DfT cancels controversial Brexit ferry contracts

1 May 2019

The Department for Transport (DfT) has cancelled two contracts with ferry operators to provide extra freight capacity in the event of no-deal Brexit.

Transport secretary Chris Grayling said the contracts had been part of a £4bn “insurance policy” the government had put in place as part of Brexit preparations.

He said: "People would expect a responsible government to take out an insurance policy, and that's what we've done, to make sure we can deal with all the challenges in a no-deal Brexit.”

In February, figures from the National Audit Office (NAO) estimated the cancellation of the ferry contracts would cost the taxpayer around £56.6m.

A DfT spokesperson said: “Following the extension, the government is reviewing all preparedness plans. The government’s freight capacity contracts for the summer period are no longer needed and have therefore been terminated.

“The government has taken this decision now as it represents the best value for money for taxpayers. The termination of these contracts has resulted in less cost to the taxpayer than the termination costs reported by the NAO in their own analysis of the freight capacity contracts.”

Speaking to the BBC, shadow transport secretary Andy McDonald MP said the handling of the contracts would be a “a case study in ministerial incompetence”.

“The transport secretary's approach to procurement and planning has cost taxpayers tens, if not, hundreds of millions of pounds,” he said.

The contracts, worth £89m, were awarded to DFDS and Brittany Ferries in December 2018 to provide additional freight capacity in the event of a no-deal Brexit.

A third contract was awarded to Seaborne Freight but it was scrapped in February 2019, after the firm’s backer Arklow Shipping pulled out.

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

In March 2019, the DfT reached a £33m settlement with Eurotunnel after the firm claimed the contracts were awarded in a “secretive” process, with no public notice.

Bernadette Kelly, permanent secretary to the DfT, told the Public Accounts Committee the department was confident that its procurement process was legal.

Last week, P&O Ferries confirmed it had initiated legal proceedings against the DfT over the settlement, claiming investment in the tunnel’s infrastructure would put its services at a “competitive disadvantage”.

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