Controversial plans for a ‘customs partnership’ with the EU have been quietly dropped following opposition from Cabinet Brexiteers.
Theresa May set up a Cabinet group last month to revive the option after it was mauled by Eurosceptic ministers.
But Whitehall sources revealed last night that almost no work has been done on the plan, with Government efforts focused on an alternative favoured by Cabinet Brexiteers.
Sources said the working group of Mrs May’s deputy David Lidington, Environment Secretary Michael Gove and International Trade Secretary Liam Fox had met just once.
Sources said the working group of Mrs May’s deputy David Lidington, Environment Secretary Michael Gove (pictured) and International Trade Secretary Liam Fox had met just once
One said it was a ‘face-saving exercise’ to allow the option, which was backed by the Prime Minister, to ‘die with dignity’.
By contrast, a group working on the Government’s alternative plan – ‘maximum facilitation’ or Max Fac – has held six meetings and conference calls.
The group – Brexit Secretary David Davis, Business Secretary Greg Clark and Northern Ireland Secretary Karen Bradley – has also visited the Irish border with the north.
A Cabinet source said: ‘It looks like it is the only game in town.’
Another said the customs partnership had taken ‘too many blows’ to survive, adding: ‘It’s done. That’s not just the Brexiteer view, that’s the view now from the Cabinet Office and even Downing Street.’
The focus on Max Fac comes despite a warning last month from HM Revenue and Customs that it could cost business an extra £20billion a year.
Supporters of the scheme in Government accuse HMRC of trying to sabotage the plan. They say the figure was never briefed to ministers and believe the cost could be just a tenth of that amount. Under Max Fac, new technology and automation would be used to streamline customs procedures and remove the need for physical checks wherever possible.
The demise of the customs partnership will be seen as a victory for Cabinet Brexiteers.
The group – Brexit Secretary David Davis (pictured), Business Secretary Greg Clark and Northern Ireland Secretary Karen Bradley – has also visited the Irish border with the north
The plan would have meant that after Brexit, the UK would be forced to levy EU tariffs at the border and pass them to Brussels. In cases where the UK wanted to levy lower tariffs, firms would have to apply for a rebate.
Critics warned it was unworkable and would stop the UK signing trade deals. Boris Johnson described it as ‘crazy’ and Mr Gove said it was ‘flawed’.
Ministers faced fresh controversy yesterday about how to resolve the issue of the Northern Ireland border. Reports claimed Mr Davis was backing a plan to let EU and UK regulations for goods and agriculture operate side by side in Northern Ireland. Liechtenstein has a similar ‘double-hatted’ scheme.
It would require the creation of a ten-mile-wide buffer zone along the 310-mile border to allow farmers and traders to operate freely across the border with no need for checkpoints. Mr Davis is said to have been persuaded that technology alone could not resolve the border problem after police said checkpoints and cameras could become a target for terrorists.
Sources at the Department for Exiting the EU said it had been discussed, but denied Mr Davis backed it. The DUP also suggested it was unacceptable.
The lack of an Irish solution makes appears to have scuppered ministers’ hopes to have agreed customs arrangements with the EU this month.