Chancellor Philip Hammond invested in a food tech company shortly before it won a share of a Government grant worth hundreds of thousands of pounds, it has been revealed.

In October 2015, while he was Foreign Secretary, Mr Hammond bought a 15% stake in Cambridgeshire firm Hydramach, Companies House records show.

Less than a year later in April 2016 the firm was among a group of eight awarded a £560,000 public grant to develop a range of low-fat and low sugar products.

Details of Mr Hammond’s investment were made public last month in the register of ministerial interests and uncovered today by the Daily Telegraph.

The former standards watchdog told the paper his failure to immediately declare his stake was “a serious failure” since “there is clearly a potential conflict of interest”.

The grant – to develop a range of low-fat and low-sugar soups, ready meals and sauces – was handed out by Innovate UK, an offshoot of the Department for Business.

The first instalment of the grant is due to be paid to the consortium, which includes J Sainsbury and the University of Chester, on 1 February – although Hydramach is no longer a member.

A source told the Telegraph Mr Hammond “didn’t know that the company had entered the assessment stage as part of this consortium, until after the assessment phase was complete”.

The source added: “Mr Hammond has no involvement in his capacity as Chancellor in the process of awarding Innovate UK grants.”

Richard Hobbs, the director of Hydramach said: “Hydramach withdrew from the proposed consortium and declined to enter into the agreement with Innovate UK.

“Therefore Hydramach has not received nor will receive or benefit in any way from any grant paid to the other members of the consortium led by Sainsbury.”

'OPEN TO CHALLENGE'

Sir Alistair Graham, who chaired the Committee on Standards in Public Life between 2003 and 2007, told the Telegraph: “I am really surprised that someone of his seniority and experience has not seen fit to declare publicly all of his shareholdings because it leaves him open to challenge of a potential conflict of interest.

“It certainly raises a very big question-mark – somebody like the Chancellor of the Exchequer really can't afford to be seen to be in such a position.

"Most people probably thought he was very straight in these matters and would have been concerned to be seen to abide by the spirit of the rules. It is a failure of leadership that he hasn’t.”

But a spokesperson for Mr Hammond said: “The shareholding has been fully declared to the Director General for Propriety and Ethics at the Cabinet Office and the independent adviser on Ministers' interests who were content with the arrangements.”

The spokesperson added: “Hydramach initially joined the consortium, but later withdrew its participation and did not bid for, or receive any research funding. Mr Hammond does not have any day to day involvement in the company.”

'NOT RELEVANT TO ROLE'

An aide to Mr Hammond told the paper: “He declared his shareholding as part of the usual ministerial interests process - as set out in the Ministerial Code - whilst Foreign Secretary.

“It wasn't published in the List of Ministers' Interests whilst he was Foreign Secretary because it wasn't considered to be relevant to his role at that time.

“It wasn't declared in his House of Commons’ register because it didn't meet their threshold for declaration.”