Peers in the House of Lords, London, as the Government suffered its first defeat in the Lords over the European Union (Withdrawal) Bill after peers voted in favour of a customs union amendment. PRESS ASSOCIATION Photo. Picture date: Wednesday April 18, 2018. See PA story LORDS Brexit. Photo credit should read: PA Wire
The 348 to 225 vote in favour of remaining in the customs union exceeded expectations © PA

The House of Lords defeated the government in a key Brexit vote on Wednesday, demanding that ministers take steps to negotiate a new customs union with the EU.

The vote, which could be overturned by MPs, represents one of the boldest attempts yet by pro-EU parliamentarians to shape the terms on which Britain leaves the EU. Peers voted 348 to 225 against the government, in a majority that exceeded expectations.

Theresa May, the prime minister, has insisted Britain will not be part of a customs union with the EU after the end of a Brexit transition. That would mean the UK can negotiate trade deals with third countries, at the risk of greater bureaucracy in exchanging goods with the EU.

Pro-EU Conservative MPs are not expected to back the Lords amendment, but are likely instead to wait until any vote on the final Brexit deal later this year before deciding whether to put pressure on the government.

Keir Starmer, the Labour party’s Brexit spokesman, said the Lords vote was “an important step forward” and that there was now a “growing chorus of voices” calling for an ongoing customs union with the EU.

The amendment to the EU withdrawal bill would require the government to make a statement to parliament outlining the steps to negotiate a customs union with the EU as part of the future relationship.

Peers also defeated the government on another amendment, voting 314 to 217 to limit ministers’ ability to change employment, consumer and environmental rules after Brexit without primary legislation.

The customs union amendment was put forward jointly by John Kerr, a cross-bencher and former civil servant, and Chris Patten, a former Conservative cabinet minister, as well as shadow ministers from Labour and the Liberal Democrats.

Lord Kerr, who authored Article 50 that set out the legal process for leaving the EU, said Britain had to seek to “limit the damage” of leaving its largest market.

“Other red lines have been . . . sensibly blurred. In my view, it’s time for this one,” he said.

Lord Kerr has called for a referendum on the Brexit deal, but said this amendment was part of a separate attempt to improve the deal itself.

He also admitted that parliament could not force the government to keep Britain in a customs union, but said it could ensure that the government found out what terms were available.

Lord Patten said the idea that Britain could easily replicate the EU’s trade deals with third countries was “for the birds”.

“There are times in one’s political career where what is alleged to be party loyalty comes way behind the national interest,” he said.

In riposte, the former Conservative chancellor Nigel Lawson said Vote Leave, the official Out campaign that he briefly chaired, had made “absolutely clear that leaving the European Union meant leaving the customs union and the single market”.

Lord Kerr responded that he was not sure that “the country was listening”.

Martin Callanan, a minister in the Department for Exiting the EU, said the UK had already made progress in Brexit negotiations “in areas that many thought impossible”.

Dexeu said Lord Kerr’s amendment vote would not keep Britain in a customs union, but simply “requires us make a statement in parliament explaining the steps we’ve taken.”

The EU withdrawal bill, which sets the legal framework for Brexit, is one of several pieces of contentious legislation in the next year. Parliament will also be asked to vote on the trade bill, the customs bill, and the withdrawal agreement and implementation bill, providing the UK and the EU reach a Brexit deal.

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