A £200m rescue of the shipyard that built the Titanic has been imperilled by a legal row about a ferry service in the Isles of Scilly. Belfast-based Harland & Wolff – which is working on a £1.6bn contract for the Royal Navy – was plunged into crisis this week as it emerged ministers were withholding approval of a lifeline loan guarantee for the company. It can now be revealed that the row centres on concerns that the support will breach domestic and European Union state aid rules, triggered partly by the company’s controversial plan to launch a new ferry service. The service will compete with one already operated by the 104-year-old Isle of Scilly Steamship Group (ISSG), which has warned ministers that any support for Harland & Wolff would flout subsidy and competition laws. Government lawyers are concerned that the loan guarantee would be regarded as an unfair intervention in this rivalry, risking a legal challenge or complaint to the Competition and Markets Authority, according to Whitehall sources. There are also fears that the intervention would fall foul of the UK’s post-Brexit deal on state aid with Brussels. A French company is contracted to make new ships for ISSG. A Whitehall...