Awarding a £13.8 million contract for no-deal Brexit ferry services to a company with no ships is an example of the Government “supporting new business”, Chris Grayling has said.

The Transport Secretary defended the decision to do a deal with Seaborne Freight, despite it never having run a Channel service.

It was one of three firms awarded contracts totalling £108 million last week to lay on additional crossings to ease the pressure on Dover when Britain pulls out of the EU.

Mr Grayling told BBC Radio 4’s Today programme that Seaborne had been properly vetted before being chosen, after concerns were raised over its ability to fulfil the contract.

He said: “It’s a new start-up business, Government is supporting new business and there is nothing wrong with that.

“We have looked very carefully at this business and have put in place a tight contract that makes sure they can deliver for us.

“This has been looked at very carefully by a team of civil servants who have done due diligence.

“We believe they are on track to run services from April, yes.”

Seaborne aims to operate freight ferries from Ramsgate in Kent to the Belgian port of Ostend, beginning with two ships in late March and increasing to four by the end of the summer.

It was established two years ago and has been in negotiations about running freight ferries between Ramsgate and Ostend, but no services are currently running.

Ramsgate port The new ferry service would run from the Port of Ramsgate (PA)

Narrow berths in the port mean there are few suitable commercial vessels available.

In a statement at the end of December, the company said it had been working since 2017 on plans to reintroduce ferry sailings from Ramsgate from early 2019.

The business has been “financed by the shareholders” during a development phase involving “locating suitable vessels, making arrangements with the ports of Ostend and Ramsgate, building the infrastructure – such as bunkering – as well as crewing the ferries once they start operating”.

Liberal Democrat MP Layla Moran, who backs a second referendum and supports the Best for Britain campaign group, said: “This has descended into farce. Supporting new business is one thing, awarding a multimillion-pound ferry contract to a company with no ships is quite another.

“If Chris Grayling is serious about supporting new British business he might wish to reconsider his position on the damaging Brexit his government is pursuing and give the people the final say.”

Mr Grayling also told Today that he expected Channel ports to operate normally after Brexit, however the UK exited the trade bloc.

MPs are due to debate and then vote on Theresa May’s Withdrawal Agreement after they return to Parliament on Monday, amid warnings of a no-deal Brexit – or no Brexit at all – if it fails to win their backing.

The Prime Minister under pressure to win fresh concessions from Brussels to allow it to get through the Commons, after plans for the vote to be held in December were pulled in the face of almost certain defeat.

Foreign Secretary Jeremy Hunt told the Today programme that MPs could get “absolutely everything we want” from Theresa May’s Brexit deal.

“We have a clear opportunity to leave the EU on 29th March,” he said. “It has the vast majority of things that people wanted, not absolutely everything.

“The question is, can we turn this into something that gives us absolutely everything we wanted, and I believe we can.

“There will be some tough negotiations to follow in the years ahead but I think getting this clearer language on the backstop will help to get it through Parliament.”