JEREMY Corbyn’s proposal for Britain to form a new customs union with the EU post-Brexit has won a cautious welcome from big business, while Tory high command dismissed it as a “complete sell-out” of the national interest.

In a keynote speech in Coventry, which attempted to put clear red water between Labour and Theresa May’s Conservatives, the party leader said, if he was prime minister, he would seek to “negotiate a new comprehensive UK-EU customs union to ensure that there are no tariffs with Europe and to help avoid any need for a hard border in Northern Ireland”.

But Mr Corbyn placed a major condition on his plan: it would have to ensure Britain had “a say in future trade deals”.

He explained: “A new customs arrangement would depend on Britain being able to negotiate agreement of new trade deals in our national interest. Labour would not countenance a deal that left Britain as a passive recipient of rules decided elsewhere by others. That would mean ending up as mere rule-takers.”

He then made an appeal to MPs, including Tory rebels, to “put the people’s interests before ideological fantasies” and side with Labour in backing membership of a new customs union with the EU27; if this were to happen, then it is possible opposition parties could defeat the Government on an upcoming key piece of Brexit legislation.

While Tory high command mocked Mr Corbyn, Foreign Secretary Boris Johnson tweeted: “Crumbling Corbyn betrays Leave voters – and all because he wants to win a Commons vote. Cynical and deluded” – captains of industry were far more welcoming.

Carolyn Fairbairn, head of the CBI, said: “The Labour leader’s commitment to a customs union will put jobs and living standards first by remaining in a close economic relationship with the EU.

“It will help grow trade without accepting freedom of movement or payments to the EU.

“Importantly, a customs union will go part of the way to providing a real-world solution to the Irish border question that is of such urgent concern to the people and firms of Northern Ireland.”

Stephen Martin for the Institute of Directors said Labour had “widened the debate” and manufacturers would be pleased that a customs union was staying on the table.

Yet he pointed out there were no easy solutions and it was hard to see how the EU would extend its trade agreements to a major non-member state without revising its treaties.

George Osborne, the former Tory chancellor, who now edits the London Evening Standard, noted how Mr Corbyn had seized the political initiative, tweeting: “Tories gifted Corbyn an open goal on the customs union and he just put the ball in.”

The trade unions also welcomed Mr Corbyn’s speech. Tim Roache of the GMB said: “By committing to a customs union, Labour is showing clear leadership that would safeguard our ports, transport firms and manufacturing sectors.”

However, Liam Fox, the International Trade Secretary, accused the Labour leader of a “cynical attempt to try and frustrate the Brexit process and play politics with our country’s future; all the while, betraying millions of Labour voters”.

In a speech today – the latest in a series of ministerial addresses on Brexit – the Scot will highlight what he sees as major disadvantages to being in a customs union with the EU.

“First of all, for goods, we would have to accept E U trade rules without any say in how they were made, handing Brussels considerable control of the UK’s external trade policy.

“Secondly, it would limit our ability to reach new trade agreements with the world’s fastest-growing economies.

“And thirdly, it would limit our ability to develop our trade and development policies that would offer new ways for the world’s poorest nations to trade their way out of poverty.”