Shadow chancellor says he has no trust in PM and likens Brexit talks to dealing with firm that is going bust

The shadow chancellor, John McDonnell, has poured cold water on Theresa May’s plan to offer a temporary customs union to win Labour over to a Brexit deal, saying the cross-party talks were like “trying to enter a contract with a company going into administration”.

McDonnell said his party wanted to do a deal as quickly as possible but would require a permanent customs union to provide stability for businesses, not just an interim arrangement until the next election.

He also said he had no trust in the prime minister after details of the talks were briefed to Sunday newspapers. Asked whether he trusted the prime minister, McDonnell said: “No, sorry, not after this weekend when she’s blown the confidentiality I had and I actually think she’s jeopardised the negotiations for her own personal protection.”

The negotiations are expected to enter a serious phase on Tuesday, after both leaders expressed a willingness to get a deal done following a month of technical talks.

May wrote an article in the Mail on Sunday urging Labour to “put our differences aside for a moment [and] let’s do a deal”, while Jeremy Corbyn said on Friday that the local election results indicated voters wanted MPs to “get a deal done” on Brexit.

The government is planning to offer a “comprehensive but temporary customs arrangement” until the next election, which would allow the next prime minister to shape what happens after that. But McDonnell said Labour would have serious reservations about signing up to such an approach, especially when hard Brexit leadership candidates were circling the prime minister.

He told BBC One’s The Andrew Marr Show: “Where we are at at the moment is: yes, we want a customs union, but a permanent and comprehensive customs union and the reason for that – why we’ve become the party of business – is that businesses want security not just for a few months up to an election but they want it permanently.”

McDonnell also made clear that Labour would need changes to the withdrawal agreement and political declaration to make sure future Tory leaders could not tear up the agreement after Brexit.

“We are negotiating with Theresa May’s team as requested. Whilst we’re doing that … in the wings, all the leadership candidates are virtually threatening to tear up any deal we do. So we are dealing with a very unstable government. It’s trying to enter into a contract with a company going into administration,” he said.

However, McDonnell said there was still room to do a deal and the party could be willing to compromise in some areas. He highlighted the “large numbers of MPs who actually do support a public vote, so let’s talk about the arrangement for that to take place”.

Two senior Conservatives, Ruth Davidson, the Scottish Tory leader, and Rory Stewart, the international development secretary, both offered a view that the major parties needed to find a compromise. Stewart suggested a split in the Tory party could be a price worth paying to get a Brexit deal done, telling BBC Radio 5 Live’s Pienaar’s Politics: “Yes, there will be short-term pain.”

However, both May and Corbyn will face a backlash from their backbenches if they sign up to a deal, with many Labour MPs prepared to reject any deal without a second referendum and many Tory MPs vehemently opposed to a customs union.

Conservative Brexiters such as Iain Duncan Smith are incensed about the prospect of a deal involving a customs union, leading to further calls for the prime minister to resign. May is likely to face demands from the 1922 Committee of backbenchers on Tuesday to set out a timetable for her departure or face serious attempts to remove her.

Senior Labour figures who back a second referendum also sounded deeply sceptical about the prospect of a deal. Tom Watson, the party’s deputy leader, told Pienaar’s Politics the party wanted a permanent customs union in any deal and would not be “bailing out” the government by signing up to a bad agreement.

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Watson said: “It’s absolutely right that these talks continue but I don’t think we should be in any doubt that the Labour party membership and vast numbers of my colleagues in parliament don’t want us to just sign off on a Tory Brexit.

“They don’t want us to bail the prime minister out of the problem of her own making, and a very large number of our members think the people should decide on what that deal looks like.

“Now that’s not to say there’s [not] another way through that we’ve not thought of yet and we’ve got a very creative negotiating team and they’re in place to do that, but only time will tell on that.”

He said a deal would only be done if Keir Starmer, the shadow Brexit secretary, who backs a second referendum, approved it. “Well, Keir is leading our negotiating team so unless he is happy with the deal I don’t think there is going to be one,” he said.

More than 100 opposition MPs, including 66 from Labour, said on Sunday they would not tolerate a “Westminster stitch-up” on a Brexit deal without a second referendum.