Cabinet's Brexiters push May to drop 'customs partnership'

Theresa May’s Brexit inner cabinet are preparing for a showdown over the customs union next week, as leading Brexiters including Liam Fox and David Davis try to force the prime minister to ditch the “customs partnership” model.

This so-called “hybrid model”, under which the UK would collect EU import tariffs on behalf of Brussels, is regarded as cumbersome and impractical by Brexiters, who fear it would leave open the option that Britain could rejoin a customs union.

It would also require the UK to access EU IT systems to levy duties, something Brussels is unlikely to accept. “The hybrid model is the unicorn model”, one senior Brexiter said.

The group, backed by the foreign secretary, Boris Johnson, hopes to persuade the prime minister to throw her weight behind the alternative, the maximum facilitation (“max-fac”) proposal, which relies on technology to minimise border checks.

The customs union has become the most contentious issue in the debate about what kind of Brexit should be pursued, with many MPs regarding it as the only way of successfully avoiding a hard border in Northern Ireland.

Countries in the customs union levy tariffs on goods made outside the EU, but member countries trade with each other tariff-free and negotiate trade deals as a bloc. It is this “common commercial policy” that Brexiters are particularly exercised about, since it would prevent Britain from striking the sort of independent deals with non-EU countries that Fox, the international trade secretary, is pursuing.

The government’s options have initially been rejected by Brussels negotiators, though Davis has insisted his team is ready to answer the EU27’s concerns.

Leavers hope the Brexit inner cabinet will decide which of the two customs union options the government will adopt when it meets next week. The decision could then be ratified by the full cabinet, but proponents of the hybrid model are likely to try to keep it on the table.

On Thursday, cabinet Brexiters were alarmed by comments from the home secretary, Amber Rudd, which appeared to leave open the possibility of remaining in the customs union.

As MPs debated the issue in the House of Commons, Rudd was asked whether she would vote to remain inside if she were still a backbencher. “I am committed to the government’s position, which, to some extent, we are still working on,” she replied.

Pressed on whether she thought it was more or less likely that the UK would stay in the customs union, Rudd said: “I’m afraid I’m not going to be drawn on that; we still have a few discussions to have, in a really positive, consensual, easy way, among all my cabinet colleagues, in order to arrive at a final position”.

One Whitehall source said: “Everyone knows where Rudd stands: there is a large part of the cabinet who see Brexit as a damage limitation exercise – and if they win the customs union battle, they will move on to the single market”.

The home secretary quickly retreated, tweeting an hour after the lunch ended that she “could have been clearer” and “of course” the UK would leave the customs union.

May’s spokesman later said: “It’s the position of the prime minister, the cabinet and the entire government that we will be leaving the customs union and be free to sign our own trade deals around the world.”

But as a series of Conservative MPs stood up in the debate to express concerns about leaving the customs union, Rudd’s comments appeared to suggest the issue remains unresolved at the highest level of government.

The shadow Brexit secretary, Keir Starmer, said: “Amber Rudd appears to have let slip that discussions around the cabinet table about negotiating a customs union with the EU have not in fact concluded.

“If that is so, then the prime minister should rethink her approach and listen to the growing chorus of voices in parliament and in business that believe she has got it wrong on a customs union.”

The former education secretary Nicky Morgan warned the Conservatives against putting economic growth at risk: “This country is being asked to experiment at other people’s pleasure with a free trade policy when we do not know what the costs will be for constituents and businesses in this country.

“And I say to my party – if we undermine and ignore the evidence for peace in Northern Ireland, and we undermine the business and financial security of people in this country, we will not be forgiven for a generation.”

The debate has no direct influence on government policy, but was regarded as a gauge of Commons opinion before potentially crucial future votes on amendments to the customs and trade bills committing the government to trying to negotiate a new customs union.

Some Brexiters are keen for May to force the issue to a vote in parliament, blaming the delay on over-cautious whips. One said that the chief whip, Julian Smith, was reticent to hold a vote too soon as “he doesn’t want to lose a career-ending vote”.

They suggested that the government would, instead, wait until it was in a stronger position once the Brexit white paper had been published, the local elections were out of the way and they could see how May’s poll ratings were holding up.

A senior Tory source acknowledged there would be some Tory remainers who would never be won over. “You could promise them free sex and chocolate and they still wouldn’t vote for Brexit.”

No 10 said there was “a discussion around the issue of which two customs options the government opts for – but are we leaving the customs union? The answer is categorically yes.”

Both options set out in May’s Mansion House speech in March were still on the table, the spokesman said. “But as we move forward, you can expect there to be a single option,” he said. “Neither of the options are a customs union.”

Asked about next week’s Brexit war cabinet, he said: “The strategy and negotiations committee is the government’s steering group in relation to Brexit. I won’t discuss that committee in advance.”

The Guardian understands that a white paper setting out the government’s negotiating position for the future economic partnership will be published next month in a bid to unblock talks in Brussels.