February 6, 2019 / 2:30 PM / 6 months ago

Factbox: The Brexit compromise that helped send PM May back to Brussels

LONDON (Reuters) - British Prime Minister Theresa May has won the backing of parliament to seek changes to her Brexit deal, thanks in large part to a peace accord between both eurosceptic and pro-EU factions within her divided Conservative Party.

The strategy, which emerged ahead of a Jan. 29 vote in parliament, has been dubbed the Malthouse Compromise after one of its proponents, lawmaker Kit Malthouse.

It helped May to fend off attempts by members of parliament opposed to her divorce deal to seize control of the Brexit process and delay Britain’s EU exit. Instead, she won a mandate to return to Brussels and try to negotiate a more acceptable deal.

It courts Brexit supporters with a promise to ditch an unpopular Irish border policy in favour of an alternative, and appeals to pro-EU Conservatives by pledging safeguards against the risk of disruption if no deal can be agreed with Brussels.


Although the plan takes its name from low-key junior housing minister Malthouse, its political weight come from the senior figures who helped draft it. These include former education minister Nicky Morgan, a prominent campaigner for close ties with the European Union, and Jacob Rees-Mogg, leader of a powerful Conservative eurosceptic faction.


To get any Brexit deal ratified, May needs to secure parliament’s approval. But her party is divided over the best way to leave the EU, and in January comprehensively rejected an exit deal she negotiated with Brussels. Without an exit deal, Britain could face significant economic disruption.

The key point of disagreement in Britain is the Irish backstop - an insurance policy designed to prevent the revival of border controls between the British province of Northern Ireland and EU member Ireland.

Many pro-Brexit MPs, including the Northern Irish party which props up May’s government, fear Britain could end up tied to EU rules indefinitely or that the backstop could drive a wedge between Northern Ireland and the rest of the UK.


The Malthouse plan can be broken into two parts: a modified set of negotiating aims and a fallback option in case that fails.


The group backs an alternative withdrawal agreement, which is closely modelled on the existing agreement, but includes a different backstop arrangement.

The new backstop would be based around a zero-tariff free trade agreement rather than its current basis of a shared customs area between Britain and the EU. It relies on technical solutions to move checks on goods away from the border. This proposal was first announced in December.

The group also proposes extending the ‘implementation period’, during which Britain would legally be out of the EU but still operating under its rules, by one year until December 2021 to allow for more time to negotiate a permanent relationship.


If negotiations with Brussels fail, the government should seek a basic transition agreement involving an offer to keep paying into the EU and guaranteeing the rights of EU citizens living in Britain.

In return, Britain would extend current trading terms beyond the end of the implementation period - utilising a clause in international trade law - if a permanent trade arrangement has not been agreed by then.

“Essentially we would be using money to buy a period of time that preserves optionality for both sides, the UK and the EU, and provides a safety position that both can go into while we continue talks,” a lawmaker involved in the plan told reporters.


May has not fully endorsed the plan, but it is one of three options she is considering as she prepares to return to Brussels on Thursday. They are:

1. A right for Britain to unilaterally decide it will leave the backstop.

2. A time limit on the backstop.

3. Alternative backstop arrangements, along the lines of those put forward by Malthouse.

The organisers of the Malthouse Compromise have been meeting Brexit minister Steven Barclay and government officials to flesh out the plan in the hope May will adopt it and present it to EU negotiators.

“It’s clear that a lot of government time and effort and brainpower is being invested in exploring this,” a second lawmaker involved in the plan told reporters.


The Jan. 29 vote in parliament allows May to present a united front in the hope of persuading Brussels to reopen the deal, but it is not specific about what she must change. This raises the risk that the Conservative peace deal is temporary.

A chorus of EU voices has dismissed the prospect of renegotiating the legal text governing Britain’s withdrawal, which was signed off by all 27 other EU countries last year.

If whatever May is able to secure from the EU falls short of her party’s expectations, she could face a repeat of the heavy defeat her original deal suffered in parliament. May has promised to report back to parliament by Feb. 13 at the latest.

A third lawmaker from the group said the Conservatives would be willing to give May more time to negotiate with the EU if she could persuade Brussels to consider reopening the agreement.

Reporting by William James; Editing by Gareth Jones

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