The Transport Secretary, dubbed Failing Grayling after a string of controversies, will see his permanent secretary grilled by the Commons Public Accounts Committee next week while Conservative MP Huw Merriman has also called for a thorough explanation from Mr Grayling himself.
It emerged on Friday that ministers had agreed to pay the Channel Tunnel operator the huge sum in order to avoid a High Court showdown after Eurotunnel had launched legal action over the awarding of £108 million in contracts to three ferry firms for provisions in the event of a hard Brexit.
Mr Merriman, who sits on the Transport Select Committee, said Mr Grayling will have to explain “exactly what’s happened, what he’s going to do to remedy it and what he thinks is his position as a result of that”.
He told Channel 4 News: “What we are touching on here is something that does seem to have occurred under his executive position as secretary of state, which is why he will need to explain exactly why the decision has been made to pay such a high amount out.”
Mr Merriman said it was “absolutely outrageous that a company has managed to get £33 million out of a £108 million tender contract, effectively make 33% profit, by doing absolutely nothing”, while he also criticised Eurotunnel for pursuing the action.
Anna Soubry, who recently quit the Conservatives to join The Independent Group of MPs, was scathing of Mr Grayling’s record as she addressed the situation.
The former minister told BBC Radio 4’s Today programme: “If you look at the evidence he should have gone a long time ago.
“It’s a litany of disaster. That is his record and that is the evidence.”
While Labour MP Rachel Reeves, chairwoman of the Commons Business, Energy and Industrial Strategy Select Committee, backed calls for Mr Grayling to go and said it was a sign of the Prime Minister’s “weakness” she had not removed him from the Cabinet.
Ms Reeves told the BBC: “There is no reason whatsoever that this man should still be in the Cabinet, making key decisions still on transport policy.
“He should be sacked by the Prime Minister, and it is a sign of her weakness that she’s not able to do that.”
Shadow transport secretary Andy McDonald said: “No matter how many mistakes Chris Grayling makes or how much public money he squanders, he remains in post.
“Theresa May must stop putting her own interests ahead of the country and sack him before he inflicts further damage.”
Deputy Labour leader Tom Watson said “heads must roll” over the fiasco.
He told The Guardian: “This is a scandalous, needless, reckless waste of public money caused by the Tories’ gross failure in Brexit negotiations and their botched effort to prepare for the disastrous folly of a no deal – which shouldn’t even be on the table.”
The Eurotunnel settlement came on the same day that the public spending watchdog released a scathing report on reforms to the probation service introduced by Mr Grayling in his previous role as justice secretary.
Nearly £500 million more than was required under the original contracts for the private firms is expected to be paid by the Ministry of Justice.