Brexit Delay Could Cost Millions in Extra Payments to Ferry Firms
Any delay to the UK leaving the EU could cost the government tens of millions in extra payments to keep its no-deal ferry contracts in place.
The extra costs will be a fresh political blow to the transport secretary, Chris Grayling, after the collapse of one contract with an operator that had no ferries and a lawsuit by Eurotunnel that was settled out of court at a cost of £33m.
It seems unlikely the contracts will now be realised after MPs voted to instruct Theresa May to seek an extension to article 50, which would delay Brexit beyond 29 March. According to the Financial Times, the cost of the delay could reach £28m.
Brittany Ferries, which has contracts worth £46.6m under the deal, said the terms “included fair and proportionate compensation in a deal scenario, taking account of the significant preparatory work and concomitant costs incurred”.
It said the firm had already “incurred a series of direct costs and resource commitments”, including hiring new staff and changing more than 20,000 bookings, and “the new schedule cannot now be changed, even as an extension to article 50 seems likely”.
The contracts are intended to ensure imports of medicines and other vital supplies to the UK continue in the event of a no-deal Brexit causing chaos on the short Dover-Calais and Channel tunnel routes. A National Audit Office memorandum in February noted the potential problems caused by a delay to the article 50 process.
“If the date of the UK’s exit from the EU changes, and there is still the possibility of a no-deal EU exit, the department will need to decide how it wishes to proceed with the contracts,” the NAO said in February.
“There is no provision for the start date to be delayed, but the department may seek to negotiate this with the operators.”
A Department for Transport spokesman said: “As the prime minister has made clear, the legal default in UK and EU law remains that the UK will leave the EU without a deal unless something else is agreed.
“Leaving with a deal is still our priority, but as a responsible government it is only right that we push on with contingency measures, that will ensure critical goods such as medicines can continue to enter the UK.”