A controversial ferry contract awarded to a company with no ships as part of no-deal Brexit plans has been scrapped, the government has said.
Ministers had faced criticism for the £13.8m deal with Seaborne Freight, which has never run a ferry service.
The Department of Transport said it made the decision after the company’s Irish backer pulled out.
The government is now in “advanced talks” to find another company to replace the cancelled deal.
The Daily Telegraph, which first reported the cancelled contract, said Arklow Shipping, a major Irish shipping firm, withdrew its support from Seaborne “without warning”.
Seaborne Freight was awarded the £13.8m contract in December to run a freight service between Ramsgate and Ostend in the event that Britain leaves the EU without a deal on 29 March.
But the government faced strong criticism for choosing a company with no ships or trading history, and for leaving too little time to establish the new ferry service before the Brexit deadline of 29 March.
At the time, the government said that it awarded the contract “in the full knowledge that Seaborne is a new shipping provider” and said that the company had been “carefully vetted”.
But on Saturday, the Department of Transport said that it has now become clear that Seaborne “would not reach its contractual requirements”, after Arklow Shipping backed out of the deal.
A spokesman said: “The government is already 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.”
No taxpayer money has been transferred to Seaborne. The government said its confidence in the viability of the deal with Seaborne was based on Arklow Shipping’s backing of the company and the assurances it received from them.