May Under Pressure From Tories on Both Sides of Brexit Split

(Bloomberg) -- Theresa May declared her “absolute determination” to make a success of leaving the European Union as she came under new pressure from Conservatives on both sides of the Brexit debate.

Writing in the Sun newspaper on Sunday, the British prime minister pledged to leave the single market and the customs union and build “a new relationship with EU partners that takes back control of our borders, our laws and our money.”

With less than a year to go before Britain leaves the bloc, May's Tory government remains deeply divided with a battle raging over future customs arrangements.

Conservatives demanding a clean break have rejected two middle-of-the-road customs options May has proposed, with leading campaigners such as Foreign Secretary Boris Johnson fearing she will tie the U.K. too closely to the EU.

But Tories who want to keep the U.K. inside the customs union are plotting to join the opposition Labour Party to defeat May in a crucial vote on the issue that could come later this month. If she sides with either wing, May faces a backlash that could oust her from power.

Partnership Option

One option floated is for a customs partnership, under which the U.K. would collect tariffs on behalf of the EU and then refund any companies whose goods aren't destined for use in one of the 27 member states. Business Secretary Greg Clark said the proposal remains under consideration, despite May being outnumbered by opponents at a cabinet meeting last week.

Clark disclosed that he spoke to Toyota Motor Corp. officials last week as he raised concerns that thousands of jobs could be at stake if auto plants that rely on just-in-time deliveries of components sourced from outside the country moved out of the U.K. He said Toyota has almost 3,500 U.K. employees.

“Doing what it takes to get the minimum of frictions is something we have made a public commitment to, and we need to make sure we get that right,” he said in an interview on the BBC's “Andrew Marr Show” on Sunday.

Clark also suggested that a customs transition period with the EU could be extended as it may take until 2023 to put new infrastructure in place.

“It would be a mistake to move from one situation to another to a third,” he said. “If we can make progress as to what, which I think we can, as to what the right arrangement is for the long term, then it may be possible to bring that in over that period of time.”

Conservative Jacob Rees-Mogg, who issued a thinly veiled warning last week that his euroskeptic group of lawmakers could withdraw its support from May, dismissed Clark's warnings and said the proposed customs partnership would effectively leave Britain inside the single market.

‘Project Fear'

“This Project Fear has been so thoroughly discredited that you would have thought it would have come to an end by now,” he said on ITV's “Peston on Sunday” show. “We trade successfully all over the world. The delays on goods coming into Southampton are tiny.”

Responding to the comments on the customs debate, the British Chambers of Commerce said pragmatism, rather than ideology, is needed.

“If the government's position is that the U.K. will not be in a customs union with the EU, it has an obligation to make this shift happen with the least possible disruption to business, consumers and the wider economy,'' Director General Adam Marshall said in emailed comments.

For the Labour Party, Shadow Chancellor John McDonnell told Marr the Tories “are going to fall apart” over the issue.

To contact the reporter on this story: Andrew Atkinson in London at a.atkinson@bloomberg.net.

To contact the editors responsible for this story: Fergal O'Brien at fobrien@bloomberg.net, Steve Geimann, Richard Bravo

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