EU Exit Preparations: Ferry Contracts

Wayne David Excerpts

Tuesday 5th March 2019 Commons Chamber

[The Secretary of State for Transport (Chris Grayling)]

As I have explained to the House on several occasions, the Government entered into contracts with ferry operators to provide additional ferry capacity and services into the UK as part of no-deal contingency planning. However, as we have heard clearly this afternoon, the reality is that the SNP does not believe in preparing for no deal. Even though the hon. Member for Kilmarnock and Loudoun (Alan Brown) accepts that it is a possibility, a risk and a danger, he does not support us in preparing for the risk of a no-deal exit—[Interruption.] The Labour Front-Bench team say, “Take it off the table,” but we can only take no deal off the table by reversing Brexit or agreeing a deal. The reality is that Labour and the SNP have spent week after week trying to prevent a deal, voting against the deal and trying to disrupt the process of getting towards a deal. Frankly, they are acting in anything but the national interest in doing so. We, however, have been acting in the national interest in preparing for all eventualities.

[Wayne David (Caerphilly) (Lab)]

If the Secretary of State really believes that no deal should be an option, why on earth did the Government not begin preparations sooner?

[Chris Grayling]

We have been preparing for a no-deal exit for months and months. There was a particular reason, as I will set out in a moment, for this particular procurement at this particular time, but my Department has been working for months to prepare for the risk of no deal. That can be seen in the new international aviation agreements, in Kent, where we have put in alternative resilience systems to the deeply disruptive Operation Stack, and in many other things.

--- Later in debate ---

[Wayne David (Caerphilly) (Lab)]

What a farcical situation. It gives me no pleasure to say that this Government have become a laughing stock to people not only in this country but throughout Europe and the world. In many ways, that is epitomised by one individual: the Secretary of State for Transport.

It came as no great surprise that Eurotunnel was aggrieved by the decision taken by the Secretary of State for Transport and his colleagues. I am no expert on procurement policy or tendering law, but it strikes me as common sense that there should have been a tendering process, especially as it was very obvious that the Government were making a decision late in the day in response to a predicament of their own making. If they were serious about considering a no-deal Brexit, they should have begun the preparations as soon as this House triggered article 50. They decided not to, and to delay it, so they found themselves in a predicament and decided not just to avoid the law but to consciously, perhaps, break it as well.

When the Secretary of State for Transport announced that the procurement process was not being followed, he announced to the House that three contracts were being issued—for three “compliant bids”, as he said. Towards the tail end of that ministerial statement, I asked a question that I thought was pretty innocuous, and I expected a certain reply. I asked:

“In the interests of transparency, will the Secretary of State indicate to the House which companies were considered for the contracts?”

At that point, I realised that the procurement process had not been followed, but I assumed that the Secretary of State had at least had a shortlist and decided from that which companies were best equipped to fulfil the requirements. The response was significant, because the question was totally ignored. The Secretary of State simply said:

“We received three compliant bids, all of which we judged acceptable and accepted.”—[Official Report, 8 January 2019; Vol. 652, c. 202.]

In other words, there was not just an avoidance of the procurement process or a dilution of it; there was a complete and utter conscious avoidance of it. Instead, we had cherry-picking—of the worst kind—of the three companies.

We have learned now that the Government have paid £33 million to Eurotunnel to avoid the case going to court, because it is pretty clear that the Government did not have a leg to stand on. The question that has already been asked is where that is coming from. Are there contingencies available that we do not know about? Will there be further public expenditure cuts? Where precisely will this £33 million of unplanned expenditure come from?

It is important to recognise that Eurotunnel had plenty of time to prepare if it had been given the opportunity to make a bid. There was clearly no urgency when the Government chose to take the action they did. It is also important to recognise that although the Government have said that they are coming to an agreement with Eurotunnel and will pay that £33 million, they have unusually stipulated what the money will be used for, as has been mentioned. We understand that the money is for the development of infrastructure, security and border measures that will guarantee the flow of vehicles carrying urgent and vital goods to help keep supply chains moving that are essential to both industry and consumers. It is interesting that the Government have stipulated that, and it begs the question that has already been raised by the shadow Secretary of State: what is the legal basis for taking such action and making such a stipulation?

Andrew Dean, an expert in procurement law who works at the law firm Clifford Chance, used to advise the DFT and is widely recognised as an expert in his field, said:

“If Eurotunnel were required to develop or redevelop infrastructure that delivers or supports a public function as part of this settlement, there is a risk it could be construed as another piece of public procurement without open and transparent competition… In which case the government would be back to square one, with other potential providers able to challenge the process.”

My question to the Minister is this: has the Department considered that possibility? What advice is he currently receiving from his departmental legal team on where the Government now stand? There is a distinct possibility that they are going from the frying pan into the fire. They have apparently solved one problem of their own making, but they have another problem, also of their own making, that they will possibly have to confront in the very near future. That is an important issue.

All of us are extremely concerned about the situation in which we find ourselves. At one point I thought the Government were surely not serious about considering the possibility of a no-deal Brexit. I suspect that initially they were not serious about pursuing it, but as time has gone on and the negotiations have been more and more unfruitful they have found themselves inevitably in the situation of having to make quite extreme, ill-thought- out contingency plans. I hope very much indeed that the Government do not have to introduce those plans. The message has gone out from right across this House, as well as from industry, the trade union movement and civil society generally: for goodness’ sake, even at this late stage, end this farce once and for all, and take no deal off the table.