13/02/2019 17:45 GMT

Government 'Took Seaborne Freight's Word' It Had Financial Backing When It Awarded £13.8m Contract, Senior Civil Servant Admits

The government made a deal with a ferry company with no ferries.

The government handed a £13.8m shipping contract to a ferry firm with no ships based on the startup’s promise it would get financial backing, one of the UK’s most senior civil servants has suggested.

The government’s ill-fated no-deal Brexit contract with ferry company Seaborne Freight – which was revealed to have never run a ferry service – was axed over the weekend after Irish company Arklow Shipping withdrew its support.

The contract had been designed to ease pressure on Dover in the event of no-deal.

But permanent transport secretary Bernadette Kelly admitted to MPs on Wednesday that the government did not get formal written confirmation from Arklow Shipping that it planned to back Seaborne until January – the month after the government had already signed the shipping contract. 

Kelly told parliament’s public accounts committee that the transport department received  “evidence” through Seaborne of Arklow’s intention to back the startup company in December. 

“They [Arklow] had presented evidence to Seaborne… words to the effect of ‘yes we are, look forward to working with the company as a trading partner’, words to that effect,” she said. “I don’t know, I can’t tell you the precise details.”

But when pressed by Labour MP Meg Hillier, Kelly admitted that Transport Secretary Chris Grayling did not receive a “formal written letter” from Arklow about the company’s intentions until January 15. 

“Yes [it was] after,” the civil servant said. “But we had had intimations via Seaborne…”

Asked by Hillier to confirm that the government “took the word of Seaborne”, Kelly said she would need to check “what precise pieces of paper were in play at that point”.

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Transport Secretary Chris Grayling has faced calls to resign over the Seaborne Freight fiasco 

Kelly’s appearance comes the day after Grayling – despite calls from fellow Tory MPs to resign over the debacle – refused to apologise over the Seaborne contract, describing the company as a “startup business that didn’t succeed because its principle backer changed its mind”.

“That is to be regretted, it is a great shame,” he told the Commons. “But I am never as a minister going to make an apology for government trying to work with new small businesses.”

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

Kelly also used her appearance in front of MPs to insist that it was not strange for the government to strike a deal with a ferry company without its own ferries. 

“The fact that they were planning to lease ships rather than owning those ships was not in any way abnormal or remarkable for this industry,” she said.