29 January 2019

The Malthouse compromise on Brexit may unite elements of the Conservative party – but shows zero understanding of what might work in Brussels, writes Jill Rutter.

Listeners were treated this morning to the unusual sound of Nicky Morgan and Iain Duncan Smith agreeing with each other about Brexit on the radio. The problem is that what they have agreed on will not fly with Brussels.

Only yesterday, Michel Barnier’s deputy Sabine Weyand said that the EU were looking not just for something that could scrape past the meaningful vote but a proposition from the UK that could secure a “stable majority”. So on the face of it, it should be good news that Conservative soft Brexiteers like Nicky Morgan have found common cause with arch-Brexiteers.

There is just one big problem with their plans A and plans B (which together make Plan C) – they are unnegotiable.

The 'Plan A' is based on an idea for the Irish backstop which has been rejected time and again

Plan A is based around the proposals made by the European Research Group (ERG) for the backstop in December. But they have a longer pedigree – the ideas for a system of mutual recognition of regulations and facilitated customs arrangements, and checks away from the border, were floated by the Government way back in Summer 2017. If they had been the solution then we would never have needed the backstop.

They are not the solution because they require the EU to surrender its hardest red line on its right to protect the integrity of the Single Market through adherence to its rules and enforcement by the Commission and the European Court of Justice (ECJ). The EU would not make an exception for the UK when the Prime Minister proposed this in Florence; nor when she proposed it at Mansion House. It won’t change tack now.

Plan B is the ERG’s managed no deal proposal

Plan B is nothing more than the long-running ERG proposal that we use a couple of years’ contribution to the EU budget to buy a transition period even if the Withdrawal Agreement fails. It is the Withdrawal Agreement with an extra year of transition, but without the backstop. This arrangement also assumes that we can use Article 24 of the GATT (General Agreement on Tariffs and Trade) to allow free trade to continue while we negotiate, a proposal which most trade experts dismiss.

More crucially, the EU has said repeatedly that the backstop is integral to the withdrawal agreement. No backstop, no withdrawal agreement. Only yesterday Sabine Weyand said that even if there was no deal the EU, the UK and Ireland would have to talk about backstop arrangements to protect the Good Friday/Belfast agreement.

The big question is why is this commanding support across the party?

One of the UK’s problems throughout the negotiations has been the assumption that we just need to sort out the UK line and the EU will gladly gobble it up. But they are likely to choke on the current proposition. The idea that they will now reverse because 'soft Brexit' Conservatives have signed up to an ERG plan looks far-fetched. But maybe a day of party unity is such welcome relief that the supporters do not care about the merits of the plan they are backing.

It is far from clear that it helps the Prime Minister either. She will already have to explain why, by deciding to whip the party in support of the Brady amendment (whose passage this plan might help), she is promoting something other than her deal. But if these are the “alternative arrangements” she wants to promote, she might as well save her Eurostar fare.

This plan shows that any semblance of collective responsibility has disappeared

It is one thing for Nicky Morgan (sacked from ministerial office) and Jacob Rees-Mogg (never asked) to conspire against the Prime Minister, but some of those involved in the plan hold ministerial offices. Unless they had the green light from the Prime Minister to try and concoct an agreement, this seems to be the biggest breakdown in collective responsibility we have yet seen, at a time when its currency is already drastically devalued.

The Prime Minister still has a choice. Will she back this idea, in the full knowledge that it is unnegotiable? Or will she sack her ministerial helpers for making her negotiating task even harder?



These comments on the ideas behind the ERG's proposal around customs facilitation are not accurate. The Hans Maessen approach, touted by the ERG, is dependent on using customs brokers to deal with goods crossing the border. The approach is based on existing techniques that are allowed for in the Union Customs Code.

There are costs to be considered here. But that is a different conversation than the one usually presented which is simply that it is impossible to achieve what the ERG propose. If the issue is one of cost, then compensation can be discussed and the UK government / parliament can decide what is worth what.

It's not just Maessen who takes the view that the customs piece can be solved. CLECAT, the European logistics body which includes the British International Freight Association, takes the same view: https://www.clecat.org/media/Brexit%20Positon%20Paper%20-%20CLECAT%20Oct.... CLECAT recommends a "regular external trading environment" ie. separate customs territory for the EU and the UK.

Now, the regulatory piece may require closer alignment with the EU until something better can be worked out but the customs issue can and should be separated out as having a solution. But note that putting NI in a separate customs union from Ireland does not infringe on the integrity of the single market. That is a regulatory issue.

For my money, the government should ask the EU to make clear that the UK could leave the backstop customs union or indeed any future customs union on these terms (whilst deferring the decision on regulatory alignment), and then defer the decision on whether to form a customs union with the EU until after the election. Meanwhile, GB should voluntarily align with NI on goods regulation, by law as part of the WA Bill, until the same election, and we should accept the level playing field measures as written in the WA. Then no one is separated from everyone else and the Labour party can have some satisfaction on workers rights. Everyone gets a bit of something and the electorate can decide the next move.

The regulatory proposals are a key part of Malthouse and it is correct to say that they've been rejected multiple times. It is also correct that the EU and the UK Government have been discussing alternative proposals based on max fac for two years and have not agreed on anything that meets the requirement.

When it comes to Maesson's proposal it is basically totally reliant on ubiquitous transit which needs a great deal of spelling out and single window IT which neither the UK nor the EU member states have developed. Nothing is really said on VAT other than that we might remain in the EU's VIES IT system (requiring ECJ). His original proposal to the Commission required cameras and RFID chip driver licenses too.

If you read the better deal proposal it involves centralised checkpoints on the vicinity of the border and other checks away from the border. It is not necessarily less dangerous to have inspections away from the border and there is basically no detail on how the enforcement would work in practice.

You are right that customs and regulation should be separated. There may be proposals that could satisfy the requirements and many customs experts have said it's not impossible. But Maesson's proposals so far are no where near satisfactory to replace the need for an insurance policy.

For it to have a chance of flying it needs to have Ireland on board and engaged in trying to find a solution. The UK could push to try to get greater guarantees that max fac can be further explored in more detail but that won't substantially change the backstop.

Unfortunately, those who are competeing in the main political field of the UK are all second or even third class players. This is a serious lack of human resources of a failing country.

The purpose of a border -anywhere- is to control smuggling and free movement of people. The purpose of the backstop is to ensure that there cannot, by-and-large, be major smuggling within island of Ireland due to customs union. Also that there cannot be restriction of free movement within that island.
Maxfac,etc. might conceivably deal with the first issue- one day- but the second requires border checking of humans in the Irish Sea or its ports, and this is incompatible with DUP red lines.