P&O Ferries is under growing pressure to repay millions of pounds in government support it received during the pandemic after a decision to replace 800 UK-based crew with cheaper agency staff sparked fierce condemnation from politicians and unions.

The company, which is owned by Dubai’s DP World, on Thursday suspended sailings as it dismissed its UK crews with immediate effect through a short video message.

Unions said the company had received £10mn in furlough money during the pandemic. P&O was also paid £4.4mn through an government emergency scheme to keep freight flowing during lockdown between May and July 2020.

James Heappey, the armed forces minister, on Friday said: “It certainly feels to me it would be the right thing to do for P&O to hand that money back. I’m sure that colleagues in the Treasury and DFT will be looking at it.”

Grant Shapps, transport secretary, added that it was not too late for P&O’s management to meet workers to discuss the redundancies, and that he would be “putting pressure on all sides” for them to do that. He said he had asked officials and legal teams to “look at” whether the government has any contracts with P&O.

DP World has invested in the Thames Freeport, and its Southampton deep-sea container port was one of eight bidders to be awarded freeport status — which brings tax advantages — by the government last year.

Government officials were made aware of P&O’s plans to sack UK crews on Wednesday evening, but ministers did not know until Thursday.

Labour said ministers should now claw back money handed over during the pandemic, suspend government contracts handed to DP World, and remove it from the UK government’s Transport Advisory Group.

“The government must now stand up for loyal workers in Britain being undermined by overseas billionaires,” shadow transport secretary Louise Haigh said.

A large crowd of protesters led by union leaders and MPs gathered at Dover docks on Friday after P&O warned it did not expect to be able to restart sailings for days.

Drawing comparisons with actions taken against Russian oligarchs, the RMT Union said ministers should “seize” P&O’s ships.

Darren Proctor, national secretary of the RMT, said sacked workers were being advised not to sign severance packages while unions sought legal advice.

He said the agency staff brought on to ships over the past 24 hours were only contracted to work a two-week period, and that management would probably bring in cheaper overseas staff after that.

“This is an international route, so in order to employ a UK seafarer at this moment in time you would have to pay the national minimum wage. If they employed someone from outside the UK they would not have to pay them the national minimum wage,” he said.

Peter Hebblethwaite, chief executive of P&O Ferries, told the company’s remaining employees, in a letter seen by the Financial Times, that the cheaper staff would reduce crewing costs by 50 per cent.

“It is a model that is proven to work across the industry, while still allowing us to retain service and safety levels,” he wrote.

Irish Ferries uses the agency recruitment model but most others in the industry, including Denmark’s DFDS, another of the three ferry operators between Dover and Calais, employs the majority of crew directly.

The sudden gap in capacity on crucial freight routes, including the short straits between Dover and Calais, led to warnings of pressure on already stretched supply chains.

DFDS said passenger bookings were three or four times higher than usual for the coming days, as well as across Easter and summer.

The Danish operator added that it had been able to handle the traffic in the ports so far and the weekend lull in freight volumes should help to keep goods and passengers flowing. Dover port handles £144bn of trade in goods and a third of UK trade with the EU.

Some P&O freight ferries such as those into terminals on the river Thames, which are owned and operated in a different manner to the ferries directly affected by the job cuts, are still operating.

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