Cross-party group draws up plans to make it impossible for PM to allow Britain to crash out of the EU without a deal

A powerful cross-party group of MPs is drawing up plans that would make it impossible for Theresa May to allow Britain to crash out of the EU without a deal in 2019. The move comes amid new warnings that a “cliff-edge” Brexit would be catastrophic for the economy.

One critical aim of the group – which includes the former Tory chancellor Kenneth Clarke and several Conservative ex-ministers, together with prominent Labour, SNP, Liberal Democrat and Green MPs – is to give parliament the ability to veto, or prevent by other legal means, a “bad deal” or “no deal” outcome.

Concern over Brexit policy reached new heights this weekend after the prime minister told the House of Commons that her government was spending £250m on preparations for a possible “no deal” result because negotiations with Brussels had stalled.

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Several hundred amendments to the EU withdrawal bill include one tabled by the former cabinet minister Dominic Grieve and signed by nine other Tory MPs, together with members of all the other main parties, saying any final deal must be approved by an entirely separate act of parliament.

If passed, this would give the majority of MPs who favour a soft Brexit the binding vote on the final outcome they have been seeking and therefore the ability to reject any “cliff-edge” option.

A separate amendment tabled by Clarke and the former Labour minister Chris Leslie says Theresa May’s plan for a two-year transition period after Brexit – which she outlined in her recent Florence speech – should be written into the withdrawal bill, with an acceptance EU rules and law would continue to apply during that period. If such a transition was not agreed, the amendment says, exit from the EU should not be allowed to happen.

The prime minister and Brexit secretary now have a real crisis on their hands over this bill Stephen Doughty, MP

With a sense of crisis engulfing the government and whips fearing a series of Conservative rebellions and defeats over the bill, ministers have been forced to postpone the committee stage of the legislation, which was due to start this week.

Stephen Doughty, a Labour MP who has been part of the behind-the-scenes cross-party efforts to find ways to amend the bill, said: “There is now growing cross-party anger at the absurd suggestion that we could crash out of the EU without a deal, and without even the transitional period that was promised by the PM – let alone that the government is attempting at the same time to give itself sweeping new powers and undermine the devolution settlement. It is clear the prime minister and Brexit secretary now have a real crisis on their hands over this bill and face defeat on a series of issues.”

Leslie said the MPs would continue work to find amendments around which soft-Brexit MPs of all parties could unite to prevent a disastrous outcome for the country.

“In the remaining time before committee stage starts, conversations between MPs across the parties will help identify common ground – and enshrining the transition period into law is increasingly likely if we work together in this way. This bill could be the last chance for parliament to put safeguards in place; it’s too important to miss these opportunities.”

Adam Marshall, the director general of the British Chambers of Commerce, said the business community “wants a transition agreed in principle and trade talks under way by the end of 2017. If there is not that clarity we will start to see the activation of contingency plans and likely significant impact on business investment.”

The 10 Democratic Unionist party MPs, upon whose votes May relies for a Commons majority, have made it clear to government whips that they would not accept a “no deal” outcome because it would mean a return to a hard border between Northern Ireland and the Republic. If May were to try to push such an approach, the deal with the DUP that keeps her in power could fall.

Yesterday, in a sign of growing desperation, it emerged that the Brexit secretary, David Davis, will travel to Brussels on Monday for unscheduled talks after the EU ruled that insufficient progress had been made for the two sides to begin future trade talks with Britain. A key plank of May’s Brexit policy has been her insistence that “no deal is better than a bad deal”. She has made it clear that at the end of negotiations MPs will have only two options: to accept whatever deal is on offer or to agree there will be no deal.

Labour has also tabled a series of amendments that would bind the government to a transitional period, after Brexit day in March 2019, during which the UK in effect would remain inside the single market and customs union. The party’s Brexit spokesman, Keir Starmer, said: “No deal means the return of a hard border in Northern Ireland. No deal means no agreement on how we trade with Europe. No deal means EU nationals working in our schools and hospitals and the 1.2 million UK citizens living in the EU will continue to be unsure about their future. No deal means no deal on aviation, which quite literally means planes cannot take off and land. This is not scaremongering, it’s the grim reality.”

If they test this I think they will find there is no majority for a ‘no deal’ outcome Nicky Morgan

Tory MPS who oppose a hard Brexit have declared they will not back any amendments tabled by Labour’s frontbench and bearing Jeremy Corbyn’s name, but say they would be prepared to line up with amendments from like-minded Labour backbenchers.

The former Tory education secretary Nicky Morgan, who has signed several amendments, said last night that the best way for ministers to avoid a defeat was to agree to give MPs a binding vote on the outcome, “whether or not there is a deal”. She added: “If they test this I think they will find there is a majority for an amendment and no majority for a ‘no deal’ outcome.”

This weekend it is expected that at least one hardline pro-Brexit Tory MP will break cover to call for the suspension of Brexit negotiations until the EU agrees that trade talks can begin. The Observer has also learned that ministers may sanction the first expenditure on preparations for a “no deal” Brexit as soon as Monday, without the full approval of parliament.

Meanwhile, ministers are rushing through a vote on treatment of nuclear material in a move that will allow them to begin spending on the new IT systems and inspectors needed should Britain remain outside Euratom, the EU-wide nuclear regulatory body.

The spending could go ahead after the vote although the legislation is far from receiving full parliamentary approval. It comes amid claims of another “power grab” by ministers over Brexit plans.