Government will audit how Eurotunnel spends £33m settlement

The government will audit Eurotunnel's accounts to ensure that its £33m settlement with the firm benefits "the wider economy".

A senior civil servant told MPs that a "binding agreement" would guarantee the money was spent on improvements to Eurotunnel's UK operations.

Bernadette Kelly also confirmed any upgrades would not be ready for a possible no-deal Brexit this month.

"This is not about making sure this work is done in 23 days," she said.

Ms Kelly, who is the Permanent Secretary at the Department for Transport (DfT), did not rule out the possibility that Eurotunnel had been planning to proceed with upgrades to its facilities before receiving public funds to do so.

Last week, the DfT settled a lawsuit with Eurotunnel over its procurement of extra ferry services in the event of a no-deal Brexit.

In December, the DfT contracted three suppliers to provide additional freight capacity on ferries for lorries, which Eurotunnel claimed were handed out in a "secretive" way.

Appearing in front of the Public Accounts Committee, Ms Kelly reiterated her confidence in the legal advice given to the DfT prior to the procurement.

She admitted "there was legal risk in this process", but refused a request by the Liberal Democrat MP Layla Moran, to make the legal advice public.

Ms Kelly insisted that the DfT was acting as an "agent for the whole of government" in securing extra freight capacity, and that it was needed to ensure the uninterrupted supply of medicines in the event of a no-deal Brexit.

The senior civil servant also denied that any pressure was put on her by Transport Secretary Chris Grayling to award a £13.8m contract to Seaborne Freight, a contract which was cancelled after the BBC found the firm had never sailed a vessel.

Bernadette Kelly said Seaborne was "known well in the industry" before the DfT handed them a contract.