Two leading Conservative MPs have launched a bid to make Theresa May keep the UK in a customs union with the European Union, as the prime minister faces cabinet and party splits over the issue.

Anna Soubry, a former business minister, and Ken Clarke, the former chancellor, said they would try to get cross-party support for keeping the UK’s current customs arrangements with the EU, in a clear challenge to May’s authority.

They have a strong chance of causing an embarrassing government defeat if Jeremy Corbyn’s frontbench supports their amendments to two trade bills when they are debated in the House of Commons before the end of February.



It is understood Labour is not ruling out backing the Tory rebels, who already have the support of a number of pro-EU Labour backbenchers. Soubry said it was part of “building a Brexit consensus inside and outside parliament”.

May is facing growing pressure as she refuses to make clear whether she would support a permanent custom union relationship at the end of a transitional period in late 2020.

The issue has become a dividing line between supporters of a hard Brexit, who believe it would limit sovereignty and stop the UK striking deals with non-EU countries, and supporters of a soft Brexit, who want to keep Britain’s trading ties with the EU as close as possible.

Quick Guide What are Brexit options now? Four scenarios Show Staying in the single market and customs union The UK could sign up to all the EU’s rules and regulations, staying in the single market – which provides free movement of goods, services and people – and the customs union, in which EU members agree tariffs on external states. Freedom of movement would continue and the UK would keep paying into the Brussels pot. We would continue to have unfettered access to EU trade, but the pledge to “take back control” of laws, borders and money would not have been fulfilled. This is an unlikely outcome and one that may be possible only by reversing the Brexit decision, after a second referendum or election. The Norway model Britain could follow Norway, which is in the single market, is subject to freedom of movement rules and pays a fee to Brussels – but is outside the customs union. That combination would tie Britain to EU regulations but allow it to sign trade deals of its own. A “Norway-minus” deal is more likely. That would see the UK leave the single market and customs union and end free movement of people. But Britain would align its rules and regulations with Brussels, hoping this would allow a greater degree of market access. The UK would still be subject to EU rules. The Canada deal A comprehensive trade deal like the one handed to Canada would help British traders, as it would lower or eliminate tariffs. But there would be little on offer for the UK services industry. It is a bad outcome for financial services. Such a deal would leave Britain free to diverge from EU rules and regulations but that in turn would lead to border checks and the rise of other “non-tariff barriers” to trade. It would leave Britain free to forge new trade deals with other nations. Many in Brussels see this as a likely outcome, based on Theresa May’s direction so far. No deal Britain leaves with no trade deal, meaning that all trade is governed by World Trade Organization rules. Tariffs would be high, queues at the border long and the Irish border issue severe. In the short term, British aircraft might be unable to fly to some European destinations. The UK would quickly need to establish bilateral agreements to deal with the consequences, but the country would be free to take whatever future direction it wishes. It may need to deregulate to attract international business – a very different future and a lot of disruption.

A cabinet split became public open on Friday as it emerged the Treasury had been making the case privately for permanent membership of a customs union.

Liam Fox, the trade secretary, attempted to slap down the claim, saying the government was not considering such an arrangement as it would limit the UK’s ability to make trade deals with the rest of the world.

The Brexit-supporting cabinet ministers Boris Johnson and Michael Gove are also opposed to remaining in a customs union.

Jacob Rees-Mogg, a Conservative backbencher and leader of the Eurosceptic European Research Group, said customs union membership was unacceptable to leading Brexit supporters and accused Philip Hammond, the chancellor, of undermining Britain’s departure from the EU.

Using the hashtag #TreasuryGate, he said that if Hammond was trying to keep the UK in a customs union then it was “a breach of collective responsibility”, and if it was officials then it was “against their duty to implement government policy”.

“The conclusion must be either the chancellor or his officials are deliberately trying to frustrate Brexit. Ultimately, ministers must take responsibility,” he said.

Speaking to Sky News on her trip to China, the prime minister would only say: “What I want to do is ensure that we have got the best possible trade arrangements with China and with other countries around the world once we have left the European Union.”

Senior Tory sources have told the Guardian that the prime minister initially appeared to be swayed by the Treasury’s proposals but had since backed away from them.

No 10 said on Friday that May had an open mind about the UK’s options for customs arrangements after Brexit. But an official spokesman also said Fox had been speaking for the government and May was sticking by her assertion in the Lancaster House speech last year that the UK did not intend to be bound by a common external tariff. This would appear to rule out being part of a customs union.

Labour is expected to firm up its views on the customs union at an upcoming “away day” meeting on Brexit policy. Its current position is that permanent membership of the customs union is a viable option, but it does not want to be overly tied down while EU negotiations on transition and future trade have barely begun.

Supporters of a soft Brexit believe Labour’s position will be crucial in creating a parliamentary majority for staying in the customs union, which could help solve the dilemma over trade across the Irish border and reduce bureaucratic checks on traded goods.

Chris Leslie, the former shadow chancellor who is backing the Soubry amendments, said there was a good chance the government would be defeated as he was “reasonably confident that the shadow cabinet and rest of the parliamentary Labour party” supported staying in the customs union.

