Chris Grayling’s plan to run ferries between Kent and Belgium to bring in crucial supplies in the event of a no-deal Brexit will not be ready in time for exit day, the mayor of Ostend has said.

The transport secretary has faced a wave of criticism after handing a £13.8m contract to run ferry services between the Belgian city and Ramsgate to Seaborne Freight, a company with no ships.

Seaborne was one of three firms awarded contracts totalling £108m to lay on additional crossings to ease the pressure on Dover when Britain pulls out of the EU, despite having never run a Channel service.

And now Bart Tommelein, the mayor of Ostend, has said it is “impossible” for his city to be ready for a ferry service in time for Brexit day on March 29 and demanded guarantees about “the solvency” of Seaborne.

It came as Labour said Grayling had handed a government contract to a firm with “no money, no ships, no track record, no employees, no ports and one telephone line and no working website or sailing schedule”, accusing the transport secretary of “gross incompetence”.

Seaborne faced embarrassment last week after it emerged the terms and conditions on its website referred to the delivery of meals, raising suspicions they had been copied and pasted from a takeaway delivery outlet.

In the Commons, Grayling insisted he was “confident that the firm will deliver the service”.

But Tommelein, asked if Ostend would be ready to run regular services by March 29, told the BBC: “No, that’s impossible. We are interested in a ferry line… because we have a harbour and a harbour needs traffic. But there are some inconveniences, also some investments to do in our harbour [and] in the harbour of Ramsgate.

“We need some guarantees [from] the ferry line themselves because I’m worried about a few things… I want guarantees about the profitability of this ferry line and the solvency of this company.” 

It came as shadow transport secretary Andy McDonald in the Commons claimed Seaborne chief executive Ben Sharp was “allegedly under investigation” by a government department after leaving a “trail of debt” from previous business activities in the Gulf.

The Labour frontbencher said: “This is a shoddy and tawdry affair and the secretary of state is making a complete mess of it.

“This contract is very likely unlawful and violates every current best practice guidance issued by Whitehall.

“When will he realise that this country cannot continue to suffer the consequences of his gross incompetence? Why is this calamitous secretary of state still in post?”

Responding, Grayling said he would not “address the idiocy” of McDonald’s comments and stressed that the contract meant the government would “pay no money until and unless ferries are running, that is responsible stewardship of public money”.

Grayling said a review of the firm had been carried out by his department and “nothing that would prevent them from contracting with Government” was found.

He said: “I make no apology for being willing to contract with a new British company, we contracted with Seaborne Freight as the service they propose represents a sensible contingency in the event of disruption on other routes.”

Conservative Sir Bernard Jenkin, chairman of the public administration and constitutional affairs committee, suggested a “quick lessons learned” review should be conducted by the department’s permanent secretary to ensure companies are “better prepared” for the scale of scrutiny they could be subjected to.

Grayling replied that the contract was “properly passed through and signed off” by his department’s accounting officer.

Lilian Greenwood, Labour chairwoman of the Commons transport committee, raised questions about Seaborne’s “secret ships” and over how the service will be delivered.

Grayling later claimed Labour “simply hate business” over its response to the government agreeing a contract with a small firm.

But Labour MP Diana Johnson accused Grayling of “bluster and bluff” before adding: “Can he just say to me that everything he’s heard today from the frontbench and from the chair of the transport select committee, does he not have one iota of concern about this contract being let to this shyster?”

SNP MP Angus MacNeil said: “It feels daily that we’re in a film called Carry On Brexit.”

Labour’s Alex Sobel claimed Seaborne tried to “get an option to purchase” four ships which “all operate in the southern Mediterranean and would need a complete refit to be able to operate in the Channel”.