Lords Defeat May on Customs Union in Challenge to Brexit Plans

(Bloomberg) — The U.K.’s upper house voted against a key part of Prime Minister Theresa May’s Brexit policy, inflicting a defeat on the government that could eventually push it toward keeping closer ties with the European Union.

The cross-party amendment — whose sponsors included former Conservative Party Chairman Chris Patten — pushes May to seek a post-Brexit customs union with the EU. It was passed by 348 votes to 225 in the House of Lords on Wednesday. It marks the first defeat in the upper chamber for May’s European Union (Withdrawal) Bill, and her Labour opponents anticipate winning further votes during its passage through the upper chamber. The change can still be rejected when the bill returns to the House of Commons.

“There are times in one’s political career when what is alleged to be party loyalty comes way behind trying to stand up for the national interest,” Patten said during the debate that preceded the vote. “In doing that I think I will be repeating what I would have been able to say with the full support of my party for most of the time I’ve been a member of it.”

May has rejected staying in the customs union as it would prevent Britain pursuing an independent trade policy, which for the most enthusiastic Brexit supporters in her party is a crucial benefit of leaving the bloc. If she reneges on that she risks a leadership challenge.

But there´s probably a majority in the lower house who also favor a customs union and it´s the official policy of the opposition Labour Party. May will need to get parliament´s approval for the final Brexit deal she strikes. The size of the Lords vote is likely to embolden members of her Conservative Party in the elected House of Commons who want to soften Brexit and retain closer trading ties with the EU.

The amendment requires ministers to make a statement to Parliament before Oct. 31 outlining “the steps taken” in the divorce talks to negotiate “an arrangement which enables the United Kingdom to continue participating in a customs union with the European Union.”

Even so, 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, according to an official familiar with the matter. In effect, the government could state that it had not made such an effort because it would run contrary to its planned post-Brexit trade policy, the person said.

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