Brexit: Customs union plan brewing in Whitehall

Theresa May Image copyright Getty Images

If Brexit looks like a political nightmare for Theresa May, it's because it is one; a nightmare she volunteered to endure the day she chose to run for PM.

"It goes with the territory," she told a colleague who offered sympathy recently.

Now she has the job of designing the kind of Brexit her most vocal, and occasionally threatening, Brexiteer Tory colleagues are demanding, then somehow selling it to Parliament, where most MPs and even more peers never liked Brexit at all and seem determined to make that mission impossible.

Search for the government's detailed blueprint for Brexit, a future trade deal and, more urgently, the customs union, and it becomes clear there isn't one.

How could there be?

Brexiteers want out. Full stop.

Or, it's hinted, they'll take Theresa May's scalp.

Most MPs and peers want to stay as close to the customs union as possible, for as long as possible.

There's no way to please them all.

And now, I'm told there's an embryonic, maybe desperate, idea being very quietly discussed among Whitehall mandarins, including UK Brexit negotiators, and privately, a number of ministers and business leaders in the loop: one which hard-line Brexiteers will hate more than most.

Sir Stephen Wall, Britain's former ambassador to the EU and former adviser to Downing Street said he'd heard the proposal amounted to, somehow, trying to stay in a customs deal by another name.

"I'm certainly picking up the idea (of) staying in the customs union," he told me in an interview for BBC Radio Four's World at One.

"Obviously through the transition we would anyway, but potentially beyond the transition... while we seek trade deals," he told me.

"One of the things this process has demonstrated so far - is that positions that we started off with have changed over time, as people have come to grips with the reality and the consequences, and if you're Theresa May you're having to think about the costs to the United Kingdom and how to minimise that cost in economic terms.

"So the idea of thinking about something slightly more long term...is very much there."

Image copyright Getty Images
Image caption Customs checks are rarely out of the headlines

Sir Stephen understood the discussion was "in Theresa May's mind", but he didn't know what she'd finally decide.

Sadly, for him and others who share his view, I'm told the prime minister meant what she said when she told Brexiteer Tory MPs they'd get the kind of Brexit they want.

Quite apart from the political minefield at Westminster, it would be hard to persuade Brussels to let Britain stay in some variety of customs deal - whether you call it that or not - while striking outside trade deals, or trying to.

Somehow reaching agreement on migration, something well short of the free movement the EU wants and regaining control of British borders would be another enormous obstacle.

It would be easy, though, compared to persuading Brexiteers it's OK to stay in any customs arrangement.

The prime minister, I'm told, is also every bit as bullish as her Brexit Secretary, David Davis, about the possibility of completing a comprehensive "bespoke" trade agreement with the EU by the end of the Brexit transition period.

Some senior officials privately believe it would take years to strike such an agreement.

Image copyright Getty Images
Image caption The CBI's Carolyn Fairbairn: Optimistic outlook

The former civil servant who until recently ran the Department of International Trade, Sir Martin Donnelly, told me he believed it would take "five, six, seven years" at least.

That raised the prospect of Britain reaching the end of its transition time with no deal, a new so called "cliff edge".

But in Downing Street they're having none of it. One senior figure argues that European political leaders were often more "can do" - and that would make a difference.

Time's running painfully short.

There's still a huge barrier to a final deal. It sits on the Irish border.

Dublin and Brussels want a British pledge there'll be no hard border on the island of Ireland when the UK leaves the EU even if that means staying a full member of customs union, or creating a new customs border with mainland Britain. It's a Unionists' taboo.

The former Taeseach, Bertie Ahern puts it bluntly.

Image copyright PA
Image caption Bertie Ahern: Politics is about compromise

There'll be no deal unless Theresa May gives ground, he said, and he didn't baulk at the term "fudge".

"Politics and negotiation is about compromise," he said.

"I hope, and I think it's possible, that whatever the name is on it - I know the UK government would have a difficulty saying the 'customs union' is still fully in place - I wouldn't get myself hung up on that - but whatever name you put on it, I think hopefully what will happen, and I think it's a good idea for everybody, if we have a customs union that is not dissimilar from what is presently there.

"That will be a good thing for the EU, a good thing for the UK government for other reasons, but it will solve the Irish question."

The EU summit is just weeks away.

The hope in Team May is that it will be possible to put off the final reckoning until later, probably October when Parliament gives its verdict on the outline Brexit agreement.

Rarely has delay been so vital to forming a plan to redefine Britain and its place in the world.

It may simply be a mark of Carolyn Fairbairn's optimistic outlook, but the Director General of the CBI believes it may yet be possible to win the argument and avoid the kind of customs barriers she believes would be, in her words, disastrous for British business.

"We are very much hoping that's where we end up because businesses across the country - we've talked to thousands of businesses in the last year - the importance of frictionless trade, being able to move goods backwards and forwards without tariffs and rules of origin, and delays abroad, is absolutely fundamental. So we are hoping for a result on this that delivers. We don't care what it's called - but a customs union outcome".

"Forget it" say the Brexiteers, who see all talk of staying in or close to the customs union - any part of the EU - as an act of denial by the remain establishment.

But what if Parliament disagrees - wants a softer Brexit than they can bear?

Tory MP Bernard Jenkin spoke for many of his Brexiteer colleagues when he told me the "remainers" were simply in denial about the fact their predictions of economic harm from the Brexit referendum had failed to materialise.

What if Parliament disagreed?

"Does Parliament really want to pick a fight with the British people," he wondered.

Well, a good many MPs and peers would be perfectly happy to defy Mr Jenkin, and defeat Mrs May for the sake of kicking a "hard Brexit" into touch.

If that also means kicking the prime minister into touch, as far as a lot of her political opponents are concerned, so much the better.

As it is, Theresa May's thinking and the thinking of her Brexiteer colleagues seems to coincide.

It seems the latest, or any, soft Brexit plan won't fly.

If the government's defeated in Parliament, where does that leave Brexit, and Mrs May's premiership?

Well, I don't have a clue. And I'm quite sure no-one at Westminster, in Downing Street or in Brussels has the faintest idea either.

With more wrangling ahead in Cabinet, much more in Brussels and what may be a final reckoning at Westminster in the autumn, it's understandable the government has no detailed plan for the final shape of Brexit.

But with the UK's place in the world being redefined in real time, that doesn't make the situation any more comfortable.

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