U.S. Markets open in 7 hrs 36 mins

P&O suing government over bungled handling of no deal Brexit ferries

Oscar Williams-Grut
Senior City Correspondent, Yahoo Finance UK
The white cliffs of Dover sit beyond the Pride of Burgundy, a cross-Channel passenger and freight ferry operated by P&O Ferries. Photo: Chris Ratcliffe/Bloomberg via Getty Images

P&O Ferries is suing the government over its handling of no-deal Brexit ferry contracts.

P&O confirmed in a statement to Yahoo Finance UK that it is taking legal action related to a £33m payment made to rival Eurotunnel, which it claims puts it at “a competitive disadvantage.”

The case relates to the bungled awarding of no-deal Brexit ferry contracts by the Department for Transport, which embarrassed the government internationally.

Last year transport minister Chris Grayling awarded a series of contracts to run emergency ferry services to and from the UK in the event of a no-deal Brexit. The awards included a £13.8m contract to a small company with no ferries that had copied its website terms of services from a takeaway website.

Eurotunnel sued the Department of Transport in February over what it said was a “secretive and flawed procurement process.” The government eventually settled the case with a £33m payment to Eurotunnel.

However, P&O claim in their case that this settlement is unfair.

“We have repeatedly made clear during decades of providing vital transport services between Britain and the Continent that we are happy to compete with other providers on a level playing field. We also fully accept that it was prudent of the Government to make contingency plans to protect international supply chains in the event of a hard Brexit,” a spokesperson for P&O said.

"However, we do not believe that the payment of £33m of public money to Eurotunnel to settle its legal challenge to these plans is fair or reasonable. It is explicitly designed to be invested in the tunnel's infrastructure and if left unchallenged would put our services at a competitive disadvantage."

The legal case threatens to increase the cost of an already expensive episode for the government. As well as the £33m payout to Eurotunnel, the Financial Times reported that delaying Brexit beyond 29 March could cost the government an additional £28m due to the wording of the contracts.

The fall-out from the contracts has also caused embarrassment for the government internationally, with the New York Times using it as a key example in a profile of the transport minister titled: “How Does He Survive? The Curious Case of ‘Failing Grayling.’”