Government says millions lost on no-deal Brexit ferry contracts still made it ‘extremely good’ value

Transport secretary Chris Grayling. Photograph: Stefan Rousseau/PA.

Transport secretary Chris Grayling. Photograph: Stefan Rousseau/PA. - Credit: PA

Ministers defended the now-cancelled no-deal Brexit ferry contracts as 'an insurance policy' for taxpayers in the face of a barrage of criticism at Westminster and demands for an apology for the 'unnecessary expense'.

Transport secretary Chris 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.

Seaborne's contract to provide sailings from Ramsgate was scrapped in February after an Irish company backing the deal pulled out.

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The Department for Transport 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 the department is being sued by P&O Ferries over its complaint that the payment to Eurotunnel put it at a competitive disadvantage.

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Responding to an urgent question on the terminated contracts by Labour in the House of Lords, transport minister Baroness Vere of Norbiton said: 'The National Audit Office estimated the total termination cost to be £56 million and I am pleased to be able to tell the House that the figure for termination is £43.8 million.

'Furthermore, the total amount for termination fees and running costs is a little over £50 million.'

She added: 'These contracts were an important insurance policy to ensure the continued movement of medicines and other essential goods.'

But opposition frontbencher Lord Rosser questioned what benefit the taxpayer had got from the public money spent.

He also highlighted the payment to Eurotunnel and the resulting legal action being taken by P&O.

Lord Rosser said: 'The government's answer is no doubt that they had no alternative to a contingency arrangement because of its own failure over two years to conclude an acceptable Brexit deal.

'But it can't argue that in relation to the £33 million to Eurotunnel or any payments to P&O Ferries.

'The government always talks about getting value for money. In this case we had a lot of money but no value to the taxpayer.

'Is the minister now going to apologise for the unnecessary expense that's been occurred and for the failures of the government and the Secretary of State in particular?'

Liberal Democrat Baroness Randerson said: 'Every time I think the Secretary of State has extracted the least vestige of farce from the ferry contracts he seems to plumb new depths.'

Highlighting the £800,000 spent by the government on legal advice linked to the contracts, she added: 'That's an awfully large sum to pay for duff advice if indeed that advice given was followed.'

Lady Vere said: 'Had I been the secretary of state I would have made the same decisions. These are very, very important contracts.

'These contracts had to be as flexible as possible.'

Labour peer Lord Hunt of Kings Heath asked if in terminating the contracts the government had 'firmly and in the future set itself against a no-deal Brexit.'

Lady Vere said: 'I didn't say that these contracts would not be repeated. The situation is that no-deal is still the legal default.

'What is going to happen next is pretty much what happened last time.'

She added: 'This was a good contract and the value for taxpayers is extremely good.'

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