Peers inflict major defeat on Theresa May's Brexit strategy as Lord's vote to stay in single market

The government also lost votes on removing the official exit date from the bill and keeping the UK in EU agencies

Peers have dealt a major blow to Theresa May’s Brexit strategy by backing a bid to force the government to effectively keep the UK in the single market.

Rebels in both Labour and Tory ranks defied the leadership to inflict the defeat on the government in the Lords, where they supported a cross-party amendment calling for continued participation in the European Economic Area (EEA).

The news will come as a blow to Jeremy Corbyn, as 83 Labour peers rebelled against a frontbench edict to abstain on the vote. Some 17 Tories also defied Ms May to back the bid.

The vote comes as the government suffered two other losses when peers backed plans to remove references to an official Brexit date from the face of the bill as well as plans to keep the UK in EU agencies after Brexit.

Later, there was a fourth defeat over calls to strengthen scrutiny of secondary legislation made by ministers following Brexit - taking the total number of government defeats to 14.

Labour’s Lord Alli, moving the amendment, said: “It is the EEA that deals with services, services like retail, tourism, transport, communications, financial services and aerospace where we have a £14bn trade surplus in these services.

“The customs union will benefit our European neighbours in their imports, and without an EEA equivalent it will damage our profitable export business and therefore the jobs and livelihoods of many thousands of people.

“It’s for that reason that we need to ensure that any continuation of the customs union must include a continuation in the EEA or its equivalent.”

Responding for the government, Brexit minister Lord Callanan warned that remaining in the EEA “would not deliver control of our borders or our laws”.

He said: “On borders it would mean that we would have to continue to accept all four freedoms of the single market, including freedom of movement.

“On laws it would mean the UK having to implement new EU legislation over which in future we will have little influence and, of course, we will have no vote.

“This will not deliver on the British people’s desire, as expressed in the referendum, to have more direct control over decisions that affect their daily lives.”

Labour rebels backing the amendment included former party leader Lord Kinnock, Lord Mandelson and ex-cabinet minister Lord Hain. The Tory rebels included former cabinet minister Lord Patten of Barnes and former deputy prime minister Lord Heseltine.

Earlier, peers backed a bid to remove the official exit date, 29 March 2019, from the bill, which is likely to infuriate Eurosceptics who see the bid as an attempt to thwart Brexit.

Labour peer Baroness Hayter said stripping the date from the bill would ”remove the straitjacket” and make the task easier for negotiators.

She told peers: “If this amendment is successful it will remove the straitjacket that the government are in – I have to say not at the behest of negotiators but at the behest of certain ardent Brexiteers.”

The efforts were spearheaded by the Conservative politician Charles Wellesley, Duke of Wellington, who insisted he was not trying to “thwart the process” of leaving the EU.

“We know beyond any doubt that for the purposes of this bill we leave the EU on 29 March 2019,” he said.

“But this date should not be defined and specified ... in case it becomes necessary and in the national interest to agree an extension as provided in Article 50.”

Lord Callanan told peers that he saw “no reason” to amend the bill, adding: “I would reiterate that exit day within the bill does not effect our departure from the EU, which is a matter of international law under the Article 50 process.”

There were 14 Tory rebels on the EU agencies amendment and 10 on the second, including former deputy prime minister Lord Heseltine and former cabinet minister Lord Patten of Barnes.