The House of Lords is expected to vote for Britain to remain in an EU customs union this week, inflicting a damaging defeat on the government.
The upper chamber of the British parliament is currently debating the EU withdrawal bill, which lays the legal ground for Brexit.
The Lords are expected to support, perhaps by a majority of more than 50, an amendment sponsored by Chris Patten, a former Conservative chairman, calling for the government to negotiate an arrangement “which enables the United Kingdom to continue participating in a customs union with the EU”.
The customs union is the agreement between EU member states not to impose tariffs on each other’s goods and to have a common external tariff regime. It allows goods to move freely within the bloc without customs checks.
Remaining in the customs union would help remove the need for a hard border between Northern Ireland and the Republic of Ireland, but the government opposes the idea because it would prevent Britain from signing bilateral trade deals.
Baroness Smith, Labour leader in the Lords, said: “This bill offers an opportunity for the government to take a pragmatic view of how best to protect the rights of UK citizens, rather than be distracted by the ideological pursuits of some on the Commons backbenches.”
“This seems to me to be modest and sensible,” said John Kerr, the former head of the Foreign Office who also proposed the amendment. “It makes a huge difference for our manufacturing industry and it is also a necessary — but not sufficient — part of the solution to the Irish conundrum.”
If the amendment were passed, it would fall to Mrs May to try to reverse it in the House of Commons in what would be crucial vote — possibly as early as mid-May. That could come after an expected meltdown for the Conservatives in local elections in London.
Jeremy Corbyn, the Labour leader, recently reversed his party’s position to back a customs union, which would help to address the Northern Ireland border question as well as easing trade between Britain and the rest of the EU.
The Scottish National party and the Liberal Democrats also favour staying in the customs union, while pro-European Tories also favour the move.
One former Whitehall official said a government defeat on the issue would “be a huge development because it would mean the UK was finally moving towards a rational assessment of the costs and benefits of Brexit”.
A previous attempt to force a customs union by tabling an amendment to the government’s trade bill was defused when Mrs May postponed the bill’s passage through the Commons.
The government is facing a series of defeats in the Lords on the withdrawal bill at its report stage.
Senior officials at the Department for Exiting the EU acknowledge that the government is likely to be defeated on some amendments because it does not have a majority in the upper chamber.
However, Dexeu officials insist that any defeat would not stop Brexit and that many peers genuinely want to improve the bill rather than destroy it.