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Grayling to scrap no-deal Brexit ferry contracts at cost of £50m - which Government says were extremely good value

Contracts to provide ferry services after a no-deal Brexit have been cancelled at a cost estimated at around £50m. Credit: PA

Chris Grayling is cancelling all of the Department for Transport's no-deal Brexit ferry contracts at a cost of around £50 million - despite the Government insisting they were "extremely good value".

The transport secretary awarded contracts worth a total of more than £100 million to three firms to run extra services in the event of a no-deal but following Brexit delays those services were not required.

Ministers defended the now-cancelled shipping deals 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".

The National Audit Office estimated in February that the maximum cost of compensation to ferry operators if contracts were terminated would be £56.6 million, but a Whitehall source said the actual figure was expected to be around 10% lower.

The contracts were aimed at easing pressure on the main Dover-Calais route if the UK crashed out the EU on March 29 but Brexit was delayed, first to April 12 and now October 31.

Transport Secretary Chris Grayling took the decision to scrap the contracts Credit: Dominic Lipinski/PA

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."

The contracts were won by Brittany Ferries, DFDS and Seaborne Freight to run services from ports including Plymouth, Poole and Portsmouth - but Grayling faced backlash after it was revealed the latter had no ships.

His decision to award Seaborne Freight a contract worth £13.8 million received widespread criticism before it was eventually scrapped in February after an Irish company backing the deal pulled out.

The announcement that the remaining contracts are now to be torn up is likely to fuel speculation that the Government no longer believes a no-deal Brexit might happen.

The DFT 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.

The government had backed its decision to Eurotunnel in an out-of-court settlement of £33 million. Credit: PA

Now Mr Grayling's department is being sued by P&O Ferries over its complaint that the payment to Eurotunnel put it at a competitive disadvantage.

The announcement that the remaining contracts are now to be torn up is likely to fuel speculation that the Government no longer believes a no-deal Brexit might happen.

Britanny Ferries has been operating 20 additional cross-Channel sailings a week since March 29 under the contract, despite Brexit not going ahead as expected on that date.

Some 30,000 passengers had their travel disrupted by new schedules introduced in March to accommodate the DFT contract, which are due to remain in place for six months.

The company has taken on 50 extra port staff in the UK and France and has spent large sums on fuel for the 2,000 additional nautical miles sailed each week.

Mick Cash, general secretary of the Rail, Maritime and Transport union, called it a national scandal. Credit: PA

Mick Cash, general secretary of the Rail, Maritime and Transport union, said: "The Brexit ferry chaos on Chris Grayling's watch has moved from farce to national scandal with the taxpayer picking up the bill.

"If he had listened to the maritime unions none of this would have happened. Grayling has reduced the shipping industry in this island nation to a global laughing stock."

Manuel Cortes, leader of the Transport Salaried Staffs Association, said: "The public will rightly be furious but they won't be surprised.

"Chris Failing Grayling's utter incompetence has all too often seen millions of pounds from the public purse blown time and again.

"Grayling really is the helmsman of this Tory ship of Brexit farce which is fast sinking below the electoral waterline. "

Shadow transport secretary Andy McDonald said: "Chris Grayling and the ferry contracts will for evermore be a case study in ministerial incompetence.

"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.

"This country cannot afford Chris Grayling."