POLITICS
11/02/2019 17:20 GMT | Updated 12/02/2019 07:31 GMT

Chris Grayling 'Baffled' At Criticism Of Seaborne Freight Fiasco

Transport secretary refuses to apologise and declares: "I did see ships".

Chris Grayling has refused to apologise for the Seaborne Freight no-deal Brexit ferry debacle and described criticism of him as “baffling” and “inexplicable”.

The transport secretary also reversed Horatio Nelson’s famous quote, declaring “I did see ships” after being mocked for handing a £14m contract to Seaborne, a company which owned no ferries, to move supplies across the Channel.

Grayling had hoped that Seaborne would ferry crucial supplies between Ramsgate in Kent to Ostend in Belgium in the event of a no-deal Brexit but cancelled the contract last week.

It followed weeks of scathing criticism as Seaborne had no experience of running ferries, no staff, and had appeared to copy a section of its website from a takeaway delivery outlet.

On Monday, it was revealed the government would face a legal challenge over the fiasco.

Eurotunnel, which operates the Channel Tunnel, said ferry contracts totalling £108 million were awarded to Seaborne and two other firms through a “secretive and flawed procurement process”.

At the High Court, the firm’s lawyer said there had been “no public notice” of the tender. A judge ruled a four-day trial will begin on 1 March.

Meanwhile, Grayling has faced calls to resign, including from his own Conservative colleagues.

But in the Commons on Monday he refused to apologise for the collapse of the contract, which was designed to ease pressure on Dover in the event of no deal.

During an urgent question in the Commons, senior Labour MP Angela Eagle asked if Grayling was “remotely embarrassed” about the failure and called on him to apologise.

The transport secretary replied: “This is a start-up business that didn’t succeed because its principle backer changed its mind.

“That is to be regretted, it is a great shame.

“But I am never as a minister going to make an apology for government trying to work with new small businesses.”

The Guardian
Grayling has faced widespread criticism for his handling of the Seaborne Freight contract

Labour’s Wayne David also called for an apology, saying Grayling told the Commons last month the Seaborne contract was a sensible contingency.

“Given what we now know, and with the benefit of hindsight, will the secretary of state now have the humility to come to this House, come to the despatch box and say sorry?”

Grayling replied: “It was a sensible contingency, it means that if we require that capacity now we will have to use longer routes in the North Sea.”

The Department for Transport (DfT) said it had decided to terminate the contract after Irish company Arklow Shipping stepped away from the deal, and stressed that Seaborne would receive no taxpayers’ money.

In another answer, Grayling told MPs: “I find it baffling that they (Labour) should be opposed to giving a chance to small business when the taxpayer was exposed to no financial risk at all, particularly when that small business had a major international backer.

“It is inexplicable.”

At one point Leave-backing Grayling was mocked by SNP MP Drew Hendry, who joked:

“Throughout this ridiculous Brexit shambles Brexiteers have liked to lean on historical events to justify the metaphors for some of their Brexit fantasies.

“Was this calamity actually engineers by the secretary of state so they could paint themselves as some sort of latter day Horatio Nelson? ‘I see no ships’.

“Well we see no confidence, will he resign?”

Grayling replied: “Actually I did see ships, they were lined up ready to go on this route, it’s a shame they pulled out.”

The DfT said it had been Arklow Shipping’s backing that gave it confidence in the viability of the deal, and that it stands by the robust due diligence carried out on Seaborne.

Grayling in the Commons quoted at length a letter from Arklow Shipping which gave assurances over Seaborne.

But shadow transport secretary Andy McDonald said: “What began as a debacle has now descended into a Whitehall farce. This minister is rewriting the textbook for ministerial incompetence in office.”

He said Grayling chose to ignore warnings from MPs and industry, also claiming the DfT “took shortcuts” in the procurement process with Seaborne.

McDonald went on: ”(Grayling) points the finger at Arklow for the contract cancellation - is it really a good time to further insult the Irish?”

McDonald asked how much cancelling the contract will cost taxpayers, adding: “He simply cannot keep blaming others for his own mistakes. This disastrous decision sits squarely with him and his office.

“Isn’t it the case that this transport secretary’s approach to transport and wider Brexit contingency planning is off the Richter scale?

“And for the good of the nation, and for the sake of some semblance being restored to this shambolic government, shouldn’t he now do the decent thing and go?”

Seaborne was one of three firms awarded contracts totalling £108 million in late December to lay on additional crossings to ease the pressure on Dover when Britain leaves the EU, despite having never run a Channel service.

The DfT is now in discussions with Brittany and DFDS about laying on extra capacity on North Sea crossings.

Meanwhile, a National Audit Office report has revealed that the DfT identified Seaborne as “high risk” before handing it a contract.

The issues included the fact that it was a new company, that it did not have any ships and that the port of Ramsgate would need work to get it ready to receive ferries.

To this end, the DfT agreed to pay £3m to Thanet District Council for work at the port and also put clauses into the contract to safeguard taxpayers’ cash.

However, the due diligence did not uncover allegations of impropriety about the company and the directors that were reported in the press in January.

The terms and conditions on the company’s website which appeared to be copied from a takeaway firm also “did not reflect the terms and conditions agreed with the department” and were posted online in error.

The due diligence also only consisted of basic checks.

Deloitte was unable to probe Seaborne’s financial stability because the firm only became incorporated in April 2017.

Mott McDonald, a consultant, however flagged “significant execution risks” in relation to Seaborne.

Law firm Slaughter and May, which vetted the ferry company, meanwhile only carried out a “basic blush test” on Seaborne, including its filing history with Companies House, that no winding-up orders had been made against it and that its directors were not disqualified.

Meg Hillier, chair of the Commons public accounts committee, said the report raised “serious issues”.

The committee will quiz the DfT’s top official Bernadette Kelly on the process on Wednesday.

Hiller said: “The Department for Transport waited until September 2018 to start thinking about the risks to freight transport across these important routes and entered into a £13.8m contract with Seaborne Freight despite it being a new operation, owning no ferries, and not having binding contracts to use the specified ports.

“We will be pressing the Department for answers on how it awarded its three new ferry contracts, what it is doing to manage risks and exactly what it intends to do now it has axed the contract with Seaborne.”