated with Teesside Freeport, Tees Valley Combined Authority and South Tees Development Corporation”.

DLUHC rejected the suggestion that the NAO should look into Teesworks. A spokesperson said: “It is not the National Audit Office’s role to audit or examine individual local authorities. The review was independent and expert, and Mayor Houchen has accepted all recommendations in the report.”

The committee also said all mayoral combined authorities’ needed better scrutiny arrangements.

“The status of the scrutiny committee tends to be relatively low, and councilors have little time or incentive to engage with it,” the report said.

So far the Department for Leveling Up, Housing & Communities has spent £41.8m on freeports and the report said the program could cost £2bn over 10 years when the cost of tax reliefs is included.

The report criticized the “lack of relevant data” about the scale of public investment in the programs and urged the government to publish more data.

Representatives from freeports and investment zones told MPs that they want tax incentives to be extended from five to 10 years.

The committee identified five other issues the government should address: