Bernadette Kelly said the £33m settlement with Eurotunnel was vital to secure the flow of medical supplies in a no-deal scenario © Parliament Live TV
Bernadette Kelly said the £33m settlement with Eurotunnel was vital to secure the flow of medical supplies in a no-deal scenario © Parliament Live TV

DfT to audit Eurotunnel settlement spend

7 March 2019

A senior civil servant has confirmed that the Department for Transport (DfT) will audit Eurotunnel’s accounts to ensure the £33m it received in an out-of-court settlement is spent in a way that benefits the taxpayer.

Giving evidence to the Public Accounts Committee, Bernadette Kelly, permanent secretary for the DfT said: “We determined that the very best way to secure the public interest was settling in order to make sure there was no risk that the contracts could be made ineffective and secondly if we were going to settle, we should secure something in return.”

When probed about the legal advice the department had received prior to awarding the contracts, Kelly confirmed that the DfT was confident that its procurement process was legal, and while there was an element of legal risk involved in awarding the contracts, this was recognised.

Last week, a £33m out of court agreement was reached between the government and Eurotunnel, which saw the firm withdraw its legal claim against three ferry contracts awarded to DFDF, Brittany Ferries and Seaborne Freight to provide additional capacity in the event of a no-deal Brexit.

In a high court hearing last month, Eurotunnel claimed that the contracts were awarded in a “secretive” process, with no public notice.

The money will see investment in Eurotunnel’s terminal in the UK including increased security and traffic flow to ensure it can keep freight moving in the event of a no-deal Brexit.

Kelly confirmed that any upgrades made to the Eurotunnel terminal would not be ready in time for the UK leaving the EU on 29 March.

When probed about the controversial £13.8m contract with Seaborne Ferries which was scrapped last month, Kelly said no pressure had been placed on the DfT by transport secretary Chris Grayling to issue the contract stating that Seaborne was "well known in the industry".

The DfT said that the extra freight capacity would help ensure the continued supply in a no-deal scenario of crucial medicines, medical supplies and veterinary medicines.

When asked why the DfT did not procure the additional capacity through Eurotunnel initially, Kelly said the department had been seeking contracts with companies that either already had ferry services or had near plans to run ferry services, to minimise disruption in areas such as Folkestone.

Kelly said the settlement with Eurotunnel was appropriate for what the DfT was trying to achieve in securing the flow of vital medical supplies and ensuring the best possible return on investment for the taxpayer.

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