An investigation into claims of wrongdoing at the UK’s largest freeport will not have public confidence because of its “handpicked” panel, Labour has suggested.

Shadow communities secretary Lisa Nandy asked why the National Audit Office (NAO) was not tasked with leading the probe into the Teesworks freeport in the north east of England, as the Tees Valley’s Conservative mayor Ben Houchen originally requested.

Communities Secretary Michael Gove said the Opposition is engaging in a “campaign on innuendo unworthy of the party of working people”.

Ms Nandy told the Commons: “He knows very well that the mayor in question asked specifically for an NAO investigation. That is a request that was backed by three select committee chairs, the official Opposition and countless others.

“Instead he has chosen to launch an investigation on his own terms, handpicking a panel to investigate an issue where accountability has totally broken down as a result of a flawed system of accountability that he has presided over for years, without heeding the concerns of members on all sides of this House and the NAO itself.

“These are not his assets; these assets belong to the people on Teesside and they deserve answers.

“Can I ask him, seriously, how anyone could possibly have faith in this investigation process or this Government when they have chosen to block the NAO from investigating?”

Mr Gove said: “She once again seeks to raise question marks over what’s happened in Tees Valley in a way that her Labour Party colleagues have done.

“I would gently point out that under the 13 years of the Labour government the constituencies and communities of the Tees Valley were neglected.

“That is why Ben Houchen was elected as mayor.

“He is bringing investment to the Tees Valley, investment that never happened in the 13 years that Labour were in power.

“And because it hurts so much for the Labour Party to acknowledge that it is a Conservative mayor who is delivering for working people in Tees Valley, what they engage in is a campaign on innuendo unworthy of the party of working people.”

Labour MP for Middlesbrough Andy McDonald criticised Mr Gove’s response, saying he has shown “staggering complacency” by “dismissing legitimate serious complaints and concerns about the use of hundreds and hundreds of millions of pounds of taxpayers’ money”.

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He added: “If there is to be any possibility of this House and the people of Teesside having any confidence in the findings of the inquiry that he has commissioned, then that must have all the powers it needs to demand and secure whatever evidence and documentation it determines necessary and anyone must be able to submit that evidence to the inquiry.

“Will he give those commitments?”

Mr Gove said: “If he has evidence, please do share it. It is the case that Labour in Teesside, including Labour on Middlesbrough, have consistently sought to undermine, thwart and oppose those efforts at economic development and investment that the mayor of Tees Valley has brought forward.

“I recognise that he has made a number of allegations in this House which he has been reluctant to repeat outside. We look forward to him putting us right in a way which is actually contributing to the welfare of the people of Tees Valley rather than advancing the agenda of the Labour Party.”