The controversial contract awarded to Seaborne Freight to run ferry services in the event of a no-deal Brexit has been scrapped.
The Department for Transport (DfT) confirmed the decision was taken after Seaborne's backer, Irish firm Arklow Shipping, pulled out.
“Following the decision of Seaborne Freight’s backer, Arklow Shipping, to step back from the deal, it became clear Seaborne would not reach its contractual requirements with the government,” said a DfT spokesperson. “We have therefore decided to terminate our agreement.
“The government is already in advanced talks with a number of companies to secure additional freight capacity – including through the port of Ramsgate – in the event of a no-deal Brexit.”
The contract with Seaborne, to run services between Ramsgate and Ostend in Belgium, came under heavy fire, with accusations it had broken EU procurement rules.
Arklow Shipping would not confirm to SM its decision, but a spokesperson told Channel 4 News: “Absolutely nothing had been signed with Seabourne. The only thing was that we wrote was a letter giving some comfort to say we were looking at it. The problem was politicians were pushing it ahead of any normal pace. It was being forced through by the UK government.”
In this letter, sent from Arklow to the DfT in January and obtained by the Financial Times, it confirmed Arklow had been working with Seabourne for 12 months “in support of the current proposals to develop the shipping route between Ramsgate and Ostend”, and that Arklow “intended to provide equity finance for the purchase of both vessels and an equity stake”, resulting in Arklow being the operating company.
Meg Hillier (Labour), chair of the Public Accounts Committee, said the committee would be examining the ferry contracts as part of its Brexit inquiry, but said the scrapping of the Seaborne contract raised “serious issues”.
“The Department for Transport waited until September 2018 to start thinking about the risks to freight transport across these important routes and entered into a £13.8m contract with Seaborne Freight despite it being a new operation, owning no ferries, and not having binding contracts to use the specified ports,” she said.
“We will be pressing the department for answers on how it awarded its three new ferry contracts, what it is doing to manage risks and exactly what it intends to do now it has axed the contract with Seaborne.”
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