Theresa May set to avoid Commons defeat on customs union after agreeing compromise deal with Tory rebels

Remainers and Brexiteers unite behind amendment that would see government try to negotiate 'customs arrangement' with EU

Benjamin Kentish

Political Correspondent

Monday 11 June 2018 21:12

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House of Lords defeat Government on EU customs union withdrawal bill

Theresa May looks to have avoided a humiliating defeat on a key area of Brexit policy after reaching a compromise with Conservative backbenchers.

The prime minister faced the prospect of losing a crunch vote on the customs union but prominent pro-EU rebels and leading Brexiteers have now agreed to unite behind a No 10 deal.

The compromise will see the government pledge to try to agree a “customs arrangement” with the EU. That appears to have been enough to convince some MPs not to back another motion, passed by the House of Lords, that would keep the UK in a “customs union” with the EU.

The issue looked set to be the subject of a knife-edge vote as the government attempted to overturn the Lords’ amendment to the EU Withdrawal Bill when the bill returns to the Commons this week.

However, ministers now believe they have won over enough rebels to successfully remove it.

The new compromise amendment has been signed by leading pro-EU Tory MPs such as Nicky Morgan, the former education secretary, and Stephen Hammond. It also has the backing of prominent Brexiteers including Jacob Rees-Mogg and Sir Bill Cash.

The motion was tabled by Conservative grandee Sir Oliver Letwin, who is reported to have helped broker the deal following days of tense meetings between Tory whips and potential rebels.

The compromise emerged after Ms May took the unusual step of addressing her parliamentary party at a meeting of the 1922 Committee of Tory MPs.

She urged MPs to get behind her, telling them voting against the government would weaken her hand in Brexit negotiations.

The biggest issues facing UK on leaving EU

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1/8The biggest issues facing UK on leaving EU

The biggest issues facing UK on leaving EU

Post-Brexit immigration

workers sorting radishes on a production line at a farm in Norfolk. One possible post-Brexit immigration scheme could struggle to channel workers towards less attractive roles - while another may heighten the risk of labour exploitation, a new report warns.

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The biggest issues facing UK on leaving EU

Customs union

A key point in the negotiations remains Britain's access to, or withdrawal from, the EU customs union. Since the referendum there has been hot debate over the meaning of Brexit: would it entail a full withdrawal from the existing agreement, known as hard Brexit, or the soft version in which we would remain part of a common customs area for most goods, as Turkey does? No 10 has so far insisted that “Brexit means Brexit” and that Britain will be leaving the customs union, but may be inclined to change its position once the potential risks to the UK’s economic outlook become clearer.

Alamy

The biggest issues facing UK on leaving EU

Northern Ireland-Irish border

Though progress was made last year, there has still been no solid agreement on whether there should be a hard border between Northern Ireland and the Republic of Ireland. To ensure borderless travel on the island, the countries must be in regulatory alignment and therefore adhere to the same rules as the customs union. In December, the Conservative Party’s coalition partners, the DUP, refused a draft agreement that would place the UK/EU border in the Irish Sea due to its potential to undermine the union. May has promised that would not be the case and has suggested that a “specific solution” would need to be found.

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The biggest issues facing UK on leaving EU

Transition period

Despite protests from a small number of Conservative MPs, the Government and the EU are largely in agreement that a transitional period is needed after Brexit. The talks, however, have reached an impasse. Though May has agreed that the UK will continue to contribute to the EU budget until 2021, the PM wants to be able to select which laws made during this time the UK will have to adhere to. Chief negotiator Michel Barnier has said the UK must adopt all of the laws passed during the transition, without any input from British ministers or MEPs.

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The biggest issues facing UK on leaving EU

Rights of EU citizens living the UK

The Prime Minister has promised EU citizens already living in the UK the right to live and work here after Brexit, but the rights of those who arrive after Brexit day remains unclear. May insists that those who arrive during the transition period should not be allowed to stay, whereas the EU believe the cut-off point should be later.

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The biggest issues facing UK on leaving EU

Future trade agreement (with the EU)

Despite this being a key issue in negotiations, the Government has yet to lay out exactly what it wants from a trade deal with the EU. Infighting within the Cabinet has prevented a solid position from being reached, with some MPs content that "no deal is better than a bad deal" while others rally behind single market access. The EU has already confirmed that access to the single market would be impossible without the UK remaining in the customs union.

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The biggest issues facing UK on leaving EU

Future trade agreements (internationally)

The Government has already begun trying to woo foreign leaders into prospective trade agreements, with various high profile state visits to China, India and Canada for May, and the now infamous invitation to US President Donald Trump to visit London. However the UK cannot make trade agreements with another country while it is still a member of the EU, and the potential loss of trade with the world's major powers is a source of anxiety for the PM. The EU has said the UK cannot secure trade deals during the transition period.

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The biggest issues facing UK on leaving EU

Financial services

Banks in the UK will be hit hard regardless of the Brexit outcome. The EU has refused to give British banks passporting rights to trade within the EU, dashing hopes of a special City deal. However according to new reports Germany has suggested allowing trade on the condition that the UK continues paying into the EU budget even after the transition period.

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Speaking after the meeting, Steve Baker, the Brexit minister, said: “The government will look very carefully at what they have tabled and we will take a decision on whether or not we can support it in the usual way

“Our policy is to leave the customs union so that we can conduct our own independent trade policy, but it would be appropriate that we have an arrangement in place with the European Union.”

Robert Buckland, the solicitor general, added: “There’s ongoing work happening and I think it’s emblematic, actually, of a real sense of common purpose in the party that we all hang together or we all hang separately.

“It’s more than just about party unity – this is about the national interest.”

Pro-EU Tories are believed to be willing to delay any potential rebellion on the customs union until later votes on other government bills – namely the Trade Bill and Customs Bill – which they believe will give them another opportunity to force Ms May to change tack on the issue.

While the internal Tory row over the customs union appears to have been temporarily resolved, the threat of a humiliating government defeat on other issues remains. In particular, a number of Conservative MPs are ready to vote in support of an amendment that would ensure parliament is given a ”meaningful vote” on the final Brexit deal negotiated with Brussels.

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Gordon Brown: Theresa May could be forced out if she loses key Brexit vote

Labour said the compromise deal on the customs union was “simply not good enough”.

Jenny Chapman, the shadow Brexit minister, added: “It is yet another fudge designed to patch over the deep divisions at the heart of the Conservative Party.

“Their failure to agree a customs proposal threatens UK jobs and industry, and this bogus amendment cannot mask that fact.

“The best way to protect jobs, the economy and to avoid a hard border in Northern Ireland is for parliament to back Labour’s call for a new comprehensive customs union after Brexit.”

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