Senior Brexiteer MPs have delivered an “ultimatum” demanding Theresa May drops one of the government’s preferred post-Brexit customs options.
A 30-page document passed to the BBC says a “customs partnership” would make meaningful trade deals “impossible” to forge and render the UK’s International Trade Department “obsolete”.
It comes ahead of a key meeting of senior ministers on Wednesday.
They will discuss the different options to replace customs union membership.
The issue threatens to split the meeting of the Brexit sub-committee and could have long-term implications for the government.
All EU members are part of the customs union, which means there are no internal tariffs – taxes – on goods transported between them, and a common tariff agreed on goods entering from outside.
The BBC’s economic editor Kamal Ahmed understands Chancellor Philip Hammond favours a customs partnership whereby Britain would mirror the EU’s customs regime at its borders and collect tariffs on behalf of Brussels.
The partnership solution could solve the Irish border question, as there would be no hard customs border between the UK and the EU.
But Brexiteers fear the scheme would be expensive and complex to operate, and could mean the UK is indefinitely trapped within the EU’s customs arrangements.
In their dossier – already seen by some Leave-supporting cabinet ministers – the MPs say the idea should be “swiftly removed from the table” as it has “nine fundamental problems”.
According to the Press Association, Downing Street has been privately warned that a customs partnership could collapse the government, as committed Brexiteers on the Tory backbenches regard it as unacceptable because, they say, it would deliver “Brexit in name only”.
Former Brexit minister David Jones told BBC’s Newsnight: “Certainly, there would be a lot of very disappointed Brexiteers if we were to end up in a customs partnership.
“The prime minister’s calculations have got to include exactly what reaction there would be from the parliamentary party and the wider Conservative Party if we were to enter into that sort of relationship.”
BBC political editor Laura Kuenssberg said several ministers on the Brexit sub-committee were understood to be urging Theresa May to ditch the customs partnership model.
However, while senior figures in Number 10 accept privately that it cannot be proved to be viable in the short term, they insist it is a potentially workable option in the longer term, she said.
The PM, backed by the chancellor, is likely to push for keeping the option on the table, she added.
The alternative to a customs partnership is what is being called a “highly streamlined customs arrangement”, which would minimise border checks rather than getting rid of them altogether.
However, both the EU and the UK have committed to keeping the border between Northern Ireland and the Republic of Ireland all but invisible, with no checks or infrastructure.
Brexit Secretary David Davis said on Tuesday that Brussels was “pushing back” against both proposals.
Analysis by BBC political editor Laura Kuenssberg
A senior Tory said “the customs partnership is the breaking point”, suggesting that if No 10 doesn’t do their bidding, they could withhold their support.
Of course, the stakes are high on all sides, tempers are hot, and it is not certain that they would deliver on those kinds of threats.
But Theresa May warned in her Mansion House Speech that the UK won’t get everything it wants in the EU negotiations.
The time when she has to say that forcefully in negotiations with her own party may be coming fast.
The question is whether that’s feasible, one former minister said that Theresa May “already isn’t leading the party”.
Another told me it’s like “the politicians have all gone missing”.
Wednesday’s meeting is not expected to reach a final decision on the proposals.
But the document warns against continued deliberations in government, saying that “further delay is itself a decision”.
Downing Street sources denied the document was an ultimatum, dismissing it as part of the policy-making process.
Looking ahead to Wednesday’s meeting Number 10 said: “The government has put forward two proposals and they will be discussed by the government further.”