The ‘Malthouse Compromise’: What is ‘Plan C’?

The House of Commons will debate up to seven amendments to the motion about the Prime Minister’s proposed next steps for a Brexit deal later today. But grabbing headlines this morning was a proposal for a new Brexit settlement that stands completely separate from all of those amendments.

Conservative ‘Remainers’, such as Nicky Morgan MP, and ‘Brexiteers’, like Jacob Rees-Mogg and Steve Baker MP, as well as the DUP, have developed a plan for Brexit that they hope the Conservative Party as a whole will support. Full details of the plan are unclear, as it has not been formally published outside of confirmation by Steve Baker MP on Twitter. Here we will aim to explain what the plan is —dubbed ‘Plan C’, or the ‘Malthouse Compromise and if it could work in practice as a ‘new’ Brexit proposal.


‘Plan A’

Although there has been no official confirmation, reports suggest the Malthouse Compromise (or MC) has two components: a ‘Plan A’ and a ‘Plan B’, which as a collective make for ‘Plan C’ to approach the EU with.

‘Plan A’ is titled ‘Revise negotiated Withdrawal Agreement and Framework’.  The proposal here is to “replace the backstop with an acceptable indefinite solution,” as set out in a December proposal supported by the DUP and the European Research Group (ERG) titled A Better Deal

In summary, A Better Deal argues for a time-limit on a ‘backstop’ of 10 years, as opposed to the indefinite backstop in the Withdrawal Agreement. It suggests this ‘backstop’ will avoid a hard border through the conclusion of a free trade agreement (rather than a single customs territory) and the operation of mutual recognition of standards, customs facilitation processes, and promises to not put in place border infrastructure. The MC adds to this a longer transition period, so as to give more time for negotiations that would make the 10-year backstop unnecessary anyway.

Could the EU accept this?

A Better Deal was not well received by border experts. However, the substance of the proposals – that the way to avoid a “hard border” is by ensuring the UK recognises the EU’s rules and the EU recognises the UK’s rules, and to use technology instead of physical checks – were not new in December 2018. ‘Max Fac’, as it was known when it was one of the two options that the UK government was pitching to Brussels, was dismissed by the EU; only yesterday, the Commission’s Sabine Weyand said:

“We looked at every border on this earth, every border EU has with a 3rd country – there’s simply no way you can do away with checks and controls. The negotiators have not been able to explain them to us and that’s not their fault, it’s because they don’t exist.”

‘Max Fac’ alone won’t be acceptable to the EU, which suggests that Plan A will not be either – and that is leaving aside that the EU has insisted it will not reopen negotiations of the Withdrawal Agreement. However, the MC then takes us to Plan B.


‘Plan B’

‘Plan B’ sets out what could be called a ‘managed no-deal’ proposal: the UK approaches the EU and asks it to honour the Withdrawal Agreement without the backstop, and the UK promises to pay relevant financial contributions for this transition period. This, again, would buy more time to negotiate either a future relationship or to prepare for a full ‘no-deal’ exit in 2021.

Could the EU accept this?

The EU has been adamant that the Protocol and the Withdrawal Agreement are a package deal.  As Michel Barnier said in November 2018: “Without an operational backstop, there will not be an accord and there will not be a transition period.”

Key to this proposal is a so-called ‘interim free trade agreement’, which proponents argue will allow the UK and the EU to keep trading as if the UK is a Member State while negotiating a future trade agreement.  The majority of trade experts believe that WTO law does not actually allow this. Even if the EU supports ‘Plan B’,  it is likely there will be problems with it under WTO law.


Could ‘Plan C’ Succeed?

The ‘Malthouse Compromise’ is unlikely to be well-received by the EU. However, if it were to be brought to the Commons and then receive an overwhelming parliamentary majority, it may result in negotiations being reopened, however firm the EU is on this not happening (Nicky Morgan MP argued that it’s at least worth asking.) However, it is not certain that it will make it through Parliament; it would need the entire Conservative Party to back the MC, or if there are rebels, a few cross-bench Labour votes.


Dr Sylvia de Mars is an EU and international law specialist in the House of Commons Library.

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