The £33m settlement will see improvements made to the Channel Tunnel to ensure freight keeps moving in a no-deal Brexit © Daniel Berehulak/Getty Images
The £33m settlement will see improvements made to the Channel Tunnel to ensure freight keeps moving in a no-deal Brexit © Daniel Berehulak/Getty Images

DfT to pay £33m over 'extraordinary' Brexit ferry contract

1 March 2019

The Department for Transport (DfT) has agreed to pay Eurotunnel £33m in an out-of-court settlement following legal action over three ferry contracts to handle extra capacity in a no-deal Brexit.

In a High Court hearing last month, Eurotunnel claimed that the contracts awarded to DFDS, Brittany Ferries and the controversial Seaborne Ferries were awarded in a “secretive” process, and were awarded with no public notice. The Seaborne contract was scrapped last month.

Under the agreement, Eurotunnel committed to improve the operations of its UK terminal, including increased security protection and improved traffic flow through the terminal.

Eurotunnel confirmed it had reached a settlement with the government that will ensure that the Channel Tunnel remains the preferred route for vital goods to travel between the EU and the UK.

The agreement sees the firm withdraw its legal claim against the government, and protects the ferry contracts purchased by the government from DFDS and Brittany Ferries.

The government has said the agreement will help ensure the continued supply of crucial medicines, medical supplies and veterinary medicines.

Transport secretary Chris Grayling said: “The agreement with Eurotunnel secures the government’s additional freight capacity, helping ensure that the NHS has essential medicines in the event of a no-deal Brexit.”

He continued: “While it is disappointing that Eurotunnel chose to take legal action on contracts in place to ensure the smooth supply of vital medicines, I am pleased that this agreement will ensure the Channel Tunnel is ready for a post-Brexit world.”

Matt Hancock, health secretary, said: “While we never give guarantees, I'm confident that, if everyone – including suppliers, freight companies, international partners, and the health and care system – does what they need to do, the supply of medicines and medical products should be uninterrupted if we leave without a deal.”

Chair of the Public Accounts Committee, Meg Hillier (Labour) said she will be pushing the DfT for answers surrounding the agreement with Eurotunnel when the department gives evidence to the committee on 6 March.

She said: “This was an extraordinary procurement which, as this £33 million settlement makes clear, is now unravelling at the taxpayers’ expense.”

Meanwhile funding to keep the port of Ramsgate “ferry ready” has been cut by Thanet District Council, which approved cuts of £630,000 in its 2019-20 budget.

The port was at the heart of the controversy surrounding Seaborne Freight, who had been awarded a £13.8m contract to run additional services between Ramsgate and Ostend, Belgium.

Separately, luxury car manufacturer Aston Martin revealed in its results that it has set aside £30m as part of contingency planning for a no-deal Brexit and it has plans in place to mitigate the impact of potential supply chain disruption.

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