DfT cancels Brexit ferry contracts at £50m cost

 

A further £50m has been lost on the botched Brexit ferry deal contracts after the Department for Transport (DfT) cancelled them altogether.

This comes on top of the £33m paid in compensation to Eurotunnel over the botched procurement process, exposed in part by Transport Network, and £1m paid to consultants.

Contracts worth £89m with Brittany Ferries and DFDS to secure ferry space for vital goods across the Channel have been cancelled, resulting in the £50m termination cost.

This follows the cancellation, without compensation, of a £14m contract with Seaborne Freight, which made the headlines after it was revealed the company had no ships.

The contracts were drawn up after a belated DfT risk assessment found the risk of a no deal Brexit to vital shipping capacity in the Channel could run to billions.

In November 2018, DfT estimated 'six months’ disruption without intervention would be £5.25bn, while the benefit of its planned intervention would be around £1.3bn, at a total cost to government of £270m'.

'The maximum early termination charge the Department would pay, which is if it cancelled all contracts ahead of 29 March 2019, is £56.6m,' the National Audit Office said, although the DfT appears to have negotiated this down.

The date of Brexit having been pushed back from 29 March to 31 October, the cancellation of the contracts was necessary because, despite the process being based around contingency planning, there was no provision for the start date to be delayed.

Government sources told the Guardian that further ferry contracts could be taken up in the autumn but that it was cheaper to cancel the existing ones and then go back to market.

It has also emerged P&O Ferries is set for legal action against the Government over the £33m settlement with Eurotunnel. P&O said the compensation left its ferry service facing an unfair disadvantage.

A DfT spokesperson 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.'

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