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Sun, 5 July 2020

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By Dods Monitoring
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The Malthouse compromise: an ‘imperfect solution’ to Brexit?

The Malthouse compromise: an ‘imperfect solution’ to Brexit?
7 min read

Westminster was blind-sided last week when a new ‘plan c’ for Brexit won the backing of leading Tory Leavers and Remainers alike. But what is the Malthouse plan, and could it be the key to breaking the Brexit deadlock? Sebastian Whale reports

“It’s a very interesting option,” Cabinet minister Chris Grayling tells The House. “It’s been carefully thought through. It’s attracted support from both sides of the party. We should take it very seriously, and the Prime Minister will be taking it very seriously.”

The so-called Malthouse compromise blind-sided Westminster when it emerged overnight on Monday. An unlikely cabal of Tory MPs, it transpired, had been meeting over a ten-day period to thrash out a possible solution to the Brexit blockage. They included Brexiteers Jacob Rees-Mogg, Steve Baker and Kit Malthouse – the Housing minister after whom the proposal was named – and Remainers Nicky Morgan and Stephen Hammond. “You will have spotted that nothing leaked for 10 days from that, which was a sign of the good faith in which we were able to work together,” says one of those involved in the talks.

The proposal has two components. Part A, which would include the transition period being extended to December 2021, would see Theresa May renegotiate the backstop element of her Brexit deal with an acceptable indefinite solution. The proposals, as set out in a December report backed by the DUP and the ERG, rely on technological solutions to carry out customs checks away from the Irish border. The UK would also agree to meet the £39bn divorce bill and commitments on EU citizens’ rights.

Should the attempt to renegotiate the backstop fall short, we move to Plan B, which is effectively a managed no deal. Here, the UK would continue to offer Plan A, while unilaterally guaranteeing EU citizens’ rights, reducing its financial offer to the minimum compatible with international law and purchasing the implementation period, which would again be extended by a year. The UK would also seek to sign a so-called “standstill” trade arrangement, meaning no tariffs, no quotas and no new barriers to trading with the bloc, in exchange for an annual payment. This would allow trade to continue if the EU rejected the purchase of the implementation period or had failed to agree a future relationship before the end of 2021.

What’s brought Remainers and Leavers to the table is the ambiguous nature of the future trading relationship, the commitment to replace the controversial backstop arrangement, and the decision to mitigate against the risks of no deal – but not take it off the table unilaterally.

 “Why do I support it?” Health minister Stephen Hammond, a vocal advocate of a soft-Brexit, begins. “Because I think that it is clearly in our country’s interest to have a deal. Clearly, we were making very little progress in terms of entrenched positions on all sides.”

He adds: “What it does is show a route to a deal. What it doesn’t do is presuppose in any way what the outcome might be. I suspect that group will argue for very different outcomes.”

Hammond, who was brought into the Government towards the end of 2018, says he will keep arguing for a “close regulatory arrangement” and a “close customs arrangement” with the European Union. “I may even be able to persuade people that an EFTA, EEA-style exit is by far the best way to go. That’s what I’ll be arguing for,” he adds, referring to the so-called Norway option which Morgan also supports.

Morgan, one of 15 Tory MPs to be branded a “mutineer” by the Daily Telegraph in 2017, was approached by Malthouse to discuss a Brexit solution with Baker and Rees-Mogg. “I will always say yes because it’s good to understand where other people are coming from and where there is scope for compromise,” she explains.

The former education secretary had come to the view, following Jeremy Corbyn’s decision not to meet the PM in the wake of the meaningful vote defeat, that the Government could not secure a stable majority on a cross-party basis. “I would be happy to be proven wrong on that, but if I was the Prime Minister, I would be concerned that I could win the meaningful vote and then struggle to get the necessary legislation through,” she says.

“What we really brought me around is that we need to have an agreement. The best way to avoid a no deal, which is what I don’t want to see, is to put an agreement in place.”

Critics, however, note EU officials’ unwillingness to reopen the Withdrawal Agreement. One of those is Sabine Weyand, the EU’s deputy chief negotiator on Brexit, who has also dismissed the idea of technology being used to prevent a hard border in Ireland. “We looked at every border on this earth, every border EU has with a third country – there’s simply no way you can do away with checks and controls,” she said at a European Policy Centre event. “The negotiators have not been able to explain them to us and that’s not their fault; it’s because they don’t exist.”

Some pro-Remain MPs have been left perplexed that their ideological counterparts are backing a plan that could lead to a no deal Brexit. Labour MP and Best for Britain supporter Owen Smith said: “It’s not so much a compromise, as a naked attempt to deliver a no deal Brexit by reopening negotiations at the last minute – knowing that there’s neither the time nor the political will for it.”

Morgan, who communicated the Malthouse compromise to Tory MPs over WhatsApp, acknowledges that some pro-EU colleagues are “sceptical” of the proposals, and that supporters of a second referendum are “maintaining their position”. But she says there was broad support for the collaboration between leading Brexiteers and Remainers. “The wider issue is the country is sick to death of Brexit. It is obscuring all other policy discussions. We have all got to compromise to find a way forward,” she says. “This is only the end of phase one. We’ve got phase two on the future relationship still to come.”

Hammond argues some MPs have “presupposed” what the Malthouse compromise is about. He urges his colleagues to consider the protections the solution advocates, such as an “elongated” transition period and guarantees on the border in Ireland.

“And we get an extra year to negotiate the future relationship. No one, I think, is underestimating the scale of the task of negotiating the future relationship in that time. But given where we start from, we have a much better chance of achieving it by December 2021 than we do by December 2020,” he adds.

A Brexiteer MP, who was not involved in formulating the proposals, says: “Anybody who doesn’t want a disorderly exit from the EU ought to support an arrangement that gives an orderly departure.”

Downing St has given a not inconsiderable amount of leg to the proposal in recent days. With the Brady amendment passed by the Commons, which calls on the Prime Minister to seek alternative arrangements to the backstop proposal, ministers believe May now has a clear message to send to Brussels of what’s required to get the Withdrawal Agreement over the line. And the Malthouse compromise is being considered as one possible option.

“We have to replace the current backstop with something else,” says Grayling. “Now, that could be a time limit, it could be an exit mechanism, it could be something like the Malthouse proposals, it could be something else that the European Union proposes. But one way or the other the backstop in its current form is not going to pass parliament so we’ve got to find an alternative for it.”

Some of its core requirements clash head on with musings from Brussels. Some MPs, therefore, remain deeply sceptical about the efficacy of the proposals. Its proponents have also come in for some stick online. Hammond explains: “Understandably, on the Twittersphere and social media I’m taking quite a lot of flak. But anyone who’s involved in any form of peace process knows that you’re initially disliked by all sides.”

From which side is the minister receiving flak? “Everywhere.”

But a proposal that draws together MPs so entirely at odds on the core issue of Brexit is clearly a notable one. “My view? This may well be an imperfect solution, and there may well be elements that are not workable. But it is a proposal for people to work with to get a deal for this country,” concludes Hammond.