Theresa May faces threat from Brexiteers over customs union ahead of Cabinet meeting
Theresa May is facing the prospect of a Government split as her “Brexit war cabinet” prepares to meet for discussions on the divisive customs union issue.
It is increasingly feared that Britain remaining in some form of customs partnership with the EU post-Brexit could spark a rebellion of MPs.
Unconfirmed reports on Tuesday night said that Chancellor Philip Hammond has thrown his weight behind a customs partnership proposal, thought to be favoured by Mrs May but branded “cretinous” by critics.
The European Research Group (ERG) of eurosceptic Tory MPs has sent her a report detailing its opposition to the plan ahead of Wednesday's Cabinet meeting.
With customs arrangements emerging as the key stumbling block to a deal on EU withdrawal, the issue has the potential to split the Cabinet, where Brexiteers like Boris Johnson and Liam Fox seeking freedom to strike new trade deals are pitted against others who fear barriers to commerce in Europe.
Downing Street has been privately warned that the issue could collapse the Government, as committed Brexiteers regard it as unacceptable as it would deliver “Brexit in name only”.
Although the European Commission has said it wants a solution for the Irish border by its upcoming summit in June, there is no requirement on Mrs May to come to a final decision at Wednesday’s meeting.
It was widely expected that she may seek to stave off potential resignations by keeping all options open.
Eurosceptic Tory Jacob Rees-Mogg has played down the question of Brexiteers issuing an "ultimatum" to Mrs May.
But he rejected the Government's proposal of a customs partnership as "deeply unsatisfactory".
"There is no question of there being an ultimatum, this is a paper that has been produced on a specific aspect of policy that would not work - it would not effectively take us out of the European Union, it would leave us de facto in both the customs union and in the single market," he told BBC Radio 4's Today programme.
"This customs partnership is one of those clever ideas that sounded plausible when first looked at and when the detail is examined turns out to be deeply unsatisfactory, flawed and not get us out of the European Union, which is what people voted for."
Under the customs partnership plan, Britain would collect tariffs on the EU’s behalf at ports and airports, passing on a share of the cash to Brussels.
If the UK decided to set different tariffs from its European neighbours, traders would claim refunds from HM Revenue and Customs for goods which stay in Britain.
Some are understood to regard the partnership as a means of avoiding a hard border in Ireland while keeping the UK out of the European customs union.
But Brexit Secretary David Davis has confirmed that Brussels is “pushing back” at the scheme, as well as a second UK proposal for a “streamlined customs arrangement” using new technology to avoid the need for checks at the border.
Reports last month suggested that EU officials told Olly Robbins, Mrs May's Brexit representative, at a Brussels meeting that both schemes were “unworkable”.
Now Mr Davis has told a House of Lords committee: “The Commission did push back on both.”
Brussels is concerned both by the prospect of “porosity” on the EU’s external border and by the risk of creating a precedent which might be copied elsewhere, he said.
Tory Brexiteers fear the scheme could indefinitely trap the UK within the EU’s customs arrangements, as well as being expensive and complicated to operate.
Cabinet Office Minister David Lidington indicated a final decision may not be taken at today's meeting of the Brexit "war cabinet".
He told BBC Radio 4's Today the discussions would "start this afternoon and will probably continue in other meetings".