May faces cabinet split over customs union

David Davis and the European Union Chief Negotiator in charge of Brexit negotiations with Britain Michel Barnier

David Davis and the European Union Chief Negotiator in charge of Brexit negotiations with Britain Michel Barnier

Theresa May has been warned by Tory Eurosceptics that a proposed "customs partnership" with the European Union after Brexit is unacceptable.

Theresa May has asked officials to draw up "revised proposals" for post-Brexit customs arrangements after a key meeting with her most senior ministers.

Officials and ministers will now go back to the drawing-board in the search for a compromise between the two positions.

The partnership scheme was drawn up by Olly Robbins, Mrs May's chief negotiator in Brussels.

Jacob Rees-Mogg has denied MPs issued Theresa May with an "ultimatum" over the Government's plans for a "customs partnership" with the EU.

It was known that Foreign Secretary Boris Johnson, Brexit Secretary David Davis, Trade Secretary Liam Fox and Environment Secretary Michael Gove were on the other side of the argument.

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It was widely expected that she may seek to stave off potential resignations by keeping all options open.

Cabinet Office Minister David Lidington, one of those attending the meeting, indicated a final decision may not be reached for "a few weeks". "There are shifting sands, there is an important UK Cabinet meeting underway today [Wednesday], and there are parliamentary votes of significance happening now".

The UK would collect tariffs set by the EU customs union on goods coming into the UK on behalf of the EU.

If the United Kingdom chose to set different tariffs from its European neighbours, traders would claim refunds from HM Revenue and Customs for goods which stay in Britain.

In a meeting which ran over to last two and a half hours, May told colleagues that the final arrangement must ensure there is no hard border between Northern Ireland and the Republic and no customs border down the Irish Sea, and leave trade with the remaining European Union "as frictionless as possible".

She also faces increasingly urgent demands from Brussels to come up with a customs plan to avoid a return to a hard border between British-ruled Northern Ireland and the Irish Republic.

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Reports last month suggested that European Union officials told Mr Robbins at a Brussels meeting that both schemes were "unworkable".

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.

May hinted that she was preparing to change tack at Prime Minister's Questions in the Commons shortly before the sub-committee met.

A spokesman for Mrs May said: "The PM said in the House that there are a number of ways of taking this forward and that's what we're working on".

Mrs May told MPs: 'We are committed to having no hard border between Northern Ireland and Ireland, and as frictionless trade as possible with the European Union'.

Chair of the Committee Dr Andrew Murrison MP said he was repeating an invitation first made in March, and that "to date, we have not seen a worked up, coherent proposals that would allow the United Kingdom to be freed from the structures of the Customs Union and Single Market and avoid additional infrastructure at the border".

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He said during the visit he saw some checks and controls were still visible on the border waiting to be dismantled. It is there because of the UK's red lines.

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