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Brexit contract dispute results in £33m settlement for Eurotunnel

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In a decision that could prove to be the final nail in the coffin for much criticised Transport Secretary Chris Grayling, the UK Government must pay £33m to Eurotunnel following the botched award of ferry contracts should there be a ‘no-deal’ Brexit.

The payment, in settlement of a lawsuit against the Government based on how certain freight contracts were awarded, is the latest in a long line of poor decisions and embarrassments for Grayling. The legal claim and subsequent compensation is as a result of the way that Department for Transport’s (DfT) contracted with three suppliers to provide extra transport and freight capacity on ferries. The contracts, awarded in December 2018, included the universally derided agreement with Seaborne Freight, a company that has never run a ferry service and didn’t have any ships. The Seaborne contract would have been worth £13.8m, but the deal was eventually cancelled following intense media scrutiny when the companies Irish backers pulled out.

Disputed contracts

Eurotunnel, an established provider of cross-Channel freight and transportation services, claimed that the DfT contracts were awarded in a ‘secretive’ way. The Channel Tunnel operator wrote to Mr Grayling earlier this year to complain that they had not been considered, highlighting that they actually did have previous experience (via the MyFerryLink company) of operating a ferry service.

Following the agreement to pay compensation to Eurotunnel, Mr Grayling commented:

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."

In response, shadow transport secretary Andy McDonald said that Grayling had been responsible for a ‘misjudgement’ in awarding the contracts. In wide ranging criticism of Grayling’s track record as Transport Secretary, he added:

This trail of destruction has gone on long enough. It's time for Chris Grayling to go."

Following the financial settlement, Eurotunnel will also be making investments to improve operational efficiency and decrease traffic congestion at its Folkestone terminal.

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