Theresa May faces down Cabinet Brexiteers with plans for UK-EU ‘free trade area’

But under the government’s plans the UK would be free to diverge from EU rules over services, a major part of the British economy, with ministers acknowledging this will reduce the levels of access available to European markets.

Free movement would also end, although the proposals include a “mobility framework” to ensure UK and EU citizens can easily travel to each other’s territories and apply to study or work.

Brussels will be reluctant to support any plan which would risk splitting the single market, and ministers appeared to acknowledge this by agreeing to step up preparations for a “no deal” Brexit.

But Mrs May said she hoped the proposals, which will be produced in a formal White Paper next week, would enable talks with the EU to move forward.

On the eve of the marathon Chequers meeting, Brexiteer ministers met at Boris Johnson’s Foreign Office to consider their strategy.

Brexit secretary David Davis was understood to have serious reservations about both the plan and whether it could be acceptable to Brussels.

But no one resigned and the Prime Minister said the Cabinet had agreed a “collective position” on the future of the negotiations with the EU.

“Our proposal will create a UK-EU free trade area which establishes a common rule book for industrial goods and agricultural products,” she said.

“This maintains high standards in these areas, but we will also ensure that no new changes in the future take place without the approval of our Parliament.

“As a result, we avoid friction in terms of trade, which protects jobs and livelihoods, as well as meeting our commitments in Northern Ireland.”

The European Union’s chief Brexit negotiator Michel Barnier said he was looking forward to the publication of the White Paper and the EU would consider whether the proposals are “workable and realistic”.

Business leaders, who have raised concerns about the impact of Brexit on jobs and the economy, also welcomed the Cabinet agreement.

CBI director-general Carolyn Fairbairn said it was a “genuine confidence boost” but added: “The hard work starts now, and time is a challenge.”

Mrs May’s position could still be under threat from Tory Brexiteers despite the Cabinet agreement.

Backbencher Andrea Jenkyns said she was “awaiting the detail” of the plans before deciding whether or not to support calls for a leadership contest.

She said the common rulebook would mean “British businesses will continue to be a rule taker from the EU”.

Veteran Brexiteer Sir Bill Cash told BBC’s Newsnight he was “deeply disappointed to say the least” and the plans “raise a lot of very serious questions”.

Alignment on goods could reduce the UK’s flexibility to strike trade deals with other countries, particularly the US which would want an agreement allowing its farm products, produced to different standards, into the British market.

It would also involve the UK paying “due regard” to European Court of Justice rulings relating to the rules Britain will share with Brussels, potentially softening the prime minister’s red line on the jurisdiction of judges in Luxembourg.

Elements of the plan revealed in a three-page summary include: The UK committing to “ongoing harmonisation” with EU rules on goods to ensure frictionless trade at ports and the border with Ireland A “joint institutional framework” for the consistent interpretation and application of UK-EU agreements, with British courts ruling on cases in Britain and EU courts in the EU but a joint committee and independent arbitration settling disputes A new “facilitated customs arrangement” to remove the need for checks and controls by treating the UK and EU as if they were a “combined customs territory” The UK effectively imposing EU tariffs at the border for goods intended for the bloc but able to “control its own tariffs for trade with the rest of the world”

Shadow Brexit secretary Sir Keir Starmer said: “It is farcical that it has taken two years for the Cabinet to even attempt to agree a position on the basics of our future relationship with the EU.

“On previous form, whatever has apparently been agreed will struggle to survive contact with Tory MPs and members.”

Former Ukip leader Nigel Farage said: “The Tory Eurosceptics are a waste of space.

“No resignations means that the so-called Brexiteers in Cabinet don’t have a principle between them, career politicians all.”

Eloise Todd, CEO of the anti-Brexit campaign group Best for Britain, said: ‘Two years into her premiership the Prime Minister has a starting point for Brexit negotiations.

“It neglects our service sector that makes up the bulk of our economy. It says we take back control of our laws, but admits that we will be following common rules as long as our Parliament rubber-stamps them.

“The people of this country need a say on whether this is what they want, and whether they are ready to give up real power within Europe for a common rule book outside.

“It’s time for May to call a people’s vote so the public can take back control of this process.’

Business secretary Greg Clark welcomed the Brexit deal thrashed out by ministers at Chequers.

Mr Clark, who had argued that the UK must maintain close links to Brussels to protect firms, said: “Very positive conclusion to Chequers meeting.

“Free trade area will mean zero tariffs and zero friction for trade between UK and EU countries.

“This will allow business supply chains and just-in-time production to operate, supporting jobs in every part of UK.”

Shadow international trade secretary Barry Gardiner said: “There is a danger that this is a lowest common denominator plan that has really been constructed to hold the Cabinet together rather than to secure the strong negotiating position that we need with the EU, that will create jobs, that will create growth in our economy.

“It’s going to be down to the EU, ultimately, to decide what they think of this set of proposals.”

He told BBC Radio 4’s Today programme: “Once upon a time we were told ‘Brexit means Brexit’, now we are told it means maintaining a common rulebook for all goods, a joint institutional framework for interpreting the agreement and the UK and EU forming this combined customs territory.

“That looks very much like regulatory alignment, the ECJ (European Court of Justice) and half a customs union to me.”

Theresa May has written to Tory MPs saying “collective responsibility is now fully restored” within the Cabinet, effectively warning ministers not to criticise the agreement.

Congratulations @theresa_may on the restoration of collective responsibility & I have no doubt you will enforce it! As a former Bis Minister I’ll always welcome Govt policy that delivers a business friendly #Brexit I await more detail #WhitePaper

— Anna Soubry MP (@Anna_Soubry) July 7, 2018

Former business minister Anna Soubry, one of the most vocal pro-EU MPs on the Tory benches, welcomed the Chequers deal, writing on Twitter: “Congratulations @theresa_may on the restoration of collective responsibility & I have no doubt you will enforce it!

As a former Bis Minister I’ll always welcome Govt policy that delivers a business friendly £Brexit I await more detail #WhitePaper.”

Cabinet Brexiteer Chris Grayling acknowledged the deal could lead to issues in negotiating a US trade deal.

The transport secretary said: “I didn’t campaign to leave the European Union to have a different specification of motor car on sale in the UK to the one that’s on sale in France. This is simply saying that we will effectively sell the same products across Europe as we do now – it’s what business does and would do anyway, nobody produces a different product for one country.”

Asked what the common rulebook with the EU on food products would mean for the proposed US trade deal, Mr Grayling told BBC Radio 4’s Today: “There may be individual issues to address in future trade talks.”

The Chequers customs plan would address issues at the border with Ireland and at Dover and Calais where “in practical terms it would be immensely difficult if not impossible to do customs checks”, he said.

And Mr Grayling stressed that the European Court of Justice’s “remit in the UK will end when we leave”.

He added: “Of course, courts pay attention to what each other say. I was a former justice secretary, the reality is our judges pay attention to what Canadian judges, Hong Kong judges and European judges say in their judgments.

“Of course there will be a degree of looking from one group of judges to another as to what they have decided and what view they form, but this doesn’t give the ECJ a remit over the UK.”

Commons Leader Andrea Leadsom said: “As a passionate Brexiteer with huge optimism about future as a free trading nation, I agree with the PM that keeping the UK together is vital.

“Alignment on goods, with Parliament sovereign on each decision, free to trade, no more vast payments, ending free movement – good for UK.”

DUP deputy leader Nigel Dodds said his party would examine the “fine print” of the Chequers plan and would meet the Government to discuss it.

He said: “The government’s commitment at Chequers to the political and constitutional integrity of the United Kingdom with no borders between Northern Ireland and the rest of the United Kingdom is a welcome reaffirmation of what is an absolute priority for us.

“It is clear the whole country will leave the EU together. Republicans may be disappointed as they tried their best to seize this as an opportunity to weaken the Union.”

He added: “On the overall United Kingdom/EU relationship, the DUP has been clear that the government must deliver on what the people of the United Kingdom voted for in the referendum, namely, control of our borders, our laws and our money.

“We will be examining and measuring the fine print of the white paper due to be published next week against these clear objectives. We will be meeting the government to discuss those details.”

A small group of Tory MPs attended a briefing in Whitehall by Chief Whip Julian Smith and Theresa May’s chief of staff Gavin Barwell about the deal.

Morecambe and Lunesdale MP David Morris said the package was “realistic” and Brexiteers now had to be “grown up” about it.

“The reality is they have to grow up and accept it,” he said when asked about Boris Johnson and Michael Gove’s approach to Brexit.

He said the detail of the agreement would be in the white paper on Thursday.

“What this is, in effect, is a common market, that is what it looks like to me,” he said.