The Prime Minister has come under fire for the way a contract for an emergency Brexit ferry service was awarded to a company that had no experience and no ships.

The issue dominated exchanges between the PM and Labour opposition leader Jeremy Corbyn.

Mr Corbyn said the contract showed the government’s handling of Brexit was shambolic and costly and “nothing illustrated it more than the fiasco of Seaborne Freight”.

He asked the PM: “What went wrong?” Replying, the PM insisted that the checks made on the company had followed the established guidance for start-up companies.

“Due diligence was carried out on all these three contracts,” she said.

She also revealed that the government was in talks with Thanet council about what needed to be done to safeguard it and taxpayers from any additional financial burden.

Mr Corbyn went on the offensive and challenged her assertion that no costs had been incurred as a result of what he described as the “spectacular incompetence” of the way the issue had been handled.

The Prime Minister repeated that due diligence checks had included third party assessments and that “there would be costs attached to that process.”

Asked why the Secretary of State had agreed to the contract despite advice that it was “high risk” Mrs May said: “He is suggesting we should never look at start-up companies...we will ensure the extra capacity is there.”

Mr Corbyn quoted from a Freedom of Information request that showed that government advisers “were instructed to restrict their due diligence checks to what Seaborne Freight told them.”

Mrs May defended the Secretary of State for his role in the saga and said no public money had been paid to Seaborne Freight.

But Mr Corbyn said the government now faced a £1m bill for defending itself in a legal challenge from Eurotunnel, which was taking it to court over the way the contracts had been handled.

He said Thanet council now faced a £2m black hole and pressed the PM to give a “cast iron guarantee” that the local taxpayers would not have to meet the costs.

Replying, Mrs May said the government was in discussion with Thanet council.

Mr Corbyn said: “It cannot be right that the hard pressed taxpayers of Thanet are footing the bill for the incompetence of the Secretary of State and this government.”