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Transport Secretary Grant Shapps said the Insolvency Service will carry out a criminal and civil inquiry into the scandal. P&O Ferries chief executive Peter Hebblethwaite had already been dubbed a “shameless criminal” when he had appeared before a committee of MPs.

He admitted the firm breached employment law by firing the workers without consultation and replacing them with cheaper agency staff.

Yesterday’s announcement followed efforts by Mr Shapps to take action against the company and its directors.

He said that new government measures announced this week will prevent a repeat of the episode.

Mr Shapps added: “I criticised… boss Peter Hebblethwaite have called for the chief executive to step down after he shamelessly told Parliament he had knowingly broken the law.

“It is right the company is held to account for its actions.

“My department will fully co-operate with the review to ensure maritime workers are protected from anything like this happening again.”

Dean Beale, Inspector General of the Insolvency Service, confirmed the investigations yesterday.

If investigators find that a criminal offence has been committed, they may pass a file to the police.

Mr Hebblethwaite, who earns £325,000 a year plus two bonuses, insisted that although employment law had been breached, the company had not committed a crime.

Mr Shapps described him as “outrageous”.

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