Published: 11:59 PM February 8, 2019 Updated: 8:45 AM September 18, 2020

Jacob Rees-Mogg arrives to make a speech at a meeting of the Bruges group. Photograph: Dominic Lipinski/PA. - Credit: PA Wire/PA Images

Brexiteer Tory MP Jacob Rees-Mogg has suggested the Irish government - not the transport secretary - could be responsible for the collapse of a controversial no-deal Brexit ferry contract.

The Department for Transport said it had been Arklow Shipping's backing that gave it confidence in the viability of the deal, and that it stands by the robust due diligence carried out on Seaborne Freight.

But Arklow's decision to pull out sparked a rethink.

Jacob Rees-Mogg, chairman of the right-wing European Research Group, has asked whether Leo Varadkar's Irish government had any influence on Arklow's decision.

He told the Daily Telegraph: 'One has to hope that the Irish government has not leant on or put any pressure on Arklow to persuade it to pull out.

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'That would be a very unfriendly act of a neighbour to obstruct no-deal preparations and one has to hope very sincerely that this is genuinely a corporate decision.'

While Rees-Mogg appeared to be trying to point the finger elsewhere Labour seized on the situation saying Chris Grayling should quit or be sacked.

Shadow transport secretary Andy McDonald said: 'As we predicted, the Seaborne Freight contract has been cancelled.

'This cannot go without consequence. The Chris Grayling catalogue of calamities grows bigger by the day.

'This contract was never going to work but this secretary of state, true to form, blunders from one disaster to another.

'Whilst Theresa May needs the few friends she has right now, we cannot have this incompetent transport secretary carry on heaping humiliation after humiliation on our country. He has to go.'

Labour leader Jeremy Corbyn raised the 'ludicrous situation' in a speech in Coventry, saying: 'Chris Grayling the transport secretary claimed the government had 'looked very carefully' at Seaborne Freight before giving the company the contract, but apparently not carefully enough to notice that it didn't have any ships.

'Chris Grayling does have form in other departments.'

Mick Cash, general secretary of the Rail, Maritime and Transport (RMT) union, said: 'RMT has taken a number of protests over the fiasco of the government's Brexit ferry contracts to both the Department for Transport and the ports, and the news this morning comes as no surprise to us.

'The whole exercise is a complete and utter shambles with the government ignoring union calls on what needs to happen. Instead they are blundering on from crisis to crisis.

'RMT has set out a package of demands that would guarantee that the Brexit ferry contracts are crewed by British seafarers, on decent pay and conditions negotiated through recognised trade unions.

'This government 'wing and a prayer' approach was always doomed to failure and it's time for Chris Grayling to stop attacking RMT and start listening to people who actually know what they are talking about instead of the chancers selling him a pile of old rope they don't even own.'

The government said no taxpayer money had been transferred to the company.