A decision on Britain’s customs arrangements after Brexit has been put off, after a crunch meeting of senior ministers failed to reach agreement.
Prime Minister Theresa May asked officials to draw up “revised proposals” after her “Brexit war cabinet” was unable to unite behind one of the two options on the table – both of which have already been dismissed as “unworkable” by EU officials.
Downing Street sources said ministers recognised that there were “challenges” with both of the proposed solutions, first put forward last summer.
Brexit negotiator Olly Robbins and his team are expected to come forward with amended proposals swiftly so that ministers can arrive at a preferred option, possibly as early as next week.
New Cabinet members Sajid Javid and Gavin Williamson both came out in the meeting against the “customs partnership” model, under which the UK would collect tariffs on behalf of the EU.
Their opposition came after Eurosceptic Tory backbenchers signalled that they regarded the partnership plan – branded “cretinous” by Jacob Rees-Mogg – as unacceptable, because it would deliver Brexit in name only.
The Home Secretary and Defence Secretary are understood to have joined senior Brexiteers like Boris Johnson, David Davis and Liam Fox in voicing a preference for the so-called “maximum facilitation” arrangement – known as “Max Fac” – which would use new technology to avoid the need for border checks in Ireland.
A Number 10 source said there was agreement in the Brexit strategy and negotiations sub-committee that Britain should leave the European customs union in order to be able to have control of its own trade policy.
In a meeting which ran over to last two and a half hours, Mrs 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 EU “as frictionless as possible”.
While the committee regarded both the partnership and Max Fac options as “serious proposals”, it was agreed that there were challenges with both that needed to be addressed.
Concerns were voiced over whether the technological solution would satisfy concerns in Brussels about the potential for a porous border and whether the partnership arrangement would allow the UK to have a truly independent trade policy.
Mrs May asked for further work to be taken forward as a priority, so that the committee can consider “revised proposals”.
The failure to settle on a firm plan relieves immediate pressure on Mrs May, following days of rumours that Cabinet big beasts could be prepared to resign rather than accept anything which smacked of continued customs union membership.
But it heightens the time pressure to find a workable alternative to the customs union, with both the European Commission and the Irish Government indicating that they would like the matter resolved at next month’s European Council summit in Brussels.
Mrs May hinted that she was preparing to change tack at Prime Minister’s Questions in the Commons shortly before the sub-committee met.
Challenged by Labour MP Karen Buck on why she was continuing to consider two options, both of which were known not to be “feasible”, the PM responded that there were “a number of ways” of delivering on the Government’s commitments.
When her official spokesman was asked whether this meant that more than two options were now on the table, he said: “Ideas are obviously evolving as we go along. As the Prime Minister said, there are a number of ways to proceed.”
Cabinet Office Minister David Lidington, one of those attending the meeting, indicated a final decision may not be reached for “a few weeks”.
Failure to come up with a solution could leave the UK forced to fall back on the European Commission’s “backstop” option, which would effectively draw a customs border down the Irish Sea by keeping Northern Ireland in the customs union.
Mrs May has insisted that no British prime minister could accept such a scenario.