LONDON – Theresa May's House of Lore defeat this week was undoubtedly embarrassing. On Wednesday, the peers overwhelmingly voted in favor of an amendment to the Brexit bill that could lead the government to re-think its plans to leave the EU customs union.
Such a defeat, if repeated in the House of Commons, would be a blow to May's Brexit plans and would be highly unpopular among the Conservative Brexit supporters.
Although the result was superficially bad news for the government, it also provides a tempting way out of May's current plight for Brexit.
"Some people have told me in recent days that they believe the government will make a turn in the Customs Union," says Professor Anand Menon, the director of UK in a changing Europe, a leading Brexit tank told Business Insider.
May has consistently rejected any plans to withdraw from its commitment to leave the current Customs Union or join a new similar union. However, government officials in recent days have repeatedly made proposals to both Bloomberg and the Times for an impending turnaround. So could we experience a great descent from May?
The worst option?
Mays commitment to leave the Customs Union is one of the most sensitive in the entire Brexit process. It conflicts with their commitment to avoid a hard border in Northern Ireland.
A hard limit would be highly damaging to both the integrity of the UK and May. However, from today's perspective, the UK government has not yet proposed a firm option to circumvent such a border while fulfilling its other promise to break customs relations with the EU.
Defeat on this issue may therefore be the worst option for May, and in some ways even politically beneficial. Not only would it help solve a seemingly persistent problem for May, but it could also be a political blow to Labor, who has tried to break into this issue between their Brexit position and the government.
"Politically, membership in a customs union may fit quite well, not least because it spits on Labor," Menon said. "It means the Brexit working position is the same as the government's, and that's not where Labor wants to be."
If this assumption is correct, the question arises of how Theresa May could make a great descent without losing face and destroying the unity of her party. Some believe that their humiliating defeat in the House of Lords on Wednesday could provide the necessary political cover.
"If Parliament votes in favor of an amendment requiring a change of direction [on the customs union]I think the Prime Minister will be privately pleased," said Andrew Duff, a former MEP and President of the Spinelli Group, a Brussels political group Guy Verhofstadt.
Duff believes that May must announce a "change of direction" before the European Council in June – if the EU expects the UK to make significant progress on the Irish border issue – and say a vote in the House of Commons could help the means to do so. It could theoretically be a defeat as a victory for the parliamentary process and evidence that the lower house is holding the government to account in the Brexit negotiations.
There is another question that could work in favor of the Members in May. Recent surveys suggest that the public is broadly in favor of membership of the Customs Union, and it would be easier to sell Tory voters than membership in the Single Market, as this would allow Britain to pursue its own immigration policy.
The loss of another vote in the House of Commons would undoubtedly undermine the authority of May. But it is possible that she sees such a defeat as brave if she continues to commit herself to the point where she is defeated.
"Half-heartedly losing is not a good look, because then May would be accused of not trying," said Professor Menon.
"If losing is their way to negotiate with the [pro-Brexit grouping of MPs] European Research Group and with Liam Fox, they have to get behind the wheel to try to win," he said.
If she had lost the voice of the House of Commons in this scenario, she would at least be able to appease the hard Brexiteers in her party by showing that she had tried.
A Brexit U-turn is in the post office
The alternative – to opt for membership of the Customs Union – would endanger their Brexiteer colleagues, but would at least show strong leadership.
"Your caliber of leadership is always in question," said Duff. "The courageous thing is to explain to the House of Commons that it is much more flexible in these matters than in the past," he said.
Whether May decides to use the Commons vote as the front for membership of the Customs Union remains to be seen.
It is unclear how Parliament would even vote on the issue at all, but a group of pro-Remain Tory MPs led by Dominic Grieve appear confident that they could defeat the government.
Grieve and his colleagues will be able to test the political turmoil next Thursday when MEPs vote on a noncommittal motion calling on the government "to be included as a target in the negotiations … the institution an effective customs union "between the United Kingdom and the EU.
Whatever happens next week, there is a growing belief that a customs union is coming. Mujtaba Rahman, Managing Director of the highly respected political consultancy Eurasia Group, reiterated a growing consensus when he told customers in an email last week that membership of the Customs Union is now the "base case" because it is breaking the Irish border Problem.
Defeat is never an attractive option for a prime minister. But the alternative of jeopardizing the British economy and the integrity of the UK by leaving the Customs Union seems far less attractive.
A withdrawal of the Customs Union may not be popular with the Conservative Brexiters, but it would have the support of the majority of MPs, business leaders and the public.
And as Prime Minister, who is held accountable for the way Brexit ends up, the short-term embarrassment of defeating the Customs Union is a bitter pill she will gladly swallow.