A BITTER dispute between port chiefs in Southampton and Liverpool has resurfaced after Hampshire bosses launched a fresh attack on a multi-million-pound grant to their rival.

The Port of Liverpool has clinched a £35m Govern-ment grant towards the cost of dredging the estuary at Seaforth to accommodate giant container ships – just as Southampton embarks on its own docks transformation project.

But wheras Southamp-ton’s scheme – boosted by this month’s £70m European Investment Bank (EIB) loan – is privately funded, Liverpool has received the public money from the Government’s Regional Growth Fund (RGF).

It follows the “cruise wars” between the two cities which led to Liverpool handing back £8.8m of taxpayers’ cash used for a new cruise terminal at Pier Head.

Southampton initially lobbied for Liverpool to hand back £17m of Government and EU money which funded the creation of the £21m terminal, and it is still to be decided if the remaining £8.6m needs to be repaid.

The latest grant – awarded in May – sparked an angry reaction from Associated British Ports (ABP) which runs Southampton Port and is spearheading the docks’ £150m dredging and modernisation scheme.

Now company chief executive Doug Morrison will approach European Union officials after the Department of Transport denied that the grant contradicts the Government’s policy that commercial ports should seek private funding.

Mr Morrison initially wrote a letter of complaint to the DfT and is monitoring the European Union State Aid rules.

He said: “When you’ve got grants going to Liverpool you’ve got to ask the question why are we not getting anything?

“We asked the Govern-ment to see if there had been a change in the ports policy, but they said it was a commercial-led sector. They must have asked Brussels about the European state aid rules when deciding the grant and we need seek clarification.”

He also said the company would be reviewing its policy on applying for grants to ensure they can get the most amount of funding available in future.

He added: “We need to move on and look at our own initiatives for grants.”

Southampton Itchen MP John Denham promised to raise the issue in Parliament, and added: “There are a lot of questions to be answered here.

“The Govern-ment policy is that the market should decide which ports are successful, so if a port is singled out for help it’s contradictory.

“We need proper explanation of why it’s gone to Liverpool and what Southampton would have to do for similar funding.”

Hampshire Chamber of Commerce chief executive Jimmy Chestnutt branded Liverpool’s grant a “disgrace”, and added: “This is nothing short of state aid to a private company and shouldn’t be allowed.

“Imagine two shops in a high street and one being subsidised. It distorts the market, and it isn’t the way the country should be run.

“But if there is something that makes it alright, we need to know what it is, as ABP has been paying for their dredge out of their own pocket.”

RGF grants are available to rebalance the economy by supporting areas highly dependent on the public sector.

Ironically, politicians in Liverpool slammed ABP for being “two-faced” for accepting its EIB loan – money which they must eventually pay back.

But Peel Ports, which owns the Mersey Docks and Harbour Company, |refused to comment on its grant or accusations from its rival.

A spokesman from the Department of Business, Innovation and Skills defended the grant and pointed out that Southampton port will benefit from a £7.5m RGF Platform Prosperity award to Southampton City Council to improve the city’s infrastructure around the docks.

He said: “The RGF is a key part of the Government’s strategy to drive up growth over the long-term in leveraging private sector investment and creating jobs.

“It is a competitive fund and only those bids that best meet the funds' objectives and offer the best value for taxpayers’ money will be supported.”