“It’s my view that the new customs partnership has flaws and that they need to be tested,” says @michaelgove #marr pic.twitter.com/Mm7tFDIebo

— The Andrew Marr Show (@MarrShow) May 13, 2018

Gove suggests the proposed customs partnership does not meet the tests set by Theresa May in her Sunday Times article today. Tough to see how the customs partnership can survive…

There is another problem with Number 10’s proposed customs partnership that hasn’t had much attention. In the unlikely event Brussels agrees to such a partnership, it would inevitably require the UK to continue to pay a substantial ratio of the customs revenues it collects to the EU. At present, the majority of UK customs revenues are paid to the EU – in 2017 the UK contributed £3.2 billion, or £60 million a week. Customs revenues make up over a third of the total UK net contribution to the EU…

Cabinet Brexiters need to ask Number 10:

• what ratio of customs revenues collected would be paid to the EU under their customs partnership?
• will the EU agree to rebate – or deduct from its overall customs contributions – revenues for goods which remain in the UK?

At present no one in the government seems to have an answer. It would be subject to negotiation, yet if we don’t like the answers there would be nothing we can do about it, as the clock is ticking down and there is no Plan B. As Open Europe’s Henry Newman points out:

“if the Government is to consider the Customs Partnership further, it needs to be clear that it would likely mean the UK continuing to pay a substantial proportion of any customs revenues collected at our borders to the EU. Whatever its merits, a Customs Partnership could entail the UK paying very large sums of money to the EU in the long-term – something the Government has so-far ruled out”

Continuing to pay the EU potentially billions of pounds does not seem to meet May’s red line of taking back control of money. This is £60 million a week that could, to coin a phrase, be spent on the NHS instead…

Another important intervention from Nick Timothy in the Telegraph today, who directly advises his old boss to drop her customs partnership and back the Brexiters’ Max Fac option. Last week Timothy savaged the NCP, today he makes the case for Max Fac and tells Number 10 to “get on with it”. Theresa May still listens to her former chief of staff, it is also significant that Max Fac is being pushed by someone in the PM’s trusted inner circle, not just Cabinet Brexiters and the ERG. Timothy says Max Fac:

“…can be made efficient by sensible policy and technology, and the costs can be offset by the opportunities provided by trade deals with the world’s fastest growing economies…

Downing Street’s reluctance to choose “max fac” is driven by concern about the Northern Irish border. But “max fac” does not demand a hard border. Checks do not need to be conducted along the border: the administration can be done in advance through pre-registration and trusted trader schemes, and monitoring can be conducted in each country. Small businesses can be exempted, more powers devolved to Belfast, and more all-Ireland governance arrangements can be agreed to facilitate trade.

The Commission says this is impossible, but their negotiating stance is hardly surprising when they believe Parliament might force the Government into a customs union. And whatever Barnier says, “max fac” would be no anomalous lacuna in the EU’s border. Two years ago, more than a million migrants simply walked into Europe. And as anybody who has driven into France from Switzerland knows, there are no checks along whole sections of the EU border.

The EU is ignoring its own negotiating guidelines. They say “the unique challenges of Ireland will require flexible and imaginative solutions”. The responsibility to find these solutions is not only British but European too.

If there is a compromise to be made, ministers might accept that “max fac” will take longer to be introduced than the current implementation timetable suggests. But to get its way with Brussels, and to convince Parliament that there is an alternative to a customs union, the Government needs to get on with it, choose “max fac” – and start making its case.”

The crunch meeting is now on Tuesday next week. If Timothy was still in Downing Street May would be backing Max Fac, instead she has been captured by Remainers. Five days to see sense…

There was no official vote at the Cabinet Brexit sub-committee this afternoon, but one source familiar with the meeting said the room split 6-5 against the customs partnership. Crucially, two former Remain Cabinet ministers, Sajid Javid and Gavin Williamson, were critical of the customs partnership option. Saj told the room the customs partnership was unprecedented and untested and would mean we lose ability for real free trade deals. He indicated that based on the details he’d seen he would opt for Max Fac. Williamson said he had “grave concerns” about the hybrid model. Brexiter sources are bullish that they will now be able to kill off the customs partnership, claiming a majority of the room see it as unworkable. The meeting went on an hour longer than scheduled, but positive noises are coming out…

An important intervention from Nick Timothy in The Sun, who has called on Theresa May to drop the customs partnership proposal. His critique of the plan backed by Olly Robbins and Cabinet Remainers is devastating:

After months of scrutiny, it seems unlikely to work. The EU has dismissed it as impossible, and it involves significant risks for Britain.

It would almost certainly require “full regulatory alignment” with the EU, meaning that after Brexit we could not change our laws and regulations in a long list of ways. It would create a bureaucratic burden on businesses and some may choose to use higher EU tariffs, or avoid importing and exporting altogether.

And, because of the need for alignment with EU regulations and the complexity of dual customs checks, it would be much harder to negotiate trade deals with other countries. So today, when Theresa May chairs her Brexit Cabinet Committee meeting, she should lead ministers to a clear decision about the Government’s favoured customs policy.

That decision should be to reject the “new customs partnership” and pursue instead the Government’s own alternative proposal: its “highly streamlined customs arrangement”.

If Timothy was still in Number 10, the customs partnership would be dead. The people keeping it alive are Remainers trying to undo the referendum result…

Crunch time for Theresa May. She is being told to drop her hybrid ‘customs partnership’ by a majority of her Brexit sub-committee – DD, Boris, Gove, Fox, Williamson and Saj – as well as the European Research Group of Brexiter MPs led by Jacob Rees-Mogg. These are the eight reasons Leavers want May to ditch Olly Robbins’ customs partnership…

• It would see the UK collect tariffs on behalf of Brussels. Importers would then have to prove their products weren’t leaving the UK in order to claim the tariff back. It would be extremely complicated and ultimately unworkable.
• It won’t be accepted by the EU. It would require them to change customs processes across Europe, which they will never agree to. Indeed they have already rejected it.
• Having to pay EU tariffs up front, and having to meet the administrative burden of proving their products are UK not EU-bound, would clearly make the UK a less attractive trade partner to non-EU countries and businesses.
• It wouldn’t eliminate friction. There would still need to be checks at the border, as rules of origin will still need to be monitored.
• It would inevitably lead to regulatory alignment – essentially staying in the single market for goods – keeping EU rules without any say. This would harm our ability to negotiate trade deals with non-EU countries. It would be a worst of all worlds outcome.
• It weakens our hand for the rest of the negotiation. It suggests the UK hasn’t made its mind up on whether we really want to leave the customs union, incentivising Brussels to offer us a nightmare binary choice of a customs union or no deal.
• Number 10 privately believes the customs partnership will not be able to be implemented until 2022, well beyond the end of the transition period.
• If May persists with her customs partnership plan, it ramps up the chances of no deal. It risks betraying the result of the referendum and forcing Brexiters to put their letters in and blow up the negotiation.

The customs partnership is a customs union in all but name. It won’t be acceptable to Brexiters. May hasn’t publicly committed to the customs partnership – it is not too late for her to reject it, having consulted with Cabinet colleagues, and choose the Max Fac technology-based option. Big day ahead, putting off this decision further is only going to harm the negotiation…