Government pays Eurotunnel £33m over Brexit ferry case

The government will pay £33m to Eurotunnel in an agreement to settle a lawsuit over extra ferry services in the event of a no-deal Brexit.

In December, the Department for Transport (DfT) contracted three suppliers to provide additional freight capacity on ferries for lorries.

But Eurotunnel said the contracts were handed out in a “secretive” way.

As part of the agreement, Eurotunnel has agreed to make some improvements to its terminal.

One of the firms awarded a ferry contract, Seaborne Freight, has already had its deal cancelled after the Irish company backing it pulled out.

Shortly after it was awarded the contract, the BBC found out that Seaborne had no ships and had never run a ferry service.

Transport Secretary Chris Grayling has been heavily criticised for the Seaborne deal, which would have been worth £13.8m.

‘Smooth supply’

In January, Eurotunnel wrote to Mr Grayling to complain that it had not been considered when the contracts were awarded.

It argued that unlike Seaborne, it has actually run a cross-Channel ferry service (MyFerryLink, which closed in 2015) and should have been approached.

In a statement accompanying the agreement, Mr Grayling said: “While it is disappointing that Eurotunnel chose to take legal action on contracts in place to ensure the smooth supply of vital medicines, I am pleased that this agreement will ensure the Channel Tunnel is ready for a post-Brexit world.”

Andy McDonald MP, Labour’s shadow transport secretary said that Mr Grayling had shown “misjudgement” in awarding the ferry contracts.

Criticising his record, including problems on the railways he said: “This trail of destruction has gone on long enough. It’s time for Chris Grayling to go.”

Analysis:

By Joe Miller, BBC Business reporter

It was the now notorious contract with Seaborne Freight that catapulted the government’s no-deal Brexit contracts into the headlines, but it’s the handling of the entire procurement process that has cost taxpayers some £33m.

Eurotunnel argues it would have been a strong contender for a contract, having run a ferry service as recently as 2015.

But the Department for Transport said the “urgency” of the situation forced it to hurry through the awarding of contingency planning contracts.

However, had it gone to court, Eurotunnel was going to argue that the DfT had ample time to for a full, public tender process, and could have foreseen all Brexit eventualities from at least the date on which Article 50 was triggered in 2017.

Sources familiar with the case say the government was essentially “held over a barrel” by Eurotunnel, and was left with little choice but to settle.