Thursday 21 February 2019

'High risk proposition' - the Brexit ferry contract with firm that had no ships

UK Transport Secretary Chris Grayling. Photo: Getty Images
UK Transport Secretary Chris Grayling. Photo: Getty Images

Andrew Woodcock

Brtain's Department for Transport went ahead with a £13.8m no-deal Brexit ferry contract despite its assessment that the firm involved was "a high-risk proposition", a Government spending watchdog has reported.

The UK National Audit Office said that Seaborne Freight was unable satisfactorily to meet the criteria required in the DfT's tender for additional cross-Channel services to ease disruption in the case of a no-deal withdrawal from the EU.

But Chris Grayling's department decided to proceed with the contract to run services between Ramsgate and Ostend after putting additional protections into the contract to reflect the risk that Seaborne - which had no ships - might not be ready in time.

The contract was terminated at the weekend, after Irish company Arklow Shipping, which had backed the new operation, stepped away from the deal.

Theresa May's spokesman said the Prime Minister continued to have full confidence in her embattled Transport Secretary amid opposition calls for his resignation over the collapsed deal.

But shadow transport secretary Andy McDonald told the House of Commons that Mr Grayling was "rewriting the textbook for ministerial incompetence in office".

Mr McDonald claimed the DfT "took shortcuts" in the procurement process with Seaborne, adding: "For the good of the nation, and for the sake of some semblance being restored to this shambolic Government, shouldn't he now do the decent thing and go?"

In a memorandum on the case, the NAO said it was only last autumn that the Government identified the possibility of "significant" disruption to cross-Channel freight lasting for six months after a no-deal Brexit, rather than the previous worst-case estimate of six weeks.

The department cited the "extreme urgency" of the situation to bypass transparency requirements which would normally have required the publication of invitations to tender.

The NAO memorandum was published by the influential Commons Public Accounts Committee, whose chairwoman Meg Hillier said it raised "serious issues".

"We will be pressing the department for answers on how it awarded its three new ferry contracts, what it is doing to manage risks and exactly what it intends to do now it has axed the contract with Seaborne."

At a regular Westminster media briefing before the release of the NAO document, Mrs May's official spokesman was asked whether the PM had full confidence in Mr Grayling.

He replied: "Yes."

The spokesman added: "In relation to Seaborne, we were clear that it would need to meet specific milestones in order to fulfil its contractual obligations.

"When it became clear that it would not reach these requirements without the continued support of Arklow Shipping, the Transport Secretary decided to terminate the contract.

"It is obviously ultimately important that we protect taxpayers' money."

The PM's spokesman said he understood that no taxpayers' money had yet been spent on the contract.

He added: "We are already in advanced talks with a number of companies to secure additional freight capacity, including through the port of Ramsgate, in the event of no deal.

"There is no threat to contracts with DFDS or Brittany Ferries, who will be providing around 90pc of additional capacity in the event of no deal."

Mr Grayling last month defended the Seaborne Freight contract, insisting it was "not a risk".

Speaking in the House of Commons on Monday, he told MPs that he was "fully aware" that Seaborne was a start-up business with no ships.

"Not a penny of taxayers money has gone to Seaborne," he said.

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