DfT's 'rushed and risky' no-deal freight procurement cost the government £85m

Written by Beckie Smith on 10 July 2019 in News
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Benefits agreed in £33m Eurotunnel settlement “little more than window dressing”, MPs say

Photo: PA

Government departments have been told to urgently step up their preparations to transport imported medicines in a no-deal Brexit scenario, to avoid a repeat of a rushed procurement exercise that MPs have said cost the taxpayer £85m.

Last month the Department for Health and Social Care announced it would procure express freight services to transport medicines and other time-critical goods across the English Channel in the event of a no-deal Brexit.

But in a report today, the Public Accounts Committee said it wanted to be reassured that the Department for Transport had learned lessons from its procurement of similar services in preparation for the original Brexit deadline of 29 March.


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The government was left out of pocket after it paid £51.4m to cut short ferry services DfT that began running on 1 April as the contracts DfT had negotiated did not include provision for an extension of the Article 50 exit process. It then paid a further £33m to Eurotunnel in an out-of-court settlement after the rail operator said the original contracts had been awarded in an anticompetitive manner. Figures obtained by CSW through Freedom of Information legislation showed the department spent almost £1m further in legal costs in the Eurotunnel dispute.

It later emerged the department had been warned before signing the contracts that it could face legal action over its decision not to hold an open tender process.

Eurotunnel has agreed to make infrastructure upgrades as part of the settlement that the government has said will help the UK nope with a no-deal Brexit.

But in its highly critical report, PAC said it was “not convinced the department has secured any additional benefit from its £33 million settlement with Eurotunnel”.

The agreed benefits appear to be “little more than window dressing”, it said, as Eurotunnel has said it would have spent at least £33m on upgrading its infrastructure irrespective of the settlement.

The committee urged DfT to set out the lessons it had learned from its original ferry services procurement exercise “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”.

DfT has said putting the extra freight capacity needed for a no-deal scenario in place could take up to three months, which means procurement processes must begin “very soon”, PAC said today.

And the MPs warned there was a “real risk that the short time left before 31 October will force the department into further high-risk procurements”.

While DHSC will handle medicines freight preparations, DfT has said it will put a framework in place for other departments to procure freight services in the event the UK leaves the EU without a deal on 31 October.

Committee chair Meg Hillier said departments “must urgently step up their preparations and ensure that the country is ready” for a potential no-deal Brexit.

 “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,” she said.

“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.” 

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