LONDON (Reuters) - The British government has terminated a contract with Seaborne Freight to provide extra ferries in the event of a no-deal Brexit that would see Britain leave the European Union on March 29 without a transition period to minimise economic disruption.
The government's decision to award the 14 million pound contract in December even though Seaborne Freight did not have any ships had been heavily criticised by opposition politicians and others.
A Department for Transport spokeswoman said on Saturday the contract was terminated after Seaborne Freight's backer, Irish firm Arklow Shipping, decided to step back from the deal.
"It became clear Seaborne would not reach its contractual requirements with the government. We have therefore decided to terminate our agreement," she said.
The spokeswoman said the government was in advanced talks with a number of companies to secure additional freight capacity -- including through the Port of Ramsgate -- in the event of a no-deal Brexit.
She said no taxpayer money had been transferred to Seaborne, adding that for commercial reasons the government had previously not been able to name Arklow Shipping's involvement.
The opposition Labour Party called the latest development "a national embarrassment".
"I do ask what on earth has (Transport Minister) Chris Grayling got to do before he is sacked?" Labour's transport spokesman Andy McDonald told the BBC.
"This is yet another episode in a long catalogue of catastrophes on his watch."
Grayling had defended the awarding of the contract last month, telling the BBC: "I make no apologies for supporting a new British business."
Britain awarded contracts worth more than 100 million pounds in total to three shipping firms to provide extra ferries. The other two -- French firm Brittany Ferries and Danish group DFDS -- are established operators.
Britain's EU membership means that trucks now drive smoothly through border checks within the 28-nation bloc. But after a no-deal Brexit, even a few minutes' delay at customs for each truck could mean vehicles backed up at ports and queuing on feeder roads on both sides of the Channel.
The Department for Transport spokeswoman also said the government stood by the due diligence carried out on Seaborne.
The company had also been criticised when its business terms and conditions showed references to placing "any meal/order", prompting speculation on social media that it had copied the format from a takeaway delivery company. Seaborne has since updated its website.
Britain is on course to leave the EU at the end of next month without a deal unless Prime Minister Theresa May can convince the bloc to reopen the divorce agreement she reached in November and then sell it to sceptical British lawmakers.
(Reporting by James Davey; Editing by Catherine Evans)