The DfT is running out of time to put in place additional ferry capacity ahead of the Brexit deadline of 31 October and is ill prepared for the possibility of a no-deal Brexit, the Public Accounts Committee has warned.

The warning comes in the committee's report Brexit and the UK Border: Out of Court Settlement with Eurotunnel, published today (10 July).

The report raises concerns about preparations to provide additional ferry capacity for freight. It points to DfT's first attempt at procuring additional ferry capacity ahead of the original Brexit deadline of 31 March, which it describes was a "rushed"and "flawed" process and questions whether DfT is in danger of repeating these mistakes.

The procurement resulted in a legal challenge from Eurotunnel, which forced DfT to pay the company £33m, as part of an out-of-court settlement. An additional £54.1m was paid out after the contracts with the ferry operators were cancelled, following the decision to extend the Brexit deadline to 31 October.

The PAC report warns that "there is a real risk that the short time left before 31 October will force DfT into further high-risk procurements, which it wants to avoid".

"Given the lead time needed to put ferry capacity in place, which the DfT says can take a minimum of three months, any new procurement process would need to begin very soon," it added.

It called on the DfT to "set out within weeks what it has learnt from the earlier procurement to ensure it does not expose the taxpayer to unnecessary

risk and excessive cost in the future and particularly in its preparations for 31 October”.

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The report is also dismissive of an agreement in DfT's settlement with Eurotunnel, which obliges the company to commit at least £33m on projects relating to infrastructure at the Channel Tunnel site. This includes security and border preparedness measures.

It states: "This appears little more than window dressing, as Eurotunnel has said that it would have committed at least £33m on these types of projects irrespective of the settlement."

DfT's preparedness for a no-deal Brexit is also a cause for concern, the report says. It notes that DfT is still still waiting for other departments to report back on the risk to the flow of goods across the channel in the event of no deal.

It states: "The DfT says that work is being done across government to determine what the risk is to the flow of goods across the short channel crossings if the UK leaves the EU with no deal in place on 31 October 2019 and what action is required by departments.

"This work needs to be completed quickly, as it will shape what freight capacity the DfT may need to procure and for what length of time, and the Cabinet Office tells us that a decision on ferry procurement needs to be made imminently.

"The Cabinet Office accepts that preparations for leaving the EU have been scaled back in Whitehall since March, and says that departments stand ready to ramp up their work again. It is confident that the civil service will be ready by 31 October. But we remain concerned that departments’ preparations are being left too late."

It calls on government to ensure all departments "urgently" step up their preparations.

Time running out

PAC chair Meg Hillier MP said this week: "In just four months’ time, on 31 October, the UK is expected to leave the EU yet momentum appears to have slowed in Whitehall. Departments must urgently step up their preparations and ensure that the country is ready.

Brexit stamp

“The taxpayer has been landed with a £85m bill with very little to show for it following the rushed procurement of ferry freight capacity. This £33m Eurotunnel settlement comes on top of the money paid to cancel the ill-fated ferries deal.

“Public benefits from the settlement with Eurotunnel amount to little more than window dressing. The DfT needs to keep a close eye and ensure that Eurotunnel deliver what is promised.”

Insurance policy

A DfT spokesman: "The freight capacity contracts were taken out as an insurance policy for the UK to ensure that key medical supplies could be guaranteed in the event of a no-deal Brexit.

“This step was in response to changed assumptions about potential delays in the Dover strait, and the agreements were entered into as soon as a cross-Government collective decision was taken that they were needed.

“Two weeks ago the department outlined a new framework proposal to provide a list of operators capable of delivering this vital freight capacity without the Government committing to any agreements at this stage, with market engagement already underway.”

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