Theresa May, U.K. prime minister, reacts while speaking during an event in the City of London, U.K. (Photographer: Simon Dawson/Bloomberg)

May Fends Off Tory Rebellion But at High Cost: Brexit Update

(Bloomberg) -- Theresa May fought off an attempt by pro-European Conservative rebels to keep open the option of Britain entering into a customs union with the European Union after Brexit. She earlier lost a vote forcing her to keep Britain within the bloc’s regulatory regime for medicines.

The question now becomes, was it worth it amid accusations of long-standing parliamentary conventions being broken.

May’s chief “whip” takes the blame (11:07 p.m.)

A senior figure in May’s government has taken the blame. Julian Smith, her chief whip, tweeted: “Jo I am v sorry-I spoke to your CW earlier. A mistake - we pair consistently 4 pregnancy pairs - @BrandonLewis was asked to vote in error.”

Read our take a month ago on how hard it is to be the person in charge of getting May over the finish line in Parliament.

Conservative Party Chairman apologizes (10:06 p.m.)

The man at the center of the controversy weighed in via Twitter: “I’m sorry Jo. I think it was an honest mistake made by the whips in fast-moving circumstances. I know how important the pair is to everyone, especially new parents, and I apologise. Also apologies for late reply, been speaking at an event.”

Backlash is growing (9:24 p.m.)

Dawn Butler, a Labour lawmaker, is weighing on the controversy of how May scraped with the help of Conservative Party chairman Brandon Lewis breaking with a gentleman’s agreement to abstain from voting. Read more about the details, below.

“Absolutely appalling move by the Conservative Party chairman. Parliament needs to be dragged into the 21st century and Brandon Lewis must personally apologise for his role in making politics even more inaccessible for new mums. @theresa_may!” she tweeted.

Victory, but at what cost? (9:15 p.m.)

Although the Tories are trying to pass the pairing issue off as a minor mistake, that’s not how they see it privately. Leadsom has campaigned hard on issues around new baby care, and a promise she made has been broken.

The danger for the government is that if trust between the whips breaks down, the opposition call off all these gentlemen’s agreements.

"It’s very, very bad,” said Philip Cowley, professor of politics at Queen Mary, University of London. “This is the sort of thing which, as when it happened in the 1970s, leads to the complete collapse of relations between the parties. Short-term gain, in exchange for long-term pain.”

Tories Accused of “Cheating” (8:42 p.m.)

There’s another way that the government won. It seems it broke the "pairing" arrangements that usually exist between parties. These allow members on opposing sides to both agree not to vote, effectively canceling each other out.

With several heavily pregnant women on the opposition benches, the House of Commons Leader Andrea Leadsom had promised that all would be given pairs. But Brandon Lewis, the Conservative Chairman, who had been offered as a pair for Liberal Democrat Jo Swinson, who is at home with a baby son, voted with the government.

Here is what Swinson had to say, via Twitter: “Don’t try any nonsense about a mistake - this is calculated, deliberate breaking of trust by govt whips @JulianSmithUK to win at all costs. Brandon abstained in afternoon divisions, but voted in the two crunch votes after 6pm. There’s a word for it - cheating.”

What Tories were threatened with (7:53 p.m.)

Two Conservative lawmakers were warned that “Brexiteers” could bring a vote of no confidence against May if they voted to keep Britain in a customs union with EU. This was a government strategy reported earlier by the Times and confirmed by Bloomberg. If the end result is anything to go by, it proved to be effective in helping May squeak by.

May needed some help from the opposition (7:18 p.m.)

May survived the customs union vote thanks to a little help from the Labour Party. Four Labour lawmakers -- Frank Field, Kate Hoey, John Mann and Graham Stringer -- rebelled against their own side and voted with the government to keep the U.K. out of a customs union.

The pound pared losses after the vote.

In the spirit of the closeness of the vote -- and the damage a loss would have done to May -- here’s a story Kitty Donaldson wrote on how the Conservative Party gets rid of its leaders:

May fends off Tory rebellion on customs union (6:46 p.m.)

May fended off an attempt by pro-European Conservative rebels to keep open the option of Britain entering into a customs union with the EU after Brexit.

It was a narrow escape. The government won the vote 307-301. Beforehand, the government had considered pulling the whole bill if they had been defeated on that amendment.

Government Said to Mull Pulling Bill If Defeated (6:41 p.m.)

May’s officials are said to be working on an emergency plan to withdraw the whole Trade Bill if the government loses the vote on customs union.

A person familiar with the matter said pulling the bill is among the options that have been considered. Another route could be to try to buy more time by pausing the passage of the law and trying to work out a compromise.

Pro-Brexit Tories fear that Hammond’s amendment will effectively take “no deal” off the table.

Government defeated over medicines regulations (6:31 p.m.)

The Tory rebels have helped inflict the first significant defeat on May over a piece of Brexit legislation since December. They won 305-301 on Phillip Lee’s amendment that seeks to keep the U.K. within the EU’s regulatory regime for medicines after Brexit.

It doesn’t bode well for May in the customs union vote, underway now.

How May’s strategy could have unraveled (6:14 p.m.)

When Theresa May decided on Monday to accept demands from euroskeptic hardliners in her party to rewrite her Brexit plan, she thought she was buying herself more time.

Instead, her gamble seems to have angered pro-EU Tories so much that just 24 hours later, they are determined to defeat her and force through moves that could keep the U.K. in a customs union with the EU. That would represent a huge defeat for the prime minister.

During a frantic debate in the Commons on Tuesday, a succession of pro-EU Conservatives stood up and announced that Monday’s machinations were a turning point for them. Nicky Morgan, chair of the Treasury select committee, accused her euroskeptic colleagues of trying “to scupper” May’s own carefully worded Brexit compromise, contained in the so-called white paper she published last week.

Phillip Lee and the veteran former Chancellor Ken Clarke also cited Monday’s votes -- which May narrowly won -- as key reasons why they will oppose the premier on Tuesday. May’s whips are trying to persuade the pro-EU rebels to back down. The vote, when it comes, could be close again.

Morgan: Majority in Commons Want customs union (6:02 p.m.)

An angry-sounding Nicky Morgan -- one of the sponsors of the Tory rebel amendment, says “it is time to put party politics aside,” and welcomes Labour’s support. She then fired a warning shot to the government -- which has ruled out remaining in a customs union with the EU.

“It is very clear that in this house there is a majority for a customs union,” Morgan says. “I hope the house will have the opportunity to demonstrate this shortly.”

Lee laments ‘worst experience in politics’ (5:55 p.m.)

Phillip Lee -- who stepped down as a minister last month in order to oppose the government’s Brexit policy -- stands up to introduce his hostile amendment that the U.K.’s post-Brexit trade agreement with the EU should allow it to “fully participate” in the European regulatory regime for medicines.

He ends by saying he’ll also support Hammond’s clause ,and described Monday’s proceedings in Parliament on the customs bill as “the worst experience in politics I’ve had in eight years.”

“I’m sorry that it has changed the dynamic,” he says. “I started the day intending to support our prime minister in her deal and the White Paper. Yesterday changed that.”

Government in open negotiations with Tory rebels (5:43 p.m.)

A key exchange in the House of Commons as Tory lawmaker Stephen Hammond tries to persuade the government to accept his amendment, which he says is “exactly in line” with the government’s Brexit White Paper.

Trade Minister George Hollingbery tries to defuse the row by offering a similar amendment in the House of Lords -- but removing the term “customs union” -- if Hammond backs down. Hammond replies that it’s a “generous offer” that he’s “tempted to accept.” But he then suggests instead that the government accept his amendment in the Commons today, and then amend it in the Lords.

Hammond doesn’t mention it, the Tory pro-EU rebels have been burned in the past by government promises of concessions that then didn’t materialize.

Labour confirms support for pro-EU Tory amendment (5:40 p.m.)

Labour trade spokeswoman Judith Cummins says the opposition party will support the Tory rebel amendment though it’s only the second part of it -- calling for a customs union -- that it really supports. The first bit calls for May’s already-stated plan of securing frictionless trade with the EU after Brexit.

“If and when it proves the government cannot negotiate the unnegotiatable, it is important that we take the obvious path to achieving frictionless trade, and that is a customs union,” Cummins says.

Major: Tory fighting could trigger election (5:22 p.m.)

Former Prime Minister John Major says Tory Brexiteers could destabilize Theresa May’s government to such an extent that it leads to a general election in the fall or the spring. He says in an ITV interview that he thinks May has it tougher than he did when he faced down anti-EU rebels in the 1990s -- he famously referred to them at the time as “bastards.”

The rebels now, he said, are “more entrenched.”

“Theresa May is in a more difficult position than I was,” he says.“Facing more committed and hard-line opponents -- and more of them -- than I had.”

Times: Rebels warned PM could face confidence vote (5:10 p.m.)

Tory rebels are being warned that Brexiteers could bring a vote of no confidence against Prime Minister Theresa May if lawmakers vote to keep Britain in a customs union with EU, the Times reports.

With about an hour to go until a vote on the key amendment is expected, the government whips are trying to get lawmakers in line and are meeting with potential rebels. The vote looks set to be on a knife-edge.

May risks defeat as Tory rebels and Labour unite (3:40 p.m.)

Prime Minister Theresa May risks defeat over her Brexit policy in the House of Commons after the opposition Labour party decided to back an amendment penned by pro-European lawmakers in her own Conservative party.

The latest flashpoint, bringing together the opposition and Tory rebels, is over an attempt to tie May’s hands by forcing her to sign up to a customs union if she fails to get a deal that would allow free and easy trade between the European Union and the U.K. by early 2019.

The opposition Labour Party will whip its lawmakers to back that amendment when it is debated on Tuesday in the lower chamber. The vote stands on a knife edge a day after May survived a vote in Parliament on Monday by a margin of just three.

All this has become a proxy war between various factions in May’s deeply divided party, with Labour seeking to exploit her lack of majority in Parliament to topple her government. While a defeat on Tuesday would not spell May’s end, it would be another uncomfortable reminder of her weakness and could make her position more precarious.

Markets are showing signs of nervousness as there are growing signs that May’s hard-won Brexit policy could be thrown into disarray. The pound snapped three days of gains to weaken as much as 0.7 percent against the dollar.

“There is anticipation that the government may well be defeated this evening,” said Neil Jones, head of hedge-fund sales at Mizuho Bank Ltd.

She survived Monday’s votes -- where she was forced to accept amendments from Brexit hardliners -- because of absentees including Liberal Democrat Leader Vince Cable and his predecessor Tim Farron, but on Tuesday, she may not be so lucky: The rebels already proved in December they’re capable of defeating the government.

©2018 Bloomberg L.P.