Thursday, July 11, 2019

More Brexit Controversy as Road Haulage Representatives Criticise Minister

Meanwhile Commons Select Committee Tells Chris Grayling to 'Learn'
Shipping News Feature
UK – Just as the British International Freight Association (BIFA) criticises it, so another government faux pas gets the same treatment, this time from the road haulage sector, after the Commons Public Accounts Committee concluded that the Department of Transport’s (DfT) rushed procurement of ferry freight capacity has cost the taxpayers dearly.

Again Public Accounts Committee chair Meg Hillier has spoken out, this time urging theDfT, led by Chris Grayling, a figure who has batted away several calls to resign having courted controversy at every stage of his political career, to learn from this incident and use its time well should it be required to re-procure ferry capacity ahead of the new October Brexit deadline.

In December 2018 the DfT awarded three ferry companies contracts lasting six months and worth a total of £107 million, to provide extra RoRo freight capacity in the event that the UK left the EU without a deal on March 29. Danish company DFDS was awarded a contract worth £47.3 million, France's Brittany Ferries’ is worth £46.6 million, and British firm Seaborne Freight was awarded £13.8 million despite not owning any ships, and proposing a service that was in no way considered as feasible by shipping professionals. The contract for Seaborne was terminated on February 9 after the company’s Irish backer.

To ensure that services would be in place in time, it has been adjudged that the Department took an unusual and risky approach to procurement. This procurement was subject to legal challenge by Eurotunnel, which had not been invited to bid. Rather than risk losing a legal case, which may have resulted in the court cancelling the ferry contracts ahead of March 29, the Department reached a £33 million out-of-court settlement with Eurotunnel. As part of the settlement Eurotunnel agreed to spend £33 million on certain types of project relating to the Channel Tunnel site’s infrastructure, including security and border preparedness measures.

On April 24 P&O Ferries began a legal challenge against this settlement on the grounds of, amongst other things, breach of procurement law.

The date for the UK to leave the EU has been extended to October 31, 2019. On May 1, the DfT announced that it had cancelled its ferry contracts with DFDS and Britanny Ferries. Departments now need to prepare for the new EU Exit date.

With the out-of-court settlement costing £33 million, coupled with the £51.4 million cost of cancelling the contracts with the ferry operators, the total cost of this procurement to the taxpayer stands at around £85 million. As a result, the Committee has called on the DfT to learn from this episode as well as raising its concerns that the DfT and other governmental departments appear to be waiting for clear instructions on what they should now plan for in relation to Brexit, acknowledging that without political certainty it is challenging but the government needs to inject direction into departments’ preparations for leaving the EU with a deal, without a deal or any delay as a matter of urgency. Meg Hillier commented:

“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.

“The taxpayer has been landed with a £85 million bill with very little to show for it following the rushed procurement of ferry freight capacity. This £33 million 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 Department needs to keep a close eye and ensure that Eurotunnel deliver what is promised.”

The Road Haulage Association (RHA) has also criticised the government's response to Brexit planning with Chief Executive Richard Burnett appearing on BBC Panorama highlighting the haulage industry’s frustration with the slow pace of government Brexit preparations.

The RHA says that it has been working to help guide the government on how best to minimise the impact Brexit on the UK supply chain, and the UK economy. However, a lack of clarity and information which has been passed on to hauliers by the government is causing frustrations for the Association, as well as the industry, who are finding it incredibly challenging to prepare for Brexit.

With so little time left until the UK leaves the EU, haulage firms are still unclear as to what exactly will happen once the UK has left, and what they need to do in order to ensure they are ready.

Additionally, the RHA says that communications with the Department for Transport have been strained, after the Association went public with its concerns around the government's Brexit planning, which reportedly resulted in a voicemail message last August from Transport Secretary Chris Grayling, which the Association had interpreted as to stop speaking out on the issue. The message was aired in the documentary, with Grayling having said:

“I had intended to involve you very closely in the planning over the next few months but issuing a press release straight after a meeting like that makes it more difficult for me to do that.”

Critics will doubtless say that only one person has made matters ‘difficult’ for Mr Grayling.

Photo: Richard Burnett puts the hauliers case on Panorama.