SHADOW business secretary John Denham has demanded an investigation into a possible breach of the ministerial code over the handling of Liverpool’s second bid to muscle in on Southampton’s lucrative cruise trade.

The Southampton Itchen MP has accused Tory shipping minister Mike Penning of pre-empting a review of a decision to refuse to allow Liverpool to use its £20m taxpayer- funded Pier Head terminal to start and finish cruises.

The terminal was built with £15m of European funds on the condition it would only be used for calling cruises.

Southampton politicians and port bosses argue it would give Liverpool an unfair advantage over other ports, amounting to a state-funded subsidy.

Southampton has spent millions of private sector cash strengthening the city’s position as the cruise capital of northern Europe with around 360 cruise ships expecting to visit the city this year – worth more than £400m to the local economy.

On a recent visit to Liverpool Mr Penning said: “Under the review the council will submit a proposal in which a percentage of the subsidy will be repaid. This allows me to go to a whole consultation that makes everyone happy and brings cruise liners back to where they came from on the Mersey.”

In a letter to the head of the civil service Sir Gus O’Donnell, Mr Denham said: “This statement would appear to pre-empt the outcome of any formal consultation which is undertaken by the Government. It suggests a close liaison with a potential beneficiary which does not seem appropriate, particularly when legal issues may ultimately be raised.”