The transport secretary is under renewed pressure after MPs said his department had squandered £85m on ferry contracts for a no-deal Brexit.

The Public Accounts Committee has published a report into a £33m out-of-court settlement that the Department for Transport (DfT) made with Eurotunnel.

The payout was agreed after the channel tunnel operator challenged what the MPs called “a rushed and risky procurement of additional ferry capacity” by Chris Grayling’s department.

Towards the end of 2018, the government made a worst-case assumption that the normal flow of goods across the short channel crossings could be reduced by 87 per cent for up to six months.

To assist with the movement of essential goods, the DfT awarded contracts to Brittany Ferries, DFDS Seaways and a “paper” company called Seaborne Freight – which turned out to have no vessels and whose business terms were copied from a pizza delivery company.

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Eurotunnel, which has experience in running ferries as well as the shuttle between Folkestone and Calais, was not invited to tender.

The committee says the hurried and bungled arrangements exposed the department to a court challenge from Eurotunnel.

“Rather than risk losing a legal case, which may have resulted in the court cancelling the ferry contracts ahead of 29 March 2019, the department reached a £33 million out-of-court settlement with Eurotunnel,” the report said.

In addition, £51.4m of taxpayers’ money was spent on cancelling contracts with the Danish ferry operator DFDS and the French line Brittany Ferries.

The DfT claimed that the £33m settlement with Eurotunnel would go towards infrastructure improvements. But Meg Hillier, the Labour chair of the committee, said: “Public benefits from the settlement with Eurotunnel amount to little more than window dressing.

“The taxpayer has been landed with a £85m bill with very little to show for it following the rushed procurement of ferry freight capacity.”

The MPs also warned the DfT about a lack of preparedness for the next deadline for leaving the European Union, 31 October 2019.

The committee said: “The department must learn from this episode and use its time well should it be required to re-procure ferry capacity ahead of the new October deadline.

“The window for decision-making for any departure on 31 October is short and key deadlines for decisions are passing every day.

“There is a real risk that the short time left before 31 October will force the department into further high-risk procurements.

A DfT spokesperson said: “The freight capacity contracts were taken out as an insurance policy for the UK to ensure that key medical supplies could be guaranteed in the event of a no-deal Brexit.

“This step was in response to changed assumptions about potential delays in the Dover strait, and the agreements were entered into as soon as a cross-government collective decision was taken that they were needed.

“Two weeks ago the department outlined a new framework proposal to provide a list of operators capable of delivering this vital freight capacity without the government committing to any agreements at this stage, with market engagement already under way.”