Eurotunnel - Statement

– in the House of Lords at 6:34 pm on 4th March 2019.

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Photo of The Earl of Courtown The Earl of Courtown Captain of the Queen's Bodyguard of the Yeomen of the Guard (HM Household) (Deputy Chief Whip, House of Lords) 6:34 pm, 4th March 2019

My Lords, with the leave of the House, I shall now repeat in the form of a Statement the Answer given by my right honourable friend to an Urgent Question in the other place. The Statement is as follows:

“I would like to update the House on the agreement the Government have reached with Eurotunnel which will help to deliver an unhindered supply of vital medicines and medical devices under any Brexit scenario. The best way to ensure a smooth and orderly exit both for the NHS and the wider economy is to support the deal that the Prime Minister has proposed to the House, as amended by the negotiations being conducted by the Attorney-General. Anyone in this House who cares about the unhindered supply of medicines should vote for that deal.

But leaving the EU without a deal remains the default position under the law and it is incumbent on us to keep people safe. It is therefore vital that adequate contingency measures are in place for any Brexit scenario. Preparing for a no-deal exit has required significant effort from the NHS, the pharmaceutical industry and the whole medical supply chain. I want to pay tribute to their work and thank them for their efforts on these contingency measures. The settlement struck between the Government and Eurotunnel last week is an important part of these measures. Because of the legal action taken by Eurotunnel and the legal risks of the court case, it became clear that without this settlement, we could no longer be confident of the unhindered supply of medicines. Without the settlement, the ferry capacity needed to be confident of supply was at risk. As a Government we could not take that risk and I doubt that anyone in this House would have accepted that risk either.

With this settlement we can be confident, as long as everybody does what they need to do, that supply will continue. While we are disappointed that Eurotunnel took this action in the first place, the House will understand why we acted, so businesses and the NHS could plan with confidence. Under the settlement, Eurotunnel has to spend the money to improve resilience, security and traffic flow at the border, benefiting both passengers and business.

The Department for Transport, on behalf of the whole Government, entered into these contracts in good faith. Our duty is to keep people safe, whatever the complications thrown up by legal process, and while we continue to plan for all eventualities, it is clear that the best way to reduce these risks is to vote for the deal in the days to come”.

Photo of Lord Tunnicliffe Lord Tunnicliffe Opposition Deputy Chief Whip (Lords), Shadow Spokesperson (Defence), Shadow Spokesperson (Treasury), Shadow Minister (Transport) 6:36 pm, 4th March 2019

My Lords, I thank the Minister for repeating the Answer, but perhaps I may start by repeating the Question: to ask the Secretary of State for Transport if he will make a Statement on the payment of £33 million to Eurotunnel over no-deal ferry contracts. We make no criticism of the National Health Service or anyone else in the supply chain. This Question is directed at the Department for Transport, in particular its leader, Chris Grayling. His catastrophic handling of the DfT’s no-deal preparations is what we are discussing.

Can the Minister spell out in detail why the Government have to pay out £33 million of taxpayers’ money? What were the specific mistakes? What are the detailed improvements that Eurotunnel has agreed to make? Will the entire £33 million be spent on improvements and when will they be ready?

Everything the Secretary of State touches seems to go wrong: from 800 trains per day cancelled as a result of the botched timetable introduction, to the east coast main line being brought back into public control. What action is the Secretary of State planning to improve the performance of his department—or is he going to take the advice of my honourable friend in the other place and resign?

Photo of The Earl of Courtown The Earl of Courtown Captain of the Queen's Bodyguard of the Yeomen of the Guard (HM Household) (Deputy Chief Whip, House of Lords)

My Lords, the noble Lord, Lord Tunnicliffe, has asked a number of questions. He asked what the payment of £33 million was based on. It followed detailed negotiations, fully informed by legal advice. The figure represents the financial impact of us not having the critical capacity we need if the contracts are cancelled. The noble Lord also asked what this money will be spent on. Under the agreement, the money will be spent on measures that will improve security and traffic flow at the border, benefiting both passengers and businesses. This will include improved access to the UK terminal, increased security protection within the terminal and improved traffic flow. There is a binding obligation to spend the money in these areas.

Photo of Baroness Randerson Baroness Randerson Liberal Democrat Lords Spokesperson (Transport)

My Lords, the truth is that the Secretary of State is now regarded as so incompetent by his colleagues that they did not dare let him answer his own questions. I regret the pathetic attempt to dress this up as a Health question, but I am sure the Minister will be more than able to answer my Transport questions.

On 21 January I asked the noble Baroness the Minister:

“What assessment have the Government undertaken of the impact on the Channel Tunnel of additional ferry services which, unlike existing ferry services, will be subsidised by the Government?”.

The Minister replied:

“We consider the contracts to be entirely consistent with the Government’s agreement with Eurotunnel”.—[Official Report, 21/1/19; col. 501.]

This started as a piece of post-Christmas pantomime and has descended into Whitehall farce. The Minister stressed to us in earlier answers that the Department for Transport took legal advice from prominent, well-known advisers Slaughter and May, Deloitte and Mott MacDonald. Not only did they apparently fail to notice that Seaborne Freight had no ships and was offering pizzas on its website; they also apparently failed to notice that giving £100 million to subsidise ferries would distort the market, to the obvious disadvantage of Eurotunnel.

I have two questions: can the Government confirm that all three of the Department for Transport’s expert advisers were satisfied with this scheme, its probity and its practicality? Can the Minister confirm how much the Government paid for this apparently faulty advice on the ferry contracts that have led to the taxpayer having to dish out a further £33 million?

Photo of The Earl of Courtown The Earl of Courtown Captain of the Queen's Bodyguard of the Yeomen of the Guard (HM Household) (Deputy Chief Whip, House of Lords)

My Lords, I thank the noble Baroness, Lady Randerson, for her questions. Her last question was specifically about the cost that was paid. I do not have that figure, but if it is not commercially confidential I will ensure she gets it. The noble Baroness also referred to the Seaborne matter. As she said, due diligence was carried out not only by senior officials at the Department for Transport but by third-party organisations with sufficient experience and expertise in this area, including Deloitte, Mott MacDonald and Slaughter and May. Due diligence was carried out throughout this process, and the fact is that we took careful note of our legal advice on this matter as well.

Photo of Baroness Chisholm of Owlpen Baroness Chisholm of Owlpen Conservative

My Lords, as a very old nurse I will take this back to health. A lot of people in this country are on long-term medication. Can my noble friend the Minister tell me what conversations the Department of Health and Social Care is having with pharmaceutical companies to make sure there are sufficient medicines in the UK when we leave the EU?

Photo of The Earl of Courtown The Earl of Courtown Captain of the Queen's Bodyguard of the Yeomen of the Guard (HM Household) (Deputy Chief Whip, House of Lords)

My Lords, my noble friend asks about sufficient supplies of medicines. I can confirm that we are working closely with pharmaceutical companies to ensure that patients can continue to receive the medicines they need. As I said before, we are confident that the supply of medicines will be uninterrupted in the event of no deal. In addition to extra warehouse space, as a first line of defence industries have been asked to ensure a minimum of six weeks’ additional supply in the UK for prescription-only and pharmacy medicines—over and above existing, business-as-usual buffer stocks—by 29 March 2019.

Photo of Lord Birt Lord Birt Crossbench

My Lords, does the Minister accept that the clear implication of this settlement with Eurotunnel is that the original procurement was unlawful? What legal advice on the conduct of the procurement was sought at the time? Was that legal advice ignored?

Photo of The Earl of Courtown The Earl of Courtown Captain of the Queen's Bodyguard of the Yeomen of the Guard (HM Household) (Deputy Chief Whip, House of Lords)

No, the legal advice was not ignored. As I said earlier, the legal advice we were given was in line with the expedited form of contract competition that we entered into.

Photo of Lord Berkeley Lord Berkeley Labour

My Lords, this £33 million to Eurotunnel is nothing more than hush money to shut it up and to avoid the disclosure of something like 1,500 pages of probable rubbish that demonstrates just how bad the procurement process has been. Can the Minister explain how Eurotunnel can possibly spend £33 million in four weeks to improve the movement of medicines across the channel when there is no evidence that there will be a shortage of capacity on any of the ferries or the Channel Tunnel? There will probably be a reduction in demand because of business going down. Surely what the Government need to have arranged in Calais is an enormous car park, with many more people checking the goods going backwards and forwards: it has nothing to do with the capacity on the ferries.

Photo of The Earl of Courtown The Earl of Courtown Captain of the Queen's Bodyguard of the Yeomen of the Guard (HM Household) (Deputy Chief Whip, House of Lords)

My Lords, this is all about guaranteeing capacity. As I said before, there are measures to improve security and traffic flow at the border, benefiting both passengers and businesses. This will include improved access to the UK tunnel. This will happen whether there is no deal or we get a deal. So the money will be well spent and this will go on for longer than the next four weeks.

Photo of Lord Sherbourne of Didsbury Lord Sherbourne of Didsbury Conservative

My Lords, does my noble friend agree that, while this payment to Eurotunnel is highly controversial, for most people in the country the most important point is for the Government to ensure that, in the event of a no-deal Brexit, we have supplies of pharmaceutical and medical products that come into the country effectively and on time?

Photo of The Earl of Courtown The Earl of Courtown Captain of the Queen's Bodyguard of the Yeomen of the Guard (HM Household) (Deputy Chief Whip, House of Lords)

My Lords, my noble friend is right. Patients can have confidence in the Government’s contingency plans to work with suppliers who provide medicines and other medical supplies to the UK to ensure the continuity of supply. We have selected the best way of ensuring that patients continue to receive the medicines, devices and medical supplies they need.

Photo of Lord Browne of Ladyton Lord Browne of Ladyton Labour

My Lords, no one believes that this £33 million was paid to Eurotunnel to secure medicines post Brexit. Anyone who knows anything about the legal process knows that, at the door of the court, the Government’s lawyers told them, “We need to settle this case”—and they settled it for £33 million to Eurotunnel. The question, which has been posed to the noble Earl twice now, is: did or did not Chris Grayling, when he personally signed these contracts, sign them against any advice that the process that had been undertaken and was challenged in court was anticompetitive and could not be protected against a legal challenge? If all the legal advice was that the process could be protected, are the Government ever going to use these lawyers again?

Photo of The Earl of Courtown The Earl of Courtown Captain of the Queen's Bodyguard of the Yeomen of the Guard (HM Household) (Deputy Chief Whip, House of Lords)

We are not publishing our legal advice, but we did not go against it. We had to enter into these contracts—the expedited form of competitive tendering—because the planning assumptions changed and the maritime market was not responding to the risk. As a responsible Government we had to react to ensure the supply of important medicines if we ended up in a no-deal scenario.