Chris Grayling has terminated a contract with Seaborne Freight to provide ferries in the event of a no deal Brexit.
The controversial ferry contract to lay on Channel crossings to relieve pressure on Dover had been awarded to a firm with no ships sparking widespread criticism.
The Department for Transport (DfT) confirmed the contract had been terminated on Saturday morning after Irish company Arklow Shipping, which had backed Seaborne Freight, stepped away from the deal.
The transport secretary’s decision to award Seaborne Freight a contract worth £13.8 million had been called a “farce” when first announced because the company didn’t have any ferries.
Seaborne aimed to operate freight ferries from Ramsgate in Kent to the Belgian port of Ostend, beginning with two ships in late March and increasing to four by the end of the summer.
On BBC Radio 4’s Today on Saturday, Andrew Gwynne, shadow communities secretary, said: “It’s just another example of a major disaster on the hands of Chris Grayling, who actually must now really class as the worst Secretary of State ever.”
A Whitehall source confirmed to HuffPost UK that no money had been paid to Seaborne.
The source said that the government has “options contracts” with other operators who are already providing 90% of capacity for further capacity and they are also discussing further options with other providers.
The source said they had had confidence in Seaborne because Arklow, who are Ireland’s biggest shipping firm, were behind them from the start.
Only a fortnight ago, Arklow had written to say everything was “still good” with Seaborne, who they had been working with for a year, the source said. Ships were in place and contracts with Ramsgate and Ostend were ready to be signed but then Arklow dropped out.
The Whitehall source said the government is now considering its options and “will pursue what’s in [the] taxpayer’s best interest”.
A DfT spokeswoman said: “Following the decision of Seaborne Freight’s backer, Arklow Shipping, to step back from the deal, it became clear Seaborne would not reach its contractual requirements with the Government. We have therefore decided to terminate our agreement.
“The government is already in advanced talks with a number of companies to secure additional freight capacity – including through the port of Ramsgate – in the event of a no-deal Brexit.”
The Labour party called for Grayling to be sacked for “heaping humiliation” on the country.
Andy McDonald MP, Labour’s Shadow Transport Secretary said: “As we predicted, the Seaborne Freight contract has been cancelled. This cannot go without consequence. The Chris Grayling catalogue of calamities grows bigger by the day.
This contract was never going to work but this Secretary of State, true to form, blunders from one disaster to another.
Whilst Theresa May needs the few friends she has right now, we cannot have this incompetent Transport Secretary carry on heaping humiliation after humiliation on our country. He has to go.”
Brexit-backing Tory MP Jacob Rees-Mogg questioned whether Leo Varadkar’s Irish Government had any influence on Arklow’s decision.
He told the Daily Telegraph: “One has to hope that the Irish Government has not leant on or put any pressure on Arklow to persuade it to pull out.
“That would be a very unfriendly act of a neighbour to obstruct no-deal preparations and one has to hope very sincerely that this is genuinely a corporate decision.”
Grayling last month defended the Seaborne Freight contract, insisting it was “not a risk”.
He had said: “The reality is that this has been looked at very carefully by a team of civil servants who have done due diligence on the company and have reached a view they can deliver. I make no apologies for supporting a new British business.”
It 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 department 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 Freight.
It added no taxpayer money had been transferred to the company.