Theresa May, U.K. prime minister. (Photographer: Jason Alden/Bloomberg)

May Fights for Her Brexit Plan With Chequers Lock-in an Option

(Bloomberg) -- U.K. Prime Minister Theresa May has used a variety of methods to keep her divided government on track, from champagne and chocolates at a rural retreat to sandwich lunches around the Cabinet table.

Now, with her most senior ministers at war over what kind of customs regime they want after Brexit, some in her team think it’s time to lock them all up in a room until they can agree. May’s officials are determined to keep her customs plan -- which was declared dead on Wednesday -- alive.

May Fights for Her Brexit Plan With Chequers Lock-in an Option

A lock-in worked well in February, when May’s Brexit “war cabinet” of eleven ministers traveled the 40 miles from central London to Chequers, her official country residence. They spent eight hours shut away in talks, sitting in comfortable armchairs in front of log fires and drinking tea. At the end of the night, there was a deal.

Something similar might happen now, after ministers failed to agree on a new tariff and border regime at a key meeting this week, according to one person familiar with the matter, who declined to be named.

It is one option open to May as she seeks a way forward in the face of an impossible situation. Brexit talks in Brussels are stuck on the thorny issue of how to avoid a hard border with Ireland -- and progress can’t be made until the U.K. decides what kind of customs plan it wants. That task hit a roadblock this week.

Tory Factions

May is trapped between warring tribes within her party. Pro-Brexit Cabinet ministers like Foreign Secretary Boris Johnson want a clean, quick break from the EU. He opposes her preferred plan for a close “customs partnership” with the bloc, in which the U.K. would collect the EU’s tariffs and then apply discounts to eligible businesses afterwards.

At a meeting on Wednesday, she was outnumbered by ministers like Johnson who support the other model on the table: a looser arrangement called “maximum facilitation” or “Max Fac.” This would try to minimize -- but not eliminate -- border checks on goods, through the smart use of technology and “trusted trader” schemes for cross-border business operators.

Unfortunately, the Max Fac solution looks likely to be impossible for the EU to agree to, because it would fail to deliver the frictionless border with the Republic of Ireland that all sides say they want.

After Wednesday’s clashes, British officials said both options had been effectively killed because the Cabinet was so badly split.

But May’s team believes neither “Max Fac” nor her preferred “customs partnership” model can be dead, despite the fact she was outnumbered at the Brexit meeting, one person familiar with the matter said.

The reason? The only other choices available are to stay in some kind of customs union with the EU -- which could be politically fatal for May -- or to crash out of the bloc with no deal at all, in which case the government would probably fall.

Speaking on condition of anonymity, another official agreed there is still hope for May’s plan. European negotiators want to explore May’s idea further and have asked the British to answer five questions on it, the official said.

Ministers on Johnson’s side who oppose the idea will be given briefings from May’s team to help them get to grips with complex details of how it would work, and to allay their concerns.

Brexit specialists are also working on both of the policy options to see if they can be modified to address the different issues raised by rival sides in the 11-strong cabinet committee, one official said. Brexit Secretary David Davis has said the two proposals have drawbacks and that the EU has pushed back against both.

When will the warring “war cabinet” meet to reach their truce? It has to be soon -- and it could be at Chequers.

The Tudor manor house was gifted to the nation at the end of the First World War. A stained glass window installed to mark the occasion bears an inscription setting out the building’s purpose. Chequers, it says, is a “house of peace.”

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