The UK's Department for Transport (DfT) has cancelled no-deal Brexit ferry contracts at an estimated cost of £50m to the UK taxpayer.
The move comes in the wake of an extension to the country's deadline to exit from the European Union.
"The Government’s freight capacity contracts for the summer period are no longer needed and have therefore been terminated,” DfT said in a statement to TradeWinds.
The National Audit Office (NAO) previously estimated the costs of cancelling the contracts would be £56.6m, but a DfT source told Sky News the cost will be "about 10% less" than this estimate.
“The termination of these contracts has resulted in less cost to the taxpayer than the termination costs reported by the NAO in their own analysis of the freight capacity contracts,” DfT said in its statement.
DfT said it had negotiated a lower settlement “by several million pounds” and described the decision as “the best value for money for taxpayers”.
Companies confirm
Ferry companies Brittany Ferries and DFDS both confirmed to TradeWinds that their respective contracts with DfT have been cancelled.
“The terms we had negotiated back with DfT in December now apply,” a spokesperson for Brittany Ferries told TradeWinds on Wednesday.
The contract included a provision for DfT to exit the deal in the event that a No-Deal Brexit did not occur or that Brexit was delayed,he said.
DFDS confirmed that its contract with DfT has been cancelled but declined to comment further.
DfT signed the agreements with Brittany Ferries, DFDS and Seaborne Freight late last year in an effort to alleviate the anticipated queues at the Port of Dover in the event of a no-deal Brexit.
The contracts had a combined value of around £108m ($140m).
The deal with Seaborne Freight was cancelled in February after Arklow Shipping, the Irish shipping firm that had been secretly backing the contract, pulled out.
Future deals
Despite the cancellation, Brittany Ferries said it would not rule out the possibility of any future contracts with the government.
“We have capacity in our fleet and we’d be more than happy to speak to DfT again,” the Brittany Ferries spokesperson said.
UK Chamber of Shipping, however, views such a government deal as unnecessary.
"The Government signed these contracts to achieve and guarantee slots and capacity for strategically important goods like medicines," Matthew Wright, policy manager, ferry and cruise at the UK Chamber of Shipping, told TradeWinds on Wednesday.
"But we’re still in the EU and the market continues to serve these goods — there’s no congestion and no limits on capacity.
“If we approach October with the likelihood of a No-Deal scenario, I would expect the government would look to guarantee capacity on sailings.
"But the UK Chamber’s position is that such a requirement shouldn’t need to be guaranteed — the market will respond accordingly.”
