In a letter to Southampton MP John Denham, Mike Penning said that Liverpool City Council had “pre-empted” a ruling from the European Commission on the repayment of £8.6m of EU funding used to build its £21m cruise terminal on the Mersey.
Southampton MPs and Euro MPs have accused Liverpool of acting “illegally” by beginning to use its City of Liverpool Cruise Terminal as a start and finish point for lucrative cruises before the Commission has decided whether it should pay back the European cash to comply with competition rules.
Mr Penning said in his letter: “The fact that Liverpool City Council has now pre-empted the Commission and commenced turnaround before a state aids decision has been made does leave it open, in the event of a finding of unlawful Aid, to the possibility of financial penalties, including repayment of grants from the European regional development fund. This is however a matter for the Commission.”
Mr Denham has said: “I welcome the minister's confirmation that Liverpool do not have permission to start cruises and may have to pay a penalty. But the minister should be stepping in himself, not leaving it to Brussels to take action.”
Mr Penning last month announced he would lift strict restriction on the terminal, limiting its use to calling cruises, if the council agrees to pay back £8.8m of UK funding.
But he said easing the restriction was subject to EU state aid clearance.
Southampton and other UK ports that have built their cruise operations on private funding have called for all public funding to be repaid.
Liverpool City Council has not offered to pay back any EU funding claiming it was not a “condition upon the terminal solely being used as a call-in facility”.