U.K. Government Cancels Ferry Contracts for No-Deal Brexit

A ferry “Spirit of France” arrives at the Port of Dover during a trial of how road will cope in case of a “no-deal” Brexit, Kent, Britain January 7, 2019. REUTERS/Peter Nicholls

By Tim Ross, Jessica Shankleman and Lucca de Paoli (Bloomberg) — The U.K. government canceled contracts for additional shipping in the event of a no-deal Brexit, a move likely to increase pressure on Prime Minister Theresa May over her strategy for leaving the European Union.

The ferry contracts were meant to guard against shortages of key items like medicines and spare parts for the energy sector and essential chemicals if the U.K. left the EU without an agreement. The government has been plagued with problems over their terms and implementation.

Canceling the contracts will cost about 50 million pounds ($65 million), according to a person familiar with the matter. “We’re taking this decision now as it represents best value for the taxpayer,” May’s spokesman, James Slack, told reporters on Wednesday.

By ending the deals, Prime Minister Theresa May risks criticism from euroskeptic members of her Conservative Party that she’s taking the option to leave the bloc without an agreement off the table. Britain was due to leave the EU in March, but the deadline has been extended to October. A no-deal Brexit could still happen later this year.

Both companies with contracts, Brittany Ferries and Denmark’s DFDS, confirmed the government’s decision.

Trade Disruption

Hiring ferry companies to ensure Britain wasn’t left without key supplies was part of the government’s broader no-deal planning and has been mired in controversy from the start. The decision to cancel, first reported by Sky News, will add to the scrutiny of Transport Secretary Chris Grayling, who has faced frequent criticism including over disruption on the train network last year.

A spokesman for the prime minister said she still has confidence in Grayling.

Read more: U.K. Orders Rethink of Privatized Railway After Summer Meltdown

“Chris Grayling and the ferry contracts will forever more be a case study in ministerial incompetence,” said Andy McDonald, transport spokesman for the opposition Labour Party.

In February, the Department of Transport scrapped a 13.8 million-pound deal with Seaborne Freight, which had no ships and no trading history, after the company backing the plan pulled out.

Another blow came when the government was forced to pay 33 million pounds to settle a case with Eurotunnel, operator of the undersea rail link between the U.K. and mainland Europe. The firm had sued over “secretive and flawed procurement exercise” for the award of ferry contracts.

© 2019 Bloomberg L.P