Peers have inflicted a first defeat on the Government over flagship Brexit legislation, amid claims they are attempting to prevent the UK leaving the EU.
Labour, the Liberal Democrats, Crossbenchers and backbench Tories formed an alliance over two European Union (Withdrawal) Bill amendments which sought to retain the option of a customs union with the EU.
When one of the amendments was pushed to a vote, peers voted overwhelmingly in favour by 348 votes to 225 - majority 123 - with the other, linked amendment approved unopposed.
But Brexit minister Lord Callanan said the Government did not support the measures as it would require it to report to Parliament on the steps taken towards delivering an objective it has “clearly ruled out”.
He also signalled the Government’s intention to overturn the measures at a later stage, saying before the vote it had no intention to “reflect further” on the matter.
Crossbench peer Lord Kerr of Kinlochard, an author of Article 50, opened the Bill’s report stage by moving the cross-party proposal and arguing there is a need to try to “limit the damage” of the UK leaving its largest market.
Lord Kerr said: “The country voted narrowly to leave the European Union, but no one can argue that it voted knowingly to leave the customs union with the European Union.”
Tory former Cabinet minister and European commissioner Chris Patten also supported the proposal, noting there were times in a political career where party loyalty “comes way behind trying to stand up for the national interest”.
But Conservative Viscount Ridley said of the amendment: “It’s an attempt to wreck this Bill and to prevent Brexit.”
Earlier he took aim at the Lib Dems, saying: “Ricardo, Cobden, Gladstone, those great Liberals would be spinning in their grave at the thought that their descendant party today is in favour of this form of trade discrimination.”
Conservative former chancellor Lord Lawson of Blaby said Vote Leave made it “absolutely clear” leaving the EU meant leaving the customs union and single market.
He dismissed trade arguments in favour of a customs union with the EU, adding: “I urge the House to reject what is in essence a wrecking amendment.”
Crossbench peer Lord Bilimoria, the founder of Cobra Beer, said the amendment was about “damage limitation” as he supported the UK remaining in the customs union.
Conservative former cabinet minister Lord Forsyth said the change being sought in relation to a customs union was “an attempt to create division and confusion” in the House of Commons in a bid to block Brexit.
He said it was seeking to make the UK’s withdrawal form the bloc “subject to some conditions about a customs union”.
He warned the amendments put forward in the unelected chamber were “putting the peers against the people”.
Lord Forsyth said: “What is going on here is an exercise by Remainers in the House who refuse to accept the verdict of the British people and I believe they are playing with fire.”
Labour’s Baroness Hayter of Kentish Town said the amendment was “good for the governance of this country” and would save the economy £24 billion over the next 15 years.
For the Government, Lord Callanan said: “We have set out our two potential options for a future customs relationship with the EU, but these amendments would send a signal that the Government won’t seek to negotiate them and instead pursue an outcome the Government has ruled out.”
A division list analysis shows 24 Conservative peers voted in favour of the customs union amendment, including former cabinet ministers Lord Heseltine, Lord Lansley and former minister Lord Willetts.
In a statement, a Department for Exiting the European Union spokeswoman said: “We are disappointed that Parliament has voted for this amendment.
“The fundamental purpose of this Bill is to prepare our statute book for exit day, it is not about the terms of our exit.
“This amendment does not commit the UK to remaining in a customs union with the EU, it requires us to make a statement in Parliament explaining the steps we’ve taken.
“Our policy on this subject is very clear. We are leaving the customs union and will establish a new and ambitious customs arrangement with the EU while forging new trade relationships with our partners around the world.”