THE BRITISH GOVERNMENT has agreed to pay £33m to Channel Tunnel operator Eurotunnel to settle a lawsuit the company took over a post-Brexit ferry contract.

The case was taken after the UK’s Department for Transport spent more than £100m on contracts to three firms - including Irish-backed company Seaborne Freight – to provide additional capacity for lorries in the event of a no-deal Brexit.

Controversy arose after it was discovered that Seaborne Freight did not own any ships and had never run a ferry service, and the company has since had its deal cancelled after its Irish backer pulled out of the contract.

In January, Eurotunnel wrote to Transport Secretary Chris Grayling to complain that it had not been considered when the contracts were awarded, accusing the government of doing so in a “secretive way”.

The company argued that, unlike Seaborne, it had actually run a ferry service across the English Channel before, and should there have been approached by the government.

Today, the government announced it would pay the company £33m to settle a lawsuit it took over the awarding of the contracts, according to the BBC.

As part of the agreement, Eurotunnel has agreed to make improvements to its terminal.

The ferry services are expected to provide up to half a million tonnes a month in extra capacity, which it is hoped will mitigate the extra time needed to perform customs checks on freight if the UK leaves the EU without a deal on 29 March.