Seaborne Freight

Lord Grayling Excerpts

Tuesday 8th January 2019 Commons Chamber

[Andy McDonald (Middlesbrough) (Lab)]

(Urgent Question): To ask the Secretary of State for Transport if he will make a statement on the awarding of a contract to Seaborne Freight as part of his no-deal contingency planning.

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

The Government are working towards ensuring that we leave the European Union in March with a sensible agreement for the future, through the withdrawal agreement that the House will consider next week, but any responsible Government need to plan for all eventualities. As part of that work, the Department for Transport has been undertaking a wide range of activities to mitigate the impact on the transport system of a potential no-deal EU exit, particularly around the movement of freight. For example, my Department has been delivering measures such as the Haulage Permits and Trailer Registration Act 2018, which puts systems in place if a permit system is required to ensure that UK heavy goods vehicles can continue to be used in the EU.

We have also put in place Operation Brock as a replacement for Operation Stack, in order to deal with disruption at the channel ports. This is not simply a Brexit-related measure. We do not want to see any repeat of the issues that Kent faced in 2015, with the closure of the M20. If there is any disruption at the ports, for whatever reason, Operation Brock should keep the motorway open while we prepare the long-term solution of a lorry park. Yesterday, Kent County Council and my Department carried out a live trial of one part of Brock, on the route from Manston. We were satisfied with the number of vehicles that took part, which was more than enough to determine a safe optimum release rate from Manston to the port of Dover via the A256 and caused minimal traffic disruption along the route.

This is a range of examples of the sensible contingency planning that a responsible Government are carrying out to ensure that we are prepared for a range of outcomes. We remain committed to ensuring that movement across the UK border is as frictionless as possible, whatever the outcome. However, without planning, there could be significant disruption to the Dover strait, particularly if no agreement is reached. Given the importance of these routes to the UK economy, it is vital that we put in place contingency plans to mitigate any disruption that might occur in a no-deal scenario.

The Department is working with the port of Dover and the channel tunnel—as well as with our French counterparts, at both official and ministerial level—to ensure that both operate at the maximum possible capacity in all instances. Those discussions are positive and I am confident that everyone is working constructively to ensure that the Dover-Calais route—particularly at the port of Dover—and the tunnel continue to operate fluidly in all scenarios. However, in order to ease any pressure on those routes, my Department has completed a proper procurement process to secure additional ferry capacity between the UK and the EU. Following this process, three contracts were awarded to operators, totalling a potential of £103 million. Almost 90% of that was awarded to two well-established operators: £46 million to Brittany Ferries and about £42 million to DFDS. These contracts provide additional capacity on established routes, and through additional sailings and, in some cases, additional vessels, into ports in northern Europe and other parts of France.

A third, smaller contract, which is potentially worth £13.8 million, was awarded to Seaborne Freight, a new British operator, to provide a new service between the port of Ramsgate and Ostend. Let me stress that no money will be paid to any of these operators unless and until they are actually operating ferries on the routes we have contracted. No money will be paid until they are operating the ferries. No payment will be made unless the ships are sailing, and of course, in a no-deal scenario, money will be recouped through the sale of tickets on those ships.

As I believe the House knows, Seaborne is a new operator looking to reopen that route, which closed five years ago. As a result of this, we ensured that its business and operational plans were assessed for the Department by external advisers, including Slaughter and May, Deloitte and Mott MacDonald. These included Seaborne’s plans to charter vessels for service, as is common across many transport modes including airlines and rail operators. We also conducted searches on the directors of Seaborne via a third party, and found nothing that would prevent them from contracting with the Government.

I make no apology for being willing to contract with a new British company, particularly one that has a large number of reputable institutional backers. We contracted with Seaborne Freight because the service it proposes represents a sensible contingency in the event of disruption on other routes. I am also pleased that this award supports the port of Ramsgate, which operated as a commercial ferry port as recently as 2013 and has taken roll-on roll-off services as recently as last year. I am looking forward to seeing ferry services resume from this port. The infrastructure work required to make that possible has already started, and it is one of the most visible and symbolic elements of how seriously my Department is taking contingency planning for all Brexit eventualities.

[Andy McDonald]

The Transport Secretary has awarded a £14 million contract to a company with no money, no ships, no track record, no employees, no ports, one telephone line, and no working website or sailing schedule. Two of Seaborne Freight’s directors would not pass normal due diligence requirements. One of them, Ben Sharp, is already under investigation by a Government Department. Did the Department for Transport consult other Departments about Mr Sharp’s fitness as a company director? Ben Sharp quit his business activities in the Gulf leaving a trail of debt behind him. His company, Mercator, was merely a shell finding vessels for security companies. Is it correct that he operated without the licence he needed pursuant to the Export Control Order 2008? Did he operate without that licence? Yes or no?

It is abundantly clear from the promissory note published by “Channel 4 News” that Sharp owed and still owes Mid-Gulf Offshore more than $l million, and many more companies besides. How is it that Slaughter and May, Deloitte and Mott MacDonald were instructed to restrict their due diligence examination to the face value of the presentation put to them by Seaborne? Why on earth have they been allowed to restrict their investigation to the present company and not to consider the trading history of the individuals concerned, particularly Ben Sharp? The mayor of Ostend has made it clear that Seaborne cannot berth at his port as it has no bank guarantees and no contract with Ostend. It is without capital. Who is investing in Seaborne? Who is paying for the dredging of Ramsgate?

This is a shoddy and tawdry affair, and the Secretary of State is making a complete mess of it. This contract is likely to be unlawful and it violates every current best practice guidance issued by Whitehall. When will he realise that this country cannot continue to suffer the consequences of his gross incompetence? Why is this calamitous Secretary of State still in post?

[Chris Grayling]

I am not even going to address the idiocy that the hon. Gentleman has just come up with. He has made a number of allegations, which I suggest he goes and makes elsewhere. I am simply going to say this: the Government have let a contract for which we will pay no money until and unless ferries are running. That is responsible stewardship of public money. On other matters, from the due diligence we have done, there is no reason to believe that anyone involved in this business is not fit to do business with the Government. I say this again: we are not spending money unless these ferries operate.

[Mr Owen Paterson (North Shropshire) (Con)]

Many of us would agree that much the best end solution for the talks between the Government and the EU would be a wide-ranging free trade agreement, as offered by President Tusk in March, with zero tariffs. However, to bring the EU to the table, to counter the arrogant boasting of Mr Selmayr in the Passauer Neue Presse, which many of us have been reading since we heard about it yesterday, and to show that we are deadly serious, it is obvious that we must prepare for World Trade Organisation terms. I therefore commend the Secretary of State for his various actions to show that we are serious about preparing this country to work under those terms, through which we work with the rest of the world.

[Chris Grayling]

I am grateful to my right hon. Friend. It is absolutely right and proper that we prepare for all eventualities. The sad thing is to see the Labour party trying to destroy Brexit and taking a destructive approach to any sensible measures that this Government take to prepare for all Brexit eventualities. Frankly, Labour is not fit to be in opposition let alone in government.

[Alan Brown (Kilmarnock and Loudoun) (SNP)]

Seaborne Freight has no boats, negative equity of £374,000 and no history of running ferry or freight services. The current director, Brian Raincock, and chief executive Ben Sharp both had companies liquidated owing Her Majesty’s Revenue and Customs money, with Raincock’s debt at £600,000. HMRC is us, the taxpayer, so what constitutes due diligence? What red flags were identified? How did that company get handpicked for direct negotiations for operating out of a port that is not even ready?

The Secretary of State’s written statement indicated that direct negotiation was possible under regulation 32 of the Public Contracts Regulations 2015, which relates to emergency situations brought about by unforeseeable events. However, the Government claim to have been planning for no deal for over two years. What legal advice was provided? What level of madness exists to contract contingency planning to a company with no track record of such service?

Saying that the company will get paid only if it can deliver misses the point, because if it does not deliver the so-called emergency contingency service, that would leave us high and dry. Is that the project for which the ministerial direction was required? Is there a central Government instruction and process for the awarding of such no-deal Brexit contracts? If so, can we see it? Does this contract comply with that guidance? If so, that highlights the shambles of this Government’s no-deal preparations. When will the Secretary of State do the right thing and go?

[Chris Grayling]

This procurement was done properly and in a way that conforms with Government rules. It secures the position of the taxpayer by ensuring that no money will change hands unless and until the ferries are running. The hon. Gentleman does not seem to listen.

[Sir Bernard Jenkin (Harwich and North Essex) (Con)]

I join my right hon. Friend the Member for North Shropshire (Mr Paterson) in supporting my right hon. Friend the Secretary of State’s determination to be prepared for all eventualities. He has succeeded on aviation services, the transit convention and other things that will ensure that trade keeps flowing. However, what lessons can be learned from this situation? No matter how good this company might be, this is a difficult contracting environment in which things must be done quickly under intense political and public scrutiny. Will my right hon. Friend ask the permanent secretary to conduct a quick lessons-learned exercise so that companies with which the Government are contracting are better prepared than this one for the scale of public scrutiny to which it has been subjected?

[Chris Grayling]

My hon. Friend makes a valid point about public scrutiny. This contract was properly signed off by my Department’s accounting officer, and it was done in the best possible way when dealing with a new business, which is to ensure that the business will be paid only when it delivers the service. That is a responsible use of taxpayers’ money.

[Lilian Greenwood (Nottingham South) (Lab)]

I have already written to the Secretary of State with a long list of questions about his Department’s procurement of additional ferry services as part of no-deal planning, and I look forward to receiving his response. Yesterday, however, Lloyd’s Loading List reported some extraordinary remarks from the CEO of Seaborne Freight, Jean-Michel Copyans, about the proposed Ramsgate to Ostend route. He said:

“Then we’ve had to identify the vessels best suited to the type of crossing, which we’re keeping a secret for the moment.”

With no crew, no signed contracts in place with Ramsgate or Ostend, no clear plans to bring the infrastructure back into service and now “secret” ships, is there not a huge question mark over the deliverability of the service?

[Chris Grayling]

My officials and I have confidence in the deliverability of the service, but if the firm fails to deliver it, we do not pay.

[Charlie Elphicke (Dover) (Con)]

Does my right hon. Friend agree that no-deal contingency planning is very much in the national interest? Will he join me in condemning those who want to try to prevent no-deal planning through parliamentary wrecking tactics and sabotage, and through Trump-style Government shutdown threats? Does he agree that such tactics from the Labour party would make problems in Kent and elsewhere more likely, and that they are irresponsible, reckless and wrong?

[Chris Grayling]

I completely agree with my hon. Friend. He will agree that it is right and proper that we do everything we can to keep trade flowing through the port of Dover and the channel tunnel as smoothly as possible. We are taking prudent measures to ease potential pressures on those ports, which is the sensible thing to do. The risk to the taxpayer is not there, because we will not pay unless the service is delivered. The Labour party does not seem to believe in no-deal Brexit planning.

[Hilary Benn (Leeds Central) (Lab)]

The Secretary of State takes a rather unusual approach to contract letting, because as soon as he is questioned about the ability of the firm with which he has contracted to deliver on what it has promised, he tells the House, “If they don’t do it, we won’t pay.” He said a moment ago that he is confident that the company will be able to run the service, so will he answer a very simple question? Has Seaborne Freight told the Department which vessel it has acquired in order to provide the service, which could be needed in just over two months’ time?

[Chris Grayling]

The company has told my Department in great detail about its plans, which are being finalised commercially. We are confident that the firm will deliver the service.

[Sir Nicholas Soames (Mid Sussex) (Con)]

My right hon. Friend will be aware that Seaborne Freight has had it in mind for well over two years to start the Ostend-Ramsgate route. Does he agree that the constant denigration of the contract, which means that the contractor will not get a single penny of anyone’s money until it fulfils the contract, is damaging to sensible work? Finally, if we were—God forbid—to crash out on WTO terms in the extreme circumstances mentioned by my right hon. Friend the Member for North Shropshire (Mr Paterson), will the Secretary of State tell the House whether he would have any arrangements to take up shipping from trade?

[Chris Grayling]

My right hon. Friend makes a good point. There seems to be visceral hatred of small business on the other side of the House and a visceral belief that the Government should not be willing to contract with small business. The Government are told time and again that we should contract and work with small business, and help small businesses to develop, but when we do so, we get nothing but a wall of criticism from Opposition Members. The Labour party hates business. This new Labour party is very different from the one of 10 years ago—it simply hates business.

I say to my right hon. Friend that if we find ourselves in a no-deal situation, there are other measures that we can bring forward. We are actively looking at how we would do so.

[Diana Johnson (Kingston upon Hull North) (Lab)]

I have never seen a Minister bluster and bluff quite as much as this Minister has today. Following everything that the Secretary of State has heard from the shadow Secretary of State and the Chair of the Transport Committee, does he not have one iota of concern about the contract being let to this shyster?

[Chris Grayling]

Mr Speaker, that is an inappropriate thing for any Member to say, and I am not going to respond to it.

[Mr Speaker]

I simply say that the Secretary of State is perfectly entitled to his assessment of whether it is appropriate in political terms. No breach of order has taken place procedurally, but the Secretary of State has made his judgment, and I accept that.

[Dr Sarah Wollaston (Totnes) (Con)]

I am glad to hear the Secretary of State confirm that no money will change hands, but there will undoubtedly be vast manpower and bureaucracy costs in no-deal planning, and we know that there are actual costs when it comes to commissioning refrigerated warehousing and special air freight. All that could be avoided if the Government ruled out no deal. No deal would be catastrophic, and no sensible Government should inflict that on their people.

[Chris Grayling]

Of course, the best way of avoiding no deal is to ensure that the deal passes through this House, and I will vote for it next week.

[Angus Brendan MacNeil (Na h-Eileanan an Iar) (SNP)]

It feels like we are on the set of a film called “Carry On Brexit”. Le Figaro described the contract as ferries “sans bateaux”. The firm’s terms and conditions are from a pizza delivery company, so we wonder whether the MV Hawaiian and the MV Pepperoni will be sailing the route. To get away from “Carry On Brexit”, the serious point is that the Secretary of State is saying that if the company does not deliver ferries, there will be no payment, but if it does not deliver the ferries, what will be the fall-back, stopgap or contingency? If there are no ferries, the whole thing falls apart—it is “Carry On Brexit”!

[Chris Grayling]

What a load of absolute tripe. I can tell the hon. Gentleman has not been listening to me. Ninety per cent. of this contract has been awarded to substantial and established ferry operators—DFDS and Brittany Ferries. We did not have a reason to exclude a small business from taking a small part of the contract with a legitimate, valid bid.

[Craig Mackinlay (South Thanet) (Con)]

It is remarkable, is it not? If the Government were to do no planning for all Brexit eventualities, they would be condemned. Now they are doing sensible planning, they face derision. I have met Seaborne Freight, which has shown itself, over a number of years, to be the only party interested in running new services between Ramsgate and Ostend—that was even before this contingency planning. Personally, I welcome the dredging and improvements now taking shape at the port of Ramsgate at no cost to local taxpayers. We will have a regeneration bonus, no matter what, and I welcome that.

Thanet District Council and the people of Ramsgate will do all they possibly can for Brexit provision, so I welcome the measures the Secretary of State has taken, but there are people in this House who do not seem to be listening. Will he say once more that there will be no cash for Seaborne Freight if it does not run the services?

[Chris Grayling]

I am very happy to reiterate that. It is a responsible approach to a new contract with a new business that we will pay when the business delivers. It is disappointing to hear that the Labour party is so opposed to the regeneration of the port of Ramsgate. It was not so long ago that the Labour party represented Ramsgate in Parliament but, given this negative attitude, it does not deserve ever to do so again.

[Luciana Berger (Liverpool, Wavertree) (Lab/Co-op)]

One of the directors of Seaborne Freight has been named by the Financial Times as Brian Raincock, whose previous company went into liquidation in April 2017 owing £585,000 to its main creditor, HMRC, which is essentially the British taxpayer. Is the Secretary of State content that this excruciating fact apparently did not come up during his Department’s due diligence on Seaborne Freight before it awarded the contract? Whether or not Seaborne Freight delivers the ships, it has still been awarded a £14 million contract, so hon. Members on both sides of the House rightly have an issue with the Secretary of State and his response today.

[Chris Grayling]

I keep telling the hon. Lady that the £14 million will not be paid unless Seaborne Freight delivers a service. I will not comment on the tax affairs of an individual, and nor should she. The due diligence on all those participating in the company found no reason why they are unfit to do business with the Government.

[James Duddridge (Rochford and Southend East) (Con)]

I congratulate the Secretary of State on his detailed preparations, but will he also consider how south Essex can support those preparations at Tilbury, London Gateway and London Southend airport? London Southend airport has experience of just-in-time delivery to Dagenham and is run by Stobart Group, an excellent freight haulage firm.

[Chris Grayling]

I absolutely agree. Of course, if we find ourselves in a no-deal scenario, a number of other ports, including Tilbury, will play a part. I hope we do not reach that point, and I think we all agree that we want a sensible free trade agreement with the European Union after 29 March, but the reality is that we need to make sure we are prepared for all eventualities. In such a situation, many of our ports up the east coast and along the south coast will play an important part in making sure that trade flows freely.

[Joanna Cherry (Edinburgh South West) (SNP)]

I am very concerned about the legality of this procurement process. In his statement yesterday, the Secretary of State said that he had proceeded under regulation 32 of the Public Contracts Regulations 2015, which allows the Government to circumvent the normal, transparent and EU-mandated procedures. I have a copy of the contract notice here, which is freely available on the internet, and it says that the basis for proceeding under regulation 32 is “extreme urgency.” As my hon. Friend the Member for Kilmarnock and Loudoun (Alan Brown) said, the idea that no deal is a possibility and, to quote the Prime Minister, that no deal is better than a bad deal has been around for some time, so how can the Government, at this late stage, justify proceeding with procurement that is appropriate only in the case of extreme urgency?

I have two questions for the Secretary of State and, just for once, my constituents would like to hear an answer. First, will he release the legal advice that permitted him to proceed under regulation 32? Secondly, as he will be aware, if he has proceeded wrongly under regulation 32, his Department and the Government are open to legal action. How much money has been set aside for the contingency of court action about the illegality of the procurement process and a claim for damages?

[Chris Grayling]

It is my view that, as we move towards leaving the European Union, preparing for all eventualities is a matter of extreme urgency, which is also the advice that my Department has received and has given to me.

[Mr Steve Baker (Wycombe) (Con)]

If Opposition Members had an ounce of sense and concern for the national interest, they would welcome the fact that the Department for Transport is preparing to leave the European Union under all circumstances and they would recognise the courage of the Secretary of State, his Ministers and his officials in testing and operationalising their plans. Does he share my disbelief at the policies that are being urged on him by Opposition Members, and will he reassure me that he will continue his excellent work to prepare this country for leaving?

[Chris Grayling]

I am very grateful to my hon. Friend for his comments. I give him an absolute assurance that I will continue that work. Frankly, the tragedy is that the Labour party seems to have abandoned interest in the national interest.

[Tom Brake (Carshalton and Wallington) (LD)]

The train timetable fiasco, the drone disruption, the Manston lorry park carry-on and, now, ferrygate—the Secretary of State is the embodiment of the Peter principle.

On the earlier point about competition, can the Secretary of State explain the

“extreme urgency brought about by events unforeseeable by the contracting authority”?

Can he explain what was unforeseeable about no deal, for which the Government have been planning for the past couple of years and to which they have referred many, many times in this place? What was unforeseeable about that?

[Chris Grayling]

Sadly, what was unforeseeable is the attitude of many hon. Members, mostly Opposition Members, towards the Prime Minister’s sensible agreement. The agreement meets all their requirements, and they are now saying they oppose it anyway.

[Mr Simon Clarke (Middlesbrough South and East Cleveland) (Con)]

The shadow Secretary of State and I both represent Middlesbrough, which voted overwhelmingly to leave, so I found his comments attacking the Secretary of State for making robust preparations for no deal very surprising.

Will the Secretary of State commit to engaging Teesport in the preparations for any scenario that may arise from Brexit? It is important that we make all the preparations required for all contingencies.

[Chris Grayling]

I am very grateful for my hon. Friend’s comments. I reiterate that we are looking to involve other ports across the country as we make preparations for an eventuality that I hope will not happen. The reality is that the people of Middlesbrough voted clearly to leave, and they will not understand why the hon. Member for Middlesbrough (Andy McDonald) is letting down their 2016 vote.

[Mr Chris Leslie (Nottingham East) (Lab/Co-op)]

If this contract fails, our country will have even greater problems with the continuity of trade, so it will be the public who pay the price—it will not be just the central contractor that loses money.

I seek a bit of accountability from the Secretary of State. The front page of today’s Financial Times says that the Department for Transport commissioned a study showing that just an extra 70 seconds of analysis or discussion of each truck crossing the channel could lead to a six-day queue for vehicles getting on a ferry. Has he seen that study? Is the study accurate, and will he publish it now?

[Chris Grayling]

We have made it very clear to the House that queues will be caused if the French seek to impose maximum control and put in place limited checks. Why on earth does the hon. Gentleman think we are putting some of these contingency measures in place? He asked what happens if the contract does not go ahead, but I have said that 90% of the extra capacity is being provided by two established operators that will continue to deliver the services we have contracted.

[Bob Stewart (Beckenham) (Con)]

Will my right hon. Friend reassure the House that the Port of Dover and Eurotunnel are making detailed contingency plans in case of no deal?

[Chris Grayling]

I give my hon. Friend that assurance. We are working with both organisations, and we are also having detailed discussions with the French. The leadership in Nord-Pas-de-Calais and Paris, and the leadership of the port and the tunnel on the French side, are as keen as we are to see fluidity continue through those ports. We are taking contingency measures, but our prime focus is on making sure that trade flows freely, whatever checks are required.

[Alison Thewliss (Glasgow Central) (SNP)]

The Transport Secretary’s colleague the Home Secretary has been trying to stop people getting across the channel while the Transport Secretary is busy contracting with companies that have no ferries at all. Is his next whizzo move to contract people who are doing people smuggling in dinghies?

[Chris Grayling]

That is an absurd question that does not merit an answer either.

[Damian Collins (Folkestone and Hythe) (Con)]

If there are delays in processing freight through the channel tunnel in my constituency or the port of Dover, is the Secretary of State convinced that his contingency planning means that we will not see a return to Operation Stack and that the M20 motorway will remain open in both directions if there are delays? Will he also update us on when he expects his Department to produce its site list for the potential long-term off-road lorry parking solution in Kent?

[Chris Grayling]

It is my belief that Operation Brock will prevent the closure of the M20. That is my prime concern—what happened in 2015 should not be repeated. I think there is sufficient capacity to ensure that that will not take place. We have completed the infrastructure works that are necessary on the motorways to ensure that the flow in both directions can continue, and we are now doing the detailed testing to understand flows of traffic and how to manage them to make sure that we do not see the kind of disruption we saw in 2015. I am hopeful that we will move quickly from the consultations we are having now to being able to decide a permanent location and get the thing dealt with once and for all.

[Grahame Morris (Easington) (Lab)]

Any members of the public watching this debate will be absolutely amazed. They will think it is bizarre that we have a Transport Secretary who signs a shipping contract with a shipping company with no ships. Given that the company is going to hire in ferries, does he have any idea what plans it has to crew its ferries and whether UK crews would be used?

[Chris Grayling]

There is a complete lack of understanding of business models on the Opposition Benches. Opposition Members should understand that when they go on holiday next summer there is a fair chance they will be flying with an airline that owns no planes. The reality is that transport operators do not always own their own assets; they contract or charter them in and they operate the service. I do not think that Opposition Members understand that. As to the crewing of the ships, that is a matter for the company itself.

[Victoria Prentis (Banbury) (Con)]

Will the Secretary of State confirm to me that it is normal to award contracts, in a small part, to new operators and that while perhaps 90% of operators used by the Department are established, it is perfectly normal for the Department properly—acting legally as part of its procurement process—to include new operators as part of the consideration?

[Chris Grayling]

My hon. Friend is absolutely right; that is normal, and we do not actually do enough of it. The Government are frequently criticised for contracting only with big business and not with small business. Ironically, now we are contracting with small business for a small part of a package we need, we are getting criticised for it, so we cannot win either way.

[David Hanson (Delyn) (Lab)]

Further to the question asked by my hon. Friend the Member for Liverpool, Wavertree (Luciana Berger), will the Secretary of State confirm that one director of this company owes £580,000 to HMRC from a previous failed administration? Will he say what due diligence was undertaken on that contract? Will he also tell us how we are going to repay that money to the Treasury?

[Chris Grayling]

I am not going to comment on individual tax affairs. All I am going to say is that due diligence was carried out into the participants in this business and no reason was found why they should not contract with Government.

[Mr Marcus Fysh (Yeovil) (Con)]

It is very reassuring to hear about my right hon. Friend’s discussions with the ports of Dover and Calais and the contingency plans that he is putting in place. Will he tell us more about how companies can get to know what they have to do to make sure that their declarations are appropriately communicated to the port? That seems to me to be a potential pinch point that we need to look at.

[Chris Grayling]

Certainly one part of the no deal preparations that we are now going through—HMRC is very actively engaged in this—is about the declaration processes that businesses would need to go through. The reality is that this happens already. Goods are shipped from this country to Switzerland, for example, through established processes in this country and on the continent. We will need to ensure in the run-up to a no-deal Brexit that business is up to speed with what it needs to do. A huge amount of work in this respect is already happening.

[Sir Mark Hendrick (Preston) (Lab/Co-op)]

Things are getting bad when a former Conservative party chair accuses this Government of using Dr Strangelove tactics. This is a perfect example. Instead of trying to prepare for a no-deal scenario, why do the Government not just look at extending article 50 so that we can avoid this catastrophe?

[Chris Grayling]

Two things: first, I think it would be wrong to block Brexit. Secondly, I think it is right that the Government prepare for all eventualities. They would be accused of being irresponsible if they did not do so.

[Helen Whately (Faversham and Mid Kent) (Con)]

The view from my constituency, which has the M20 and the M2 running through it, is that we must not have another Operation Stack, so I welcome all contingency measures that my right hon. Friend is taking, but the reality is that whatever happens, the vast majority of our freight will have to continue to go through Dover-Calais. Therefore, the flow of that route is absolutely critical. Will he advise us of how ready the French are to carry out any customs checks that might be required in the event of a no-deal Brexit?

[Chris Grayling]

We have had detailed discussions with the French. I am very optimistic that they have the same ambition that we do, and they are putting in place plans to ensure that happens. I have had personal commitments from the leadership in Nord-Pas-de-Calais, and of course there is a legal requirement for them put those plans in place, particularly with regard to the tunnel, as the treaty of Canterbury requires them to keep trade and traffic flowing smoothly through the tunnel. I have every reason to believe the French will uphold that commitment.

[Richard Burden (Birmingham, Northfield) (Lab)]

In April 2018, Seaborne Freight issued in writing an investor briefing that claimed:

“Detailed port agreements with Ramsgate and Ostend negotiated and agreed”,

but it is now clear that no such agreements exist to this day. Indeed, the Mayor of Ostend has given an interview in which he said:

“A start-up in March is simply impossible. There is currently no agreement with Ramsgate and also with Ostend”.

If the Secretary of State has satisfied himself that due diligence checks have been carried out that confirm the suitability of Seaborne Freight to receive a £13.8 million Government contract, will he tell us what weight he has attached to the fact that Seaborne Freight has issued inaccurate investor briefings? Will he also finally answer the question asked by my right hon. Friend the Member for Leeds Central (Hilary Benn), the Chair of the Brexit Committee, and name just one ship that due diligence checks have revealed Seaborne Freight is likely to be able to bring into service by March?

[Chris Grayling]

I am not sharing, nor is it my responsibility to share, the company’s commercial information. I simply remind the hon. Gentleman that no money will change hands unless the company is running this service. That seems to me to be the best possible protection for the taxpayer’s money.

[Stephen Metcalfe (South Basildon and East Thurrock) (Con)]

Will my right hon. Friend expand on the discussions he has had with the management team and what expertise and experience they are bringing to the table to operate this service?

[Chris Grayling]

My officials have had detailed discussions with the management team and have gone through their plans in detail. My hon. Friend might have seen the article in Lloyd’s List, which has also been shown the business plan and gave it a thumbs-up as being a viable option. This is a team of people who have experience in this industry and who we believe will deliver this service, but of course they will be paid only if they do so.

[Stephen Morgan (Portsmouth South) (Lab)]

Some 95% of fresh produce in the Channel Islands gets there via Portsmouth international port. Delays at our port would mean empty shelves in the Channel Islands in 48 hours. What guarantee can the Secretary of State give today to ensure uninterrupted delivery from all our ports of critical goods such as fresh food and medicine?

[Chris Grayling]

On incoming freight, we intend not to put in place complex checks at the border. We have been clear all along that the Government’s priority, apart from security, will be to ensure free movement of trade. Of course, goods arriving from the Channel Islands will not be subject to the kind of constraints we might see going in at Calais, and the issues around transport blockages really relate only to the short straits around Dover and the tunnel, not to other ports, where the movement of ships is not on a sufficient scale to cause significant blockages.

[Matt Warman (Boston and Skegness) (Con)]

It would be irresponsible not to prepare for no deal, of course, but would it not be even more irresponsible to be spending money where we did not need to?

--- Later in debate ---

[Chris Grayling]

That is why we are not going to spend the money until the ships are available and running. The reality is that we do need to spend money to prepare for a no-deal Brexit. I hope that money proves not to be needed—I want us to have a sensible partnership in the future—but believe me, if we were here now facing a no-deal Brexit and no preparation had been done, the shouting from the Labour party would be enormous.

[Mr Paul Sweeney (Glasgow North East) (Lab/Co-op)]

The Secretary of State talks about supporting entrepreneurialism. I am a big fan of “Dragons’ Den”, and I think this is one of those pitches that everybody would have been cringing at had they actually seen it, but it seems to be good enough for the Secretary of State. He talks about a no-deal Brexit. I think the Government should rule out a no-deal Brexit, but if he is insistent on planning ahead for it he needs sure delivery of freight capacity on shipping routes. The Ministry of Defence has immediate access to four roll-on roll-off ferries. Why on earth has he not committed to using those assets, which are immediately available to him, instead of insisting on a highly risky contractual arrangement with a dubious private contractor?

[Chris Grayling]

What I have done is insist on a highly substantial commercial arrangement with two very established cross-channel ferry operators and given a small amount of business to a new operator. If there is a no-deal Brexit, which I hope will not happen, we have several other measures that we can bring into place.

[Rebecca Pow (Taunton Deane) (Con)]

Will my right hon. Friend assure the House that he is in consultation with not only Dover and Calais but other ports about what would happen in the event of no deal, which I sincerely hope will not happen? The way to avoid no deal, of course, is to vote for the deal. In Taunton Deane, many businesses, lots of them small, rely on exporting and ferries. They must not be hampered and we must act responsibly to give them assurances.

[Chris Grayling]

The clearest assurance that I can give is that I have been to Calais and met my French counterpart to talk about this issue, I have met the president of the Nord-Pas-de-Calais, and officials have had discussions, and I have had no sense from any of those conversations that the French want anything other than to maintain the fluid movement of trade through the channel ports. That is something to which we should all aspire.

[Jonathan Edwards (Carmarthen East and Dinefwr) (PC)]

Does not this sorry episode clearly indicate that the absurd mantra of a managed no deal is a contradiction in terms?

[Chris Grayling]

As I say, the Government do not aspire to a managed or an unmanaged no deal—we want to secure a deal—but it is not responsible not to prepare for all eventualities.

[Mr Philip Hollobone (Kettering) (Con)]

I commend the Secretary of State for recognising that it is absolutely in the national interest to make preparations for a no-deal Brexit, not least because it strengthens our negotiating hand, even at this late stage. Will he tell the House what the common transit convention is, not only for the benefit of the House but in particular for the benefit of those on the Opposition Front Bench, and explain how it will mitigate the worst effects of impeded traffic flows in the event of no deal?

[Chris Grayling]

The common transit convention is the international agreement by which trade flows across multiple countries. It has already been announced that in leaving the European Union the United Kingdom will remain part of that convention, which will play a significant part in ensuring that trade flows freely in all situations. None the less, we need to make sure that we cannot get blockages at key ports, and that is what we are working to do.

[Wayne David (Caerphilly) (Lab)]

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

[Chris Grayling]

We received three compliant bids, all of which we judged acceptable and accepted. Two of them were from major operators that will provide around 90% of the capacity, plus there was this small additional contract. Should we choose to return to the market, there is also potential interest in the provision of extra capacity. I hope we will not need that, because I hope that we will have a proper deal come next week.

[Douglas Chapman (Dunfermline and West Fife) (SNP)]

It has certainly been an “I see no ships” sort of week, but what consideration has the Secretary of State given to utilising ports in other parts of the UK—namely, the high-exporting country of Scotland? I hear really good things about the potential for a Rosyth-Zeebrugge ferry link, for which potential ships have actually been identified. Is not Scotland losing out? How can we realise Scotland’s potential in this Brexit fiasco?

[Chris Grayling]

I appreciate that the Scottish National party does not support Brexit and, indeed, would like to do everything it can to stop Brexit, but we will work to make sure that every part of the United Kingdom, including Scotland, is able to continue to trade freely around the world and gain from the benefits that will be achieved in this country in a post-Brexit world.

[Kevin Brennan (Cardiff West) (Lab)]

I see no ships, but I do smell something fishy, and I think other colleagues do as well. Is the Secretary of State really saying to the House that the best choice for the contract was a company that cut and pasted its terms and conditions at the last minute from a fast-food company? Is his new Brexit mantra “A meal deal’s better than no deal”?

[Chris Grayling]

Of course, it is not a single contract. There are multiple contracts, of which 90% is going to two of the biggest cross-channel operators—something the Labour party appears to be completely ignoring. The fact is that we have chosen to give a small proportion of the business to a legitimate bid from a small start-up business, and I think that is something the Government should do more often, not less.

[Chris Stephens (Glasgow South West) (SNP)]

I think our plea to the contractors is that we want these ships, not excuses. Quite astonishingly, in answer to a question from the hon. Member for Easington (Grahame Morris), we heard from the Secretary of State that there will somehow be driverless ferries—that there will be no staff—so presumably there is no national minimum wage requirement in the contract. First, will the Secretary of State publish the legal advice that he says he was given? That seems sensible, given the House’s concerns. Secondly, will he tell us what were the procurement requirements in relation to equipment, such as ferries, or indeed in respect of the socioeconomic impact in relation to wages, for example?

[Chris Grayling]

In effect, what we are doing is buying tickets in advance on cross-channel ferries on a number of routes around the country. That is what we are doing. It is no more and no less than that.

[Alex Sobel (Leeds North West) (Lab/Co-op)]

It is quite incredible that the Secretary of State has awarded a contract to a company with no ships, no investors, no customers, no credible business plan, no employees and no premises. Is he aware that Seaborne Freight tried to get an option to purchase the following four ships: the Hartmut Puschmann, the Espresso Catania, the Espresso Ravenna and the Via Adriatico? They all operate in the southern Mediterranean and would need a complete refit to be able to operate in the channel. In addition, two of the ships failed EU safety inspections. On top of that, Tirrenia, which owns the ships, said that it would not sell them because it did not believe that Seaborne Freight had the money. I visited Tirrenia’s website and found that I could go on a Mediterranean cruise on the four vessels in April. Was the Secretary of State aware of that?

[Chris Grayling]

I am not going to comment on the commercial plans of Seaborne Freight. I am satisfied that it will have the ships necessary to operate the service, but if it is not able to deliver them, it will not be paid.

[Luke Pollard (Plymouth, Sutton and Devonport) (Lab/Co-op)]

Brittany Ferries has been awarded a no-deal ferry contract but, unlike Seaborne, it actually has ferries. No-deal sailings into Millbay port in Plymouth will increase traffic by 50%. Will the Secretary of State point to where on the 200 metres of tarmac between the ferry port and Plymouth city centre he expects facilities to be built for the lorry park, the customs checks, the veterinary checks and the environmental health checks?

[Chris Grayling]

Let me say two things. First, I thought it would be good for the port of Plymouth to have more traffic; I am sorry that the hon. Gentleman does not agree. Secondly, the reality is that, as I said earlier, we do not intend to impose a hard border for traffic coming into the United Kingdom. We intend to focus on the fluidity of trade as our priority. It will be security first and fluidity second, and other matters will come well afterwards. We are not imposing a hard border on this side of the channel.