News | Published May 01 2019

Government cancels two no-deal ferry contracts at a cost of £50 million

The Department for Transport has announced the termination of contracts to provide additional ferry services in event of a no-deal Brexit. 

The cancellation of these contracts, agreed with Brittany Ferries and DFDS, could cost the taxpayer over £50 million, with the National Audit Office estimating that cancellation costs for all of the ferry contracts would total £56.6 million.

This follows the cancellation of the £13.8 million contract with Seaborne Freight, a company that was found to not own any ferries.

Across these two contracts, the government purchased £89 million worth of capacity. While some of this cost may eventually be recouped through the sale of this capacity, millions of pounds is still likely to be lost. Estimates of the scope of this loss vary, with the Financial Times stating that the three cancelled ferry contracts amount to a cost of more than £80 million.

Chris Grayling, the Transport Secretary, said that these cancelled contracts were part of the governments strategy to deal with a no-deal Brexit.

Labelling them an “insurance policy”, he argued that “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.”

The contracts were cancelled after the EU delayed the date of Brexit until the end of October. If the House of Commons is unable to break the impasse as October gets closer however, Grayling has signalled that he may have to spend millions more on further ferry contracts.

These contracts were designed to relieve pressure on the main Dover-Calais route as the government expected extra delays from additional border checks.

The shadow transport secretary, Andy McDonald, labelled the saga a “case study in ministerial incompetence.” He added “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.”

Several Labour MPs echoed this criticism with Virenda Sharma labelling Grayling as “the man with the reverse Midas touch.” 

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Authored by

George Salmon
Political Editor
May 01 2019

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