Chris Grayling’s department cancels no-deal Brexit ferry contracts at £50m cost to the taxpayer

Posted On: 
1st May 2019

The Department for Transport is set to take £50m hit after it cancelled no-deal Brexit ferry contracts.

The ferries were supposed to operate out of Ramsgate in Kent.
Credit: 
PA

Chris Grayling's department awarded the contracts, worth £108m, to three ferry companies last year in an effort to expand lorry freight capacity in the event of the UK leaving the EU without a deal.

According to Sky News, the beleaguered Transport Secretary has decided to terminate the agreements after the deadline for the UK's departure was extended until the end of October.

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However, an estimated £50m will still be paid to the ferry companies for part value of the contracts.

A National Audit Office report previously warned the Government it would face a £56.6m bill for cancelling the contracts, but one department source told Sky they estimated the final cost would be around 10% lower.

A spokesperson for the Department of Transport said: “The Government’s freight capacity contracts were a vital part of contingency measures, ensuring goods like medicines could enter the UK in the case of disruption during a no deal Brexit.

“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.”

But Labour's Shadow Transport Secretary Andy McDonald accused Mr Grayling of "leaving a trail of scorched earth".

“Chris Grayling and the ferry contracts will evermore be a case study in ministerial incompetence", he said.

“The Transport Secretary’s approach to procurement and planning has cost taxpayers tens, if not, hundreds of millions of pounds. His career as a minister has left a trail of scorched earth and billions of pounds of public money wasted.

“This country cannot afford Chris Grayling.”

Mr Grayling has already faced calls to quit over the handling of the contracts after it emerged in December that one of the firms, Seaborne Freight, had no experience in the industry and did not own any ferries.

The £13.8m agreement was eventually dropped in February after the DfT admitted the firm would “not reach its contractual requirements”.

In March, he faced another humiliating blow after the Government were forced to pay a £33m out-of-court settlement to Eurotunnel after the firm accused the ministers of handing out the “secretive” ferry contracts.

As part of the agreement the operator committed to improve security and traffic flow to ensure medicines and vital imports can reach the UK in the event of a no-deal Brexit.

Speaking after the settlement was reached, Mr 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.”

“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.”