Thanet council has issued a statement calling the axing of the Brexit resilience contract with Seaborne Freight, due to backers pulling out, ‘disappointing’ – but says there will be no interviews on the matter.
The £13.8 million government contract with Seaborne Freight was to provide extra ferry capacity in the event of a no deal Brexit on March 29.
The firm was awarded the contract in December despite being a start-up company with no vessels or track record as yet.
Seaborne, which says it is proposing to run a Ramsgate/Ostend service, had said operations would start in late March – to coincide with the UK withdrawal from the European Union – initially with two ships.
But the Department for Transport has now axed the agreement, saying Seaborne would not reach its contractual requirements and the firm’s previously unnamed backer Arklow Shipping has pulled out of the deal.
The announcement came a little over 24 hours after Thanet council withdrew its budget decision from a meeting on Thursday night (February 7) following intervention from Secretary of State for Transport Chris Graying.
Impact on Thanet council budget decision
The lack of a signed deal between Seaborne and Thanet council had prompted the inclusion of plans to ditch £500,000 funding to keep Ramsgate port in readiness for a ferry operation and axe a further £130,000, totalling £630,000 – or £730,000 in a full year -from Thanet council’s 2019/20 budget.
A report to Cabinet members at a meeting last month said Thanet council would be “at significant risk of overspending the proposed budget,” unless the action was taken.
The authority needs savings of £1.8 million in order to balance the books. Councillors have been told the biggest expense is at Ramsgate Port.
But the budget report was withdrawn following discussions between Thanet council leader Bob Bayford and Mr Grayling.
Cllr Bayford said that although an ‘uncomfortable decision’ may have to be made to close sections of the port and make cost savings the approach from the Department for Transport would delay that until a date on or before March 11.
He added that the importance of Ramsgate in Post-Brexit resilience plans had been recognised and the DfT was keen to “keep the option of Ramsgate alive.”
Thanet council say the budget decision will be made in the next seven to 10 days and £730,000 of savings will be made at the port if there is no signed ferry contract.
Questions put by The Isle of Thanet News over how those cuts would be made and what services or job roles would be affected have not been answered. However a council source confirmed last month that the decision would likely impact on port employees.
A spokesman said: “It is disappointing that Seaborne Freight’s backer, Arklow Shipping has decided to step back from the deal.
“Thanet District Council is actively in discussion with the Department for Transport around the Port of Ramsgate in terms of supporting Brexit resilience.
“The budget report was withdrawn for a period of 7-10 days. It will go back to Full Council for decision to ensure the council meets its statutory requirements to balance its budget.
“If a contract is not agreed then the council will need to make savings of £730,000 at the Port.”
Ramsgate Port has racked up a £20million deficit since 2010. Losses include £5million in live export compensation paid after the High Court overruled a live export ban from the port put in place by the then-Labour led council and £3.4million for bankrupt TransEuropa Ferries unpaid fees and charges.
Arklow Shipping, which is based in Ireland and also has operations in Rotterdam, has a fleet of modern singledeck, box hold and container fitted vessels ideally suited for the carriage of project cargoes, grain, generals and bulk commodities. It does not have ro-ro vessels.
A ‘letter of comfort’ from Arklow purportedly sent to Mr Grayling in January said the firm had been working with Seaborne for 12 months and intended to provide equity finance for two vessels and an equity stake in the firm.
The letter said the Seaborne plans were “viable and deliverable.”
However, a Channel 4 report has revealed that Arklow says despite advanced negotiations no contract had been signed with Seaborne and the firm felt is was being forced through too quickly by the government.
There have now been growing calls for the Secretary of State to resign.
Arklow Shipping has been asked for comment.
A spokesman for Seaborne Freight said: “It is with regret that Seaborne Freight is not in a position to add any further comment, as we remain bound by a confidentiality clause with the DfT.”
The aim of the DfT contracts with Seaborne until cancellation, DFDS and Brittany ferries, is to alleviate pressure on Kent’s roads which would come with a ‘hard border’ and could lead to a backlog of traffic, particularly HGVs, trying to access Dover Port and the Eurotunnel.
In November Thanet council said the Port of Ramsgate could have the potential to provide enough sailings to divert 3,360 lorry movements per day from the planned Operation Brock queuing system on the M20 and M26 to support ‘post-Brexit resilience.’
The resilience plans also include use of the Manston airport site as a lorry park to cope with possible post-Brexit jams at the Port of Dover.
A special development order designating the use came into force last month.and runs until December 31, 2020 with additions to allow work on the site to create a new access, add temporary hardstanding and modifications to the new entrance and create lining and signage.
Some £4.9million will be spent on the work which will increase capacity at the site to hold 6,000 – rather than the initial projection of 4,000 – lorries.