No-deal Brexit ferry contracts to be scrapped
The early termination of services to ease pressure if the UK left the EU without a deal is expected to cost the taxpayer around £50m.
Transport Secretary Chris Grayling is cancelling a set of contracts to provide ferry services after a no-deal Brexit, at a cost estimated at around £50 million.
Mr Grayling awarded contracts worth a total of more than £100 million last December to three firms – Brittany Ferries, DFDS and Seaborne Freight – to run extra services from ports including Plymouth, Poole and Portsmouth to ease expected pressure on the Dover-Calais route.
After the expected March 29 date of EU withdrawal was delayed, first to April 12 and now October 31, sailings went ahead even though the feared disruption to essential supplies like food and medicines did not materialise.
The National Audit Office estimated in February that the maximum cost of compensation to ferry operators if contracts were terminated early would be £56.6 million, but a Whitehall source said the actual figure was expected to be around 10% lower.
Seaborne’s contract to provide sailings from Ramsgate was scrapped in February after an Irish company backing the deal pulled out.
The DFT paid £33 million to Channel Tunnel operator Eurotunnel in an out-of-court settlement of a claim that the company was unfairly overlooked for the work.
Now Mr Grayling’s department is being sued by P&O Ferries over its complaint that the payment to Eurotunnel put it at a competitive disadvantage.
The announcement that the remaining contracts are now to be torn up is likely to fuel speculation that the Government no longer believes a no-deal Brexit might happen.
But a Downing Street spokesman said: “Departments will continue to work with ministers and permanent secretaries to take whatever decisions are required to make sure we are prepared in the event of a no-deal scenario.”
Shadow transport secretary Andy McDonald said Mr Grayling’s handling of the ferry contracts provides “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,” said Mr McDonald.
“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.”
A Number 10 source said that Theresa May continues to have “full confidence” in Mr Grayling.
If he (Grayling) had listened to the maritime unions none of this would have happened Mick Cash, RMT union
Prime Minister Theresa May said that early termination was better value for taxpayers’ money than allowing the contracts to run on.
Mrs May told the House of Commons Liaison Committee: “The combined termination costs with the operators is actually lower than the NAO’s recent estimate of termination costs, thanks to the decisions we took. It’s also lower than keeping those contracts on.
“I’m sure everyone would agree that we have to take the decision that is best in terms of the use of taxpayers’ money.”
Asked if the contracts might have to be revived if the UK leaves the EU without a deal on October 31, Mrs May said that it was “not entirely in the hands of the Government”.
If Parliament would not ratify a Withdrawal Agreement and the EU declined a request for a further extension to the process, the UK could still leave without a deal, she said.
Britanny Ferries has been operating 20 additional cross-Channel sailings a week since March 29 under the contract, despite Brexit not going ahead as expected on that date.
Some 30,000 passengers had their travel disrupted by new schedules introduced in March to accommodate the DFT contract, which are due to remain in place for six months.
The company has taken on 50 extra port staff in the UK and France and has spent large sums on fuel for the 2,000 additional nautical miles sailed each week.
Mick Cash, general secretary of the Rail, Maritime and Transport union, said: “The Brexit ferry chaos on Chris Grayling’s watch has moved from farce to national scandal with the taxpayer picking up the bill.
“If he had listened to the maritime unions none of this would have happened. Grayling has reduced the shipping industry in this island nation to a global laughing stock.”
Manuel Cortes, leader of the Transport Salaried Staffs Association, said: “The public will rightly be furious but they won’t be surprised.
“Chris ‘Failing’ Grayling’s utter incompetence has all too often seen millions of pounds from the public purse blown time and again.
“Grayling really is the helmsman of this Tory ship of Brexit farce which is fast sinking below the electoral waterline. ”
The Government has taken this decision now as it represents the best value for money for taxpayers Department for Transport
However, a Department for Transport spokeswoman defended the termination, saying it would cost the public purse less than keeping the contracts.
She 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.”