Peers inflict big defeat on Government over flagship Brexit bill

Nicky Morgan the Tory chairwoman of the Treasury select committee signed the amendment to the customs bill

The bill, which was approved by MPs previous year, has reached report stage in the House of Lords - where the government does not have a majority and is vulnerable to defeat if Labour, Lib Dems and rebel Tories join forces with crossbenchers.

"If in the end we do leave, it should be in way that limits the damage to the country's well-being ... and that's why I believe it makes sense for the government to be asked to explore customs unions", said Lord John Kerr, a supporter of staying in the EU at the 2016 referendum.

Remain-backing peers succeeded in their bid to amend the European Union (Withdrawal) Bill to force ministers to set out the steps taken during negotiations with Brussels to enable the United Kingdom to stay in a customs union with the bloc.

Britain's upper house of parliament is expected to inflict an embarrassing defeat on Theresa May's government on Wednesday, challenging her refusal to remain in a customs union with the European Union after Brexit.

"A failure to do so however, will amount to kicking the can down what could be a very rocky road".

Once the Lords has amended the bill, it will be returned to the House of Commons, which will decide whether to accept the changes, or refer them back to peers, in a process known as "ping pong".

"We are leaving the Customs Union and will establish a new and ambitious customs arrangement with the EU while forging new trade relationships with our partners around the world".

After losing the Conservative Party's majority in an ill-judged election last June, May relies on the support of a small Northern Irish party to pass legislation.

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An official told Bloomberg that the government wasn't overly concerned because it interprets that wording as only a requirement to make a statement about its efforts to discuss staying in a customs union.

Labour's shadow Brexit secretary Keir Starmer, who watched the debate from the sidelines, welcomed the result, saying it was a "huge step forward".

That's because while the Lords typically defer to the elected house after a bill has been passed between the two chambers two or three times, a large majority in the Lords may be enough to embolden Tory rebels in the Commons, where May has a wafer-thin majority. May's trade minister, Liam Fox, and others regard such a deal as anathema if it prevents London negotiating its own trade deals.

It's still not clear how the government would react to a defeat, and to what extent the amendments will force May to change her policy.

"I certainly know a number of Tories who I won't name, but who are absolutely going to vote with us on the customs union", said Hayter.

"I don't think it will have the intended effect", said Jones, a former Brexit minister.

But a customs union that sets external tariffs for goods imported into the EU, and allows them to flow freely, would offer a solution to the problem of ensuring no return to a hard border with the bloc on the island of Ireland.

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