Tory Brexit revolt could sink Theresa May’s government
Tory Brexit revolt could sink Theresa May’s government as 60 MPs warn PM they will abandon her if she backs customs partnership with the EU
- The Prime Minister faces a showdown in a meeting with her Brexit ‘war cabinet’
- Sixty Eurosceptic Tory MPs threatened to sink the PM if she agrees customs deal
- Boris Johnson, David Davis, Michael Gove and Liam Fox thought to be united
- Dr Fox suggested he will quit if PM drops red line over leaving customs union
Theresa May has been warned that her government could ‘collapse’ if she goes ahead with plans for a customs partnership with the EU against the wishes of Brexiteers.
The Prime Minister faces a showdown in a meeting with her Brexit ‘war cabinet’ today after sixty Eurosceptic Tory MPs sent a 30-page report to Downing Street savaging the plan.
The damning report – compiled by the European Research Group, which is led by Jacob Rees-Mogg – claimed the plan would ‘festoon the entire economy with burdensome controls, while crippling the ability of the UK’ to negotiate trade deals.
The Prime Minister faces a showdown in a meeting with her Brexit ‘war cabinet’ today after sixty Eurosceptic Tory MPs sent a 30-page report to Downing Street savaging the plan
Boris Johnson (right), Michael Gove, David Davis (left) and Liam Fox will also form a united front against the proposal, a source said
Downing Street has reportedly been warned in correspondence that accepting the customs partnership deal would bring about the ‘collapse’ of the Government. Pictured: Environment Secretary Michael Gove, who is said to be willing to form a united front against the plan
It has become such a divisive issue for the group that sixty of its backers have threatened to withdraw their support from the Government in Parliament, sources told The Daily Telegraph.
Boris Johnson, Michael Gove, David Davis and Liam Fox will also form a united front against the proposal, a separate source said.
The move would effectively paralyse the Government’s ability to pass bills in the Commons – where Mrs May has a meagre majority of 13 – and could bring her premiership to an end.
Downing Street has reportedly been warned in correspondence that accepting the customs partnership deal would bring about the ‘collapse’ of the Government.
One European Research Group source told The Telegraph: ‘We have swallowed everything so far – but this is it.
‘If they don’t have confidence in Brexit we don’t have confidence in them. The Prime Minister will not have a majority if she does not kill off the NCP [New Customs Partnership].’
Liam Fox (pictured in Downing Street today) stopped short of saying explicitly that he would quit if Mrs May changed course, but left little doubt about his intentions
Brexiteers fear Mrs May will side with Mr Hammond, Business Secretary Greg Clark and her chief Brexit adviser Olly Robbins, who are championing the idea.
The leading Brexiteers fear it would effectively keep the UK inside the EU’s customs union and wreck hopes of an independent trade policy.
‘The four are unambiguous in thinking this is a terrible idea,’ the source said.
Mr Gove has described the plan as ‘bonkers’ and Dr Fox yesterday hinted he could even resign if it went ahead.
Mr Davis, who has dismissed the proposal as ‘blue sky thinking’, is also reported to have told friends he could quit. Aides played down the prospect of a walk-out however.
The four hope to ‘peel off’ Defence Secretary Gavin Williamson and new Home Secretary Sajid Javid, both former Remainers.
Jacob Rees-Mogg urged the Prime Minister to abandon the partnership plan and challenge Remainers in Parliament who want to keep Britain inside the customs union.
The Eurosceptic MP said the partnership proposal, which has the backing of Chancellor Philip Hammond, would ‘result in the worst of all worlds and make us a vassal state’.
The Prime Minister is expected to warn ministers the proposal is the only one that can resolve the Northern Ireland border problem and get through Parliament.
One Whitehall source said the PM was more concerned about the prospect of a defeat in Parliament by diehard Remainers led by former attorney general Dominic Grieve than by the risk of a mutiny by Tory Eurosceptics.
‘The bottom line is, she is more afraid of Grieve than she is of Iain Duncan Smith,’ the source said.
The two options now on the table
New Customs Partnership —backed by Remainers
It would involve UK officials electronically tracking final destinations of goods coming to Britain. Those heading for Europe would pay the relevant EU tariff and the money handed over to Brussels. Firms selling to the UK would be eligible for a refund, if our tariff levels were lower.
In theory, the EU would have to make similar arrangements at its borders to track goods destined for the UK.
If it works – and many believe it won’t – it would theoretically allow the UK to leave the customs union and negotiate trade deals with non-EU countries. Crucially, by removing all physical EU-UK customs borders it would also provide the answer to the Ulster border.
Maximum Facilitation — supported by Brexiteers
This would attempt to dramatically reduce customs controls and barriers between the UK and the EU.
Goods would be electronically tracked and pre-cleared with the tax authorities.
Firms allowed to operate as ‘trusted traders’ – so they can move goods freely without having to pay duty every time goods moved across the border.
Officials admit this will be more bureaucratic than inside customs union but hope to create a ‘bespoke’ model.
It would allow Britain to do deals with non-EU nations, because we would not have to comply with EU tariffs.
But the EU has dismissed this proposal as ‘magical thinking’.
Another source said Mrs May could try to fudge the issue at today’s two-hour meeting to prevent destabilising the Government ahead of tomorrow’s local elections.
But if a deal is signed off it could be approved by the full Cabinet as early as next week.
Cabinet sources played down the prospect of immediate resignations, suggesting Eurosceptic ministers would rely on Brussels killing off the proposal later in the year.
Opinion in Mrs May’s 11-strong Brexit war cabinet is finely balanced. Friends of Mr Javid acknowledge he has held ‘bracingly Eurosceptic’ views for years, but point out that he is a pragmatist who ended up backing Remain in 2016.
Mr Williamson is opposed to the UK remaining in any customs union. But allies suggested he could be swayed by his loyalty to the PM. Today’s meeting has been called to discuss the Government’s two options for future customs dealings with the EU.
The ‘new customs partnership’ would require officials to track the final destination of all goods entering the UK and hand over relevant tariffs to Brussels on goods ending up in the EU. It would also require alignment with EU regulations in some sectors.
The second option – known as ‘maximum facilitation’ – is a looser arrangement, which would use technology to streamline customs controls, particularly at the Irish border.
The four hope to ‘peel off’ Defence Secretary Gavin Williamson (pictured) and new Home Secretary Sajid Javid, both former Remainers
The Prime Minister is expected to warn ministers the proposal is the only one that can resolve the Northern Ireland border problem and get through Parliament
The EU has raised doubts about whether controls could ever be seamless enough to prevent the need for a hard border on the island of Ireland.
Eurosceptic MPs have warned that Mrs May could face a leadership challenge unless she opts for a clean break with Brussels. One former minister said: ‘This would be the final straw.’
Unconfirmed reports earlier this month suggested that EU officials had dismissed both UK proposals. Mr Davis yesterday told the House of Lords EU committee: ‘The Commission did push back on both.’
Downing Street fears the Government’s hands could be tied if Remainers in Parliament rally round an amendment to the Trade Bill tabled by former Tory Minister Anna Soubry to keep Britain in a customs union.
Insiders believe the partnership idea could buy off enough rebels to avoid defeat.
Downing Street last night insisted the scheme could be delivered on time.
The damning report – compiled by the European Research Group, which is led by Jacob Rees-Mogg (pictured) – claimed the plan would ‘festoon the entire economy with burdensome controls, while crippling the ability of the UK’ to negotiate trade deals
A No 10 spokesman said: ‘We are leaving the customs union and won’t be joining a customs union. We have put forward two proposals for addressing the customs issue in general and they will be discussed by the Government further.’
Yesterday, Dr Fox ramped up the pressure on May over Brexit – making clear he is ready to quit if she drops her red line on leaving the customs union.
The Trade Secretary said any form of customs union with the EU would be ‘unacceptable’ and worse than the UK’s current membership terms with the bloc.
The PM has repeatedly pledged that there will be no customs union after Brexit, but is struggling to find a way of reconciling the demands of Brexiteers and Remainers.
Tory rebels are threatening to side with Labour and other parties in a Commons vote on staying in the customs union expected next month.
They say keeping the ties are the only way to protect the economy and prevent a hard Irish border.
The Lords has already passed an amendment to the EU Withdrawal Bill designed to maintain a customs union – although ministers believe it is so loosely worded as to have little real impact.
But Eurosceptic Tories say they could move against Mrs May unless she holds the line on the crucial issue and ensures the UK can strike trade deals around the rest of the world.
The Cabinet met yesterday but is not thought to have discussed Brexit.
What is a customs partnership with the EU?
A customs partnership is less formal than the current EU customs union the UK is a member of.
Under the proposals, Britain would stay in a customs union with the EU for some sectors, while leaving it for others.
This would mean it would impose the same tariffs as the Brussels bloc on some goods, but set its own on others.
Backers of the plan say his would facilitate free trade in areas where Britain does a lot of its business with the EU, while freeing the country to sign new free trade deals with other countries.
One possibility could be keeping the UK and EU in a customs union for trade in goods, but allowing divergence for the services sector.
Under the so-called ‘hybrid model’, the UK would collect EU import tariffs on behalf of Brussels and then pay it to the EU.
But Brexiteers are critical of the plan. which they think is unworkable and cumbersome.
They fear it will effectively stop the UK from being able to negotiate free trade deals around the world after Brexit.
A key moment could come tomorrow when a powerful sub-committee meets to thrash out the UK’s position – although it could delay a final decision.
Brexiteers have been trying to kill off a plan for a ‘customs partnership’ with the EU, which would see the UK collect taxes on behalf of the bloc.
Dr Fox said yesterday that staying in any form of customs union was not an option.
‘I don’t think we can stay in the customs union for a number of reasons, the main reason being that we would be in a worse position than we are today,’ he told BBC Radio 4’s Today programme.
‘If we were in a customs union with the European Union we would have to accept what the EU negotiated in terms of market access to the UK without the UK having a voice.
‘That’s worse than the position in which we found ourselves today in the European Union.
‘I don’t think there is a customs union that could ever be acceptable.
‘If we are in a customs union of any sort we will have less ability to shape Britain’s future than we have today. That is not what the public voted for.’
Dr Fox refused to say explicitly that he would quit if Mrs May changed course, but left little doubt about his intentions.
‘Getting no answer you can draw your own inferences,’ he said.
Mrs May’s task might have been made more difficult by Amber Rudd’s resignation amid the Windrush fiasco.
The Cabinet has been carefully designed to represent both Europhile and Eurosceptic factions within the Tory party – with Mrs May theoretically having a casting vote.
But while Ms Rudd was a full-hearted Remainer, it is not clear where her replacement Sajid Javid will fall in the debate.
He was seen as a reluctant backer of EU membership during the referendum two years ago.
The PM – pictured chatting with pupils at Brooklands Primary School in Sale, Manchester yesterday – is facing a battle to hold the Cabinet together behind her Brexit plans
Trade Secretary Liam Fox (pictured right arriving for Cabinet with Boris Johnson today) said any form of customs union with the EU would be ‘unacceptable’
Mr Javid, pictured on his way to work this morning, is set to play a crucial role in the looming clashes over a future trade deal with the EU. But Ms Rudd, pictured leaving her London home today, has returned to the backbenches
Amber Rudd was thought to have been backing Mrs May ahead of a crunch showdown on the customs union in the Brexit ‘war Cabinet’ sub-committee (pictured together in February). But it is unclear where Mr Javid will fall on the issue
WHO’S IN BREXIT WAR CABINET AND WHERE DO THEY STAND?
Prime Minister Theresa May
Backed Remain, has since insisted she will push through Brexit, leaving the single market and customs union.
Cabinet Office Minister David Lidington
A strong Remainer during the referendum campaign, recently made clear he has not changed his mind about it being better if the country had chosen to stay in the bloc.
Chancellor Philip Hammond
Seen as one of the main advocates of ‘soft’ Brexit in the Cabinet. Has been accused of trying to keep the UK tied to key parts of the customs union for years after the transition ends.
Home Secretary Sajid Javid
Brought in to replace Amber Rudd after she resigned amid the Windrush scandal, Mr Javid was seen as a reluctant Remainer in the referendum.
Many thought the former high-flying banker would plump for the Leave campaign, but he eventually claimed to have been won over by the economic case. He is likely to focus be guided by evidence about trade calculations in discussions over how closely aligned the UK should be with the EU.
Foreign Secretary Boris Johnson
The Brexit champion in the Cabinet, has been agitating for a more robust approach and previously played down the problems of leaving with no deal.
He is said to be unhappy with plans for a tight customs arrangement with Brussels – warning that it could effectively mean being lashed to the EU indefinitely.
Environment Secretary Michael Gove
Has buried the hatchet with Mr Johnson after brutally ending his Tory leadership campaign in the wake of David Cameron’s resignation.
Thought to be less concerned with short term concessions that Mr Johnson, but focused on ensuring the UK is free from Brussels rules in the longer term.
Brexit Secretary David Davis
A long-time Eurosceptic and veteran of the 1990s Maastricht battles, brought back by Mrs May in 2016 to oversee the day-to-day negotiations.
He has said the government will be seeking a ‘Canada plus plus plus’ deal from the EU.
International Trade Secretary Liam Fox
Another Brexiteer, his red lines are about the UK’s ability to strike trade deals with the rest of the world, and escaping Brussels red tape.
Business Secretary Greg Clark
On the softer Brexit side of the Cabinet, Mr Clark is thought to have supported Mr Hammond’s efforts to maintain close links with the customs union.
Defense Secretary Gavin Williamson
A close ally of the Prime Minister and viewed by some as her anointed successor. He is believed to be siding with the Brexiteers on the need for Britain to be able to diverge from EU rules.
Northern Ireland Secretary Karen Bradley
Supported Remain but a relatively unknown quantity on the shape of a deal. Replaced James Brokenshire, another May loyalist, after he resigned on health grounds last month.
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