Brexit ferries cancelled as trade rush eases - leaving £50 million bill
By Grimsby Telegraph | Posted: 1 May 2019
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 – DFDS, Brittany Ferries and Seaborne Freight - to run extra services from ports including Immingham to ease expected pressures.
After the expected March 29 date of EU withdrawal was delayed, first to April 12 and now October 31, sailings went ahead as record levels of freight were moved as the deadline neared.
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 per cent 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."
In the run up to March 29, we reported how companies fearing tariffs, hold-ups and delays triggered by customs uncertainty, had led to unprecedented demand at its terminal operations on the UK’s largest port. The seven extra services to Germany and Holland came as restrictions had to be put in place for freight collections, a first in 27 years at Immingham.
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.
Representatives of DFDS were not immediately available for comment.