The transport secretary’s Brexit contingency plans were thrown into further turmoil when it was revealed that the deals — signed to create extra freight capacity across the Channel — were being scrapped early.
The £50 million bill for services that have not been used comes on top of a £33 million settlement to the Channel tunnel operator Eurotunnel when it was effectively excluded from bidding for the contracts. The cancellations are likely to fuel speculation that the government sees a no-deal Brexit as unlikely, but new contracts will be required if the prospect returns.
Andy McDonald, Labour’s shadow transport secretary, said: “Chris Grayling and the ferry contracts will evermore be 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. 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.”
In December the Department for Transport (DfT) awarded contracts worth £103 million to three ferry operators to create additional cross-Channel freight capacity, to keep food and vital medicine flowing into the UK in the event of a no-deal Brexit.
The bulk of the deals were awarded to established operators DFDS and Brittany Ferries. A third contract for £13.8 million was handed to Seaborne Freight — a British start-up — to provide additional ferries into Ramsgate, Kent, even though it did not own any vessels and had no agreement with the port. The DfT subsequently scrapped its deal in February.
In March it was announced that the government had made a £33 million settlement to Eurotunnel after claims that the Channel Tunnel operator had unfairly missed out on the contracts. The deals had been awarded without a normal tendering process because of the need to secure ferry capacity quickly.
The money was intended to be used on Eurotunnel’s infrastructure, including installing improved scanning equipment to keep traffic flowing through the tunnel.
The ferry contracts were intended to start at the end of March. However, Brexit has now been delayed — potentially until October — so the additional space is not needed.
DfT sources said today that the contracts had been cancelled, with the government incurring a £50 million bill so far. The government insisted that it represented an overall saving to the taxpayer because the full £103 million had not been spent.
However, it will raise serious questions over the wording of the contracts and why they were not cancelled sooner. The National Audit Office has already criticised the process.
In a further twist, a rival ferry operator, P&O, said last week that it was preparing its own legal action amid claims that the payout to Eurotunnel put P&O at a disadvantage by allowing the tunnel operator to improve its facilities, in direct competition against the ferry company.