MIDDLESBROUGH'S elected mayor overstepped his remit and did not follow council processes when huge changes were made to scale back the Boho X project.

Andy Preston went against the council’s constitution by meeting developer BCEGI about the Boho X scheme without council staff present or documenting the meetings, according to an internal audit review carried out by the council.

The mayor said that every meeting he attended “was explicitly sanctioned by senior council staff.”

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More than £600,000 was spent on design costs for the original £30m 260ft tower (plan A) before it was shelved for a low rise building (plan B) that is currently taking shape in Middlehaven.

At the time, Mr Preston said that the Covid pandemic had led to a change of plans.

The report states: “Seven design changes outlined in the BCEGI change log between June and August 2020 (in which period there were no internal project board meetings) represent the change from plan A to plan B, and were perceived by BCEGI as authorised by the mayor and recorded as such in their log. There is no evidence that these changes were attributable to COVID-19 as identified public communications and as such the decision-making on the change was not transparent.”

Developer BCEGI believed that the mayor was making decisions and formal instructions for the project and the review also raised concerns that meetings were not documented so there was not a clear record of discussions. However, according to the report, the mayor did not believe that he was making those formal decisions about the project.

In September 2020, the project board minutes recorded that the mayor had instructed for changes to be made to the project. The audit report states: “The project was not always managed in line with the council’s constitution, in that the mayor of Middlesbrough held meetings with third party contractors on project direction without officers present, and without these being documented.

“While this arrangement was agreed by the former executive director of growth and place via email, it was not in their gift to do so and was contrary to the constitution and the programme and project management framework (PPMF).” The report adds: “This may have led to decisions and design changes being made without appropriate input or transparency or being communicated efficiently.”

‘There does not appear to be an effective culture of challenge’

Change control notices, which are the written record of agreed changes to projects, were not submitted, reviewed and authorised in line with council policy, which meant that key design changes were recorded in the BCEGI decision log following meetings as being agreed by the mayor. These changes were not referred to the relevant people in the council, including the project sponsor and the directorate portfolio board, as they should have been.

There was an agreement in place that these would go through the former executive director of growth and place, Kevin Parkes, however, the report states that “no email evidence is available to support this had occurred.” The review adds: “Changes recorded in the BCEGI decision log included those items that BCEGI perceived as being authorised by the mayor, and there was no officer involvement in these decisions, which resulted in changes to the project design and cost.”

Despite the agreement and direction of Mr Parkes the “decisions were not in line with the council’s constitution or PPMF.” The report did find that the decisions around funding for the Boho X project and the awarding of key contractors had been “taken, recorded, published and communicated appropriately.”

It also stated that there was a clear record of the costs after the project was scaled back and there was an appropriate procurement process for key contractors. There is concern that the project may not have been overseen appropriately because the document that considers the project’s risks, which is reviewed by the project manager, is not analysed at the internal project working group board meetings.

The report adds: “There does not appear to be an effective culture of challenge in place across the project – while the mayor acted outside of their expected roles and responsibilities, the process was agreed by the executive director of growth and place at the outset. There was no evidence that the mayor was advised that he could be perceived as exceeding his constitutional role in relation to the Boho X project identified during the investigation.”

The mayor had been provided with induction training which detailed the relationship between officers and members and the split of responsibilities. However, there would not have been training on governance arrangements for operational project delivery as this is not part of the remit of members.

The report adds: “Significant gaps, weaknesses or non-compliance were identified by the auditor, leading to an overall opinion of the controls in place at the time of the audit as providing only limited assurance.” The council has complied with the Thames Valley Combined Authority’s (TVCA) funding conditions for Boho X and the TVCA signed-off the construction contract and specification reflecting the scaled-back plans.

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The report stated that the issues raised in the reports were relevant to a number of risks including, failure to comply with statutory duties, failure to have adequate governance, failure of Boho X to deliver anticipated benefits and financial returns, and concert that corporate procurement policies were not adhered to. The review has suggested a number of changes including an update to the PPMF to clarify roles of elected members within programmes and projects and then provide briefings for the executive and councillors on the updates.

New ways for officers to raise concerns about governance issues will be developed and the council will also be commissioning further risk-based internal audits of governance of regeneration projects and Middlesbrough Development Company and Towns Fund governance arrangements.

Going forward, all decisions about the Boho X project will need to be taken at Middlesbrough Council board level and risks will need to be reviewed at the relevant board.

‘The people of Middlesbrough expect me to be hands-on’

In response to the report’s findings, Andy Preston took a swipe at Labour for wasting money while the party was in office and accused them of keeping the new Centre Square offices for themselves and the council – branding it a “political palace.” However, Labour has previously said that it planned to move into the Centre Square offices to show the private sector that it was a viable proposition.

Mr Preston said: “As the mayor, the people of Middlesbrough expect me to be hands-on with projects that are important for the town’s future – ensuring progress and making sure money isn’t being wasted. That’s what I do. Every meeting I had about Boho X was explicitly sanctioned by senior council staff and that will continue to be the case as we deliver this and many other transformational projects across Middlesbrough.

“This landmark project will change the town’s skyline, help create jobs and make a huge profit for Middlesbrough Council. We will be doing more of this going forward. It’s sad that some people want to try to distract from the massive progress by sniping from the sidelines. It terrifies them that Middlesbrough is on the rise after years of failure under their watch.”

The digital office space is expected to be let in its entirety for ten years in the near future and Mr Preston has confirmed that a tenant is lined up.

It is funded jointly by the TVCA and Middlesbrough Council at a revised estimated final cost of £21m and it is the biggest single project in the council’s portfolio.

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