The Prime Minister’s so-called “Brexit war cabinet” is meeting to attempt to reach a deal on whether the UK should leave Europe’s customs union or enter a “customs partnership”.
The PM has repeatedly pledged that there will be no customs union after Brexit, but is struggling to reconcile the demands of warring Brexiteers and Remainers and avoid more Cabinet resignations.
She also faces near-civil war on her back benches too, with pro-Remain Tory rebels threatening to vote with Labour and other Opposition parties in the Commons to stay in the customs union.
But on the eve of the Cabinet showdown, a group of Brexiteer Tory MPs delivered an ultimatum to the PM threatening to vote against her EU deal if she tries to force through a customs partnership.
MPs on the 60-strong European Research Group, led by Jacob Rees-Mogg, have written personal letters to the Prime Minister ahead of her crunch meeting of the Brexit war cabinet.
And in another move to put pressure on the PM, Euro-sceptic Tory MPs have sent a 30-page dossier to Downing Street in which they detail their opposition to the customs partnership plan.
The document, passed to Sky News, concludes: “The new customs partnership proposed is undeliverable in operational terms and would require a degree of regulatory alignment that would make the execution of an independent trade policy a practical impossibility.”
The Daily Telegraph reports that No.10 has been warned in correspondence that accepting a customs partnership would lead to a “collapse” of the Government because it would mean Mrs May could not deliver a clean break from the EU and would lose the support of Brexiteers.
Sources told the Telegraph that Tory MPs would consider withdrawing support for Government Bills in Parliament, which would lead to legislative paralysis and put Mrs May’s future as leader in doubt.
Speaking to Sky News, Mr Rees-Mogg, who last week dismissed the customs partnership plan as “completely cretinous” and the same as staying in a customs union, said: “I am aware of the correspondence.
“There is a document on the customs partnership that represents a widespread view within the party but is not formally an European Research Group paper.”
At the same time as Cabinet ministers and Tory MPs fight their Brexit battles, peers in the House of Lords are on course to inflict another thumping defeat on the Government on the EU (Withdrawal) Bill.
After nine defeats in the Lords already, peers are expected to back a cross-party amendment to maintain the open border between Northern Ireland and the Irish Republic and safeguard the Good Friday Agreement.
Leading the Cabinet charge to leave the customs union are Brexiteers Boris Johnson, Michael Gove, David Davis and Liam Fox, all leading figures in the Leave campaign in the 2106 EU referendum.
But the dramatic resignation of the strongly pro-Remain Amber Rudd on Sunday has suddenly altered the delicate balance between Leavers and Remainers on the Cabinet sub-committee.
Just days before she quit as Home Secretary, she incensed Euro-sceptic Tory MPs by claiming there were still discussions to be had among Cabinet colleagues to arrive at a final position.
Chancellor Philip Hammond, the Cabinet’s leading Remainer, who is leading the drive for membership of a customs partnership, has now lost a vital ally in his bruising battles with the Brexiteers.
Mr Hammond can rely on the support of the PM’s de-facto deputy David Lidington, loyal Theresa May ally Karen Bradley and the pro-Remain Business Secretary Greg Clark.
But the appointment of Sajid Javid as Home Secretary is seen by Tory MPs as a boost for the Brexiteers, because although he supported Remain in the referendum he has since been sceptical about staying in the customs union.
With the threat of mutiny from both Mr Rees-Mogg and his supporters and pro-Remain Conservative MPs, the stakes could not be higher for the Prime Minister and senior ministers as they gather around the Cabinet table.
It has been reported that Brexiteers Mr Johnson, Mr Gove, Dr Fox of even Mr Davis, the Brexit Secretary, could be prepared to resign if they lose the battle with the Chancellor and allies pushing for a customs partnership.
On the eve of the crucial Downing Street meeting, Dr Fox was adamant that the UK would leave the customs union and refused to rule out resignation if the Prime Minister insisted on a compromise deal.
And one of the European Research Group MPs writing to Mrs May, Daniel Kawczynski, wrote: “I wish to put on record that I could not in good conscience vote for an agreement that would keep us in the customs union or partnership as set out in the proposal.
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“In my view this would betray our manifesto commitment to no longer be members of the single market or the customs union.”
The Prime Minister will be desperate to avoid any more Cabinet resignations having lost Sir Michael Fallon, Damian Green, Priti Patel, Justine Greening and now Ms Rudd in less than a year since the general election.