Rishi Sunak has offered to sacrifice some of Britain’s Brexit freedoms in a bid to re-establish devolved government in Northern Ireland.
The Prime Minister has pledged to introduce a requirement that all new laws are screened to ensure they will not create extra trade barriers in the Irish Sea.
Downing Street hopes the promise will persuade the Democratic Unionist Party (DUP) to end its two-year boycott of Stormont that has paralysed Northern Irish politics.
But the offer angered Tory MPs, who warned that introducing such a policy would make it almost impossible for Great Britain to diverge from EU rules.
Eurosceptic sources said the plan would mean any laws designed to take advantage of Brexit freedoms risked being blocked by Whitehall officials.
All legislation would have to be accompanied by a ministerial statement confirming it did not have a “significant adverse effect” on internal UK trade.
The planned system would mirror the one used to screen new bills for their compatibility with the European Convention on Human Rights.
Northern Ireland effectively remained in the European single market when the rest of the UK left the bloc, to prevent the need for a hard border with the Republic.
As a result, goods travelling from Great Britain to Ulster have to undergo customs checks to make sure they are not destined for Ireland, an EU member.
If Britain diverges from EU rules, the number of checks necessary on British goods crossing the Brexit border to Northern Ireland could increase, which critics say will harm trade.
It raises the prospect that new laws which mean Britain diverges from Brussels could be blocked.
Unionists have been angered by the current arrangement, which they say has harmed the Northern Irish economy and made its people “second class” UK citizens.
The DUP walked out of the Belfast assembly in February 2022 in protest at the Irish Sea Border and has refused to return until the checks are scrapped.
Mr Sunak renegotiated the original Brexit deal last year and replaced it with the Windsor Framework, which reduced – but did not eliminate – customs red tape.
Unionists have been pushing the Prime Minister to go further, but doing so would anger the EU and put the wider Brexit trade deal in peril.
His latest offer would give the DUP an effective guarantee that the UK would not pass laws in the future that would create more trade barriers between Great Britain and Northern Ireland.
But Tory MPs warned it would come at the expense of tying Britain to European standards and putting paid to capitalising on Brexit freedoms.
Sir Jacob Rees-Mogg, the former business secretary, said: “This means we will not diverge at all, and we will have ended up with Theresa May’s Chequers deal in all but name.
“I voted against the Windsor Framework because it subordinates part of the UK to the EU. This mechanism would restore part of the EU hegemony over us.”
Sir Iain Duncan Smith, a former Tory leader, added that the plan was “a real problem”.
He added: “The Windsor framework is the back door to the EU holding on to the UK and stopping us diverging. It should be replaced.”
Sir Iain has led calls for the UK to relax its rules on the growing of gene-edited crops, which would be a major boost to UK farmers.
But practice is banned by the EU, meaning Northern Ireland could not implement it or import any such produce from Great Britain.
A eurosceptic source said: “It will be a powerful tool in the hands of civil servants, producing a chilling effect where any divergence will be seen as impossible.”
Sir Jeffrey Donaldson, the DUP leader, has been locked in talks with the Government for months over a deal to return to power-sharing in Stormont.
Ministers have offered legislation guaranteeing Northern Ireland’s place in the UK, a new East-West council on internal trade ties and £3.3 billion of funding.
There were hopes he would back the deal at a party meeting last week but the offer faced stiff resistance from some senior DUP members.
He told the Commons on Wednesday that he had been threatened for attempting to find a deal over the Irish Sea border issue but vowed not to be intimidated.
The Government has come under fire for “failing” to take advantage of Brexit by quietly extending the sway of EU law over the British economy.
That criticism coincided with the Department for Business slipping out an announcement that it is expanding the use of European safety marks.
‘Listened to business’
Kevin Hollinrake, the business minister, said the bloc’s ‘CE’ stamp, which denotes goods made to EU standards, will now be accepted for more goods.
The move means UK manufacturers of electronics, such as vacuum cleaners, heat pumps and fridges, will be incentivised to keep following Brussels’ rules.
In a written statement, Mr Hollinrake said he had “listened to business” in both the UK and on the Continent who want to continue following EU standards.
But eurosceptic MPs fear the latest climbdown will effectively end any hopes of Britain taking advantage of its Brexit freedoms by diverging from the EU.
David Jones, deputy chairman of the European Research Group, said ministers “should encourage and hasten the development of British standards and not continue to adhere to EU regulation”.
He added: “The UK is pursuing a global trading stance and EU standards are increasingly irrelevant. Clinging to the CE mark is extremely shortsighted.”
Sir Bill Cash, a leading Tory eurosceptic, warned the Government was “squandering the opportunity” to break free from Brussels red tape.
In a letter to Kemi Badenoch, the Business Secretary, he said there was “little hard evidence” ministers have a plan to pursue Brexit freedoms.
Asked about the offer from Mr Sunak, a UK Government spokesman said: “We do not comment on speculation.
“We believe there is a strong basis for a restoration of power-sharing, and we remain hopeful that this can be fixed soon.”