30 January 2019

Theresa May to renegotiate Irish backstop after MPs vote for “alternative arrangements”

The House of Commons yesterday voted 317 to 301 in favour of the amendment tabled by Conservative MP Graham Brady and backed by the Government, which calls for the Irish backstop in the Withdrawal Agreement to be replaced with “alternative arrangements.” Seven Labour MPs voted with the Conservatives, while eight Conservative MPs rebelled against the Government. Speaking after the vote, Prime Minister Theresa May told the Commons, “It is now clear that there is a route that can secure a substantial and sustainable majority in this house for leaving the EU, with a deal,” adding, “We will now take this mandate forward and seek to obtain legally-binding changes to the Withdrawal Agreement. There is limited appetite for such a change in the EU and negotiating it will not be easy, but this House has made it clear what it needs to approve the Withdrawal Agreement.” The Government is considering three options for changes to the backstop including a time limit, a unilateral exit mechanism or an alternative plan. May also said that if the deal has not been agreed by 13 February, the Government will table an amendable motion for MPs to debate on 14 February.

Meanwhile, Conservative MP Caroline Spelman’s amendment, which stated that the UK should not leave the EU without a deal, but which has no legislative force, was passed by 318 votes to 310. Five other amendments were defeated, including one tabled by Labour MP Yvette Cooper seeking an extension of Article 50 (defeated by 321 to 298), and another tabled by Conservative MP Dominic Grieve, which sought to give the House of Commons control by allowing it to hold a series of indicative votes (defeated by 321 to 301).

Responding to last night’s votes, the Labour leader Jeremy Corbyn said, “The Prime Minister must now face the reality that No Deal is not an option. I will meet the Prime Minister and others from across Parliament to find a sensible Brexit solution that works for the whole country.” Sky News reports that Corbyn and May will hold talks this afternoon.

Separately, speaking on BBC Radio 4 Today programme, Brexit Secretary Stephen Barclay said “alternative arrangements” could include “the use of technology” or the ‘Malthouse Compromise’, a Conservative Party plan developed by Housing Minister Kit Malthouse to renegotiate the Irish backstop in the Withdrawal Agreement. Giving evidence to the House of Lords EU Committee yesterday, Open Europe Director Henry Newman said the EU would be unlikely to endorse the ‘Malthouse Compromise,’ as to do so would be “a wholesale abandonment of their entire negotiating strategy.” He added that if the Government wants legal assurances on the backstop, “There is no necessary need to re-open the Withdrawal Agreement itself… an exchange of letters can be binding on both sides.”

Source: The Daily Telegraph The Times The Guardian The Daily Mirror Sky News

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Donald Tusk: backstop will not be renegotiated

Following yesterday’s vote in Parliament, a spokesman for European Council President Donald Tusk said, “The Withdrawal Agreement is, and remains, the best and only way to ensure an orderly withdrawal of the United Kingdom from the European Union,” adding, “The backstop is part of the Withdrawal Agreement, and the Withdrawal Agreement is not open for renegotiation.” French President Emmanuel Macron yesterday said the Irish backstop was “not renegotiable.”

Elsewhere, the Irish Government said in a statement, “The Withdrawal Agreement is not open for re-negotiation,” though it added that changes to the Political Declaration on the future relationship were possible. Deputy Prime Minister Simon Coveney said, “[The] backstop was agreed by UK/EU as the insurance policy to avoid a hard border in all scenarios. We hope it will never be used… But it is necessary and tonight’s developments at Westminster do nothing to change this.” Meanwhile, Lisa Chambers, the Brexit spokesperson for opposition party Fianna Fáil, said she was “disappointed” to see the Brady amendment passed.

Meanwhile, the European Parliament’s Brexit coordinator, Guy Verhofstadt, wrote,”There is not majority to re-open or dilute the Withdrawal Agreement in the European Parliament including the backstop.” On a possible extension of Article 50, he said, “That amendment has been defeated. And I think it is in the interest of nobody to prolong this process, because that creates more uncertainty for businesses and for citizens.”

Separately, Manfred Weber, leader of the European People’s Party (EPP) group in the European Parliament, yesterday said, “If there is now a unilateral attempt to reopen the [Withdrawal] Agreement, the consequence will be that not just the backstop has to be renegotiated – then the Gibraltar question, the question of how much money Britain has to pay for exiting, the question of citizens’ rights will have to be renegotiated.” He added, “If we reopen [it], then everything will be reopened…and to be honest, I don’t see much sense in that.”

Source: The Guardian I The Guardian II BBC News Simon Coveney Lisa Chambers Guy Verhofstadt The Guardian III The Scotsman

EU officials say ‘Malthouse Compromise’ is unworkable

EU officials have criticised the ‘Malthouse Compromise’, saying it was not a workable alternative to the Irish backstop, the Guardian reports. Guy Verhofstadt, the European Parliament’s Brexit coordinator, said, “The European Parliament will not give its consent to a watered down Withdrawal Agreement.” This comes as Prime Minister Theresa May said she considered the plan a “serious proposal” which she is engaging with “sincerely and positively.”

Separately, the Irish Minister for Europe, Helen McEntee, yesterday said that “there can be no change to the backstop,” adding, “A bit of realism is needed at this stage.”

Meanwhile, the Democratic Unionist Party (DUP) endorsed the plan, saying that “it can unify a number of strands in the Brexit debate including the views of Remainers and Leavers” and “gives a feasible alternative to the backstop proposed by the European Union.”

Appearing on BBC News, Open Europe’s Henry Newman was asked whether the passing of the Brady amendment would help the Malthouse compromise to move forward. He said, “I don’t think in its current form it can go forward. I do think you can do certain things. It’s going to need to be legally binding. It’s going to need to be at least a mini-treaty… which makes it clear the circumstances under which the UK could leave the backstop.”

Source: The Guardian I The Daily Telegraph I The Guardian II The Guardian III The Guardian II Henry Newman

Financial Times: UK has signed 21 agreements with international partners to replace EU deals

The Financial Times reports that the Government has so far signed 21 agreements with international partners, to replace EU international agreements that will no longer automatically apply to the UK after Brexit. According to a letter sent by the UK’s EU ambassador to the European Commission, another 13 are set to be signed “shortly.” The finalised deals include nuclear energy cooperation agreements with Canada and the US, and deals to provide “continuity of air services” with the US, Israel and Albania. The UK has so far not replicated any free trade agreements, although it intends to sign trade deals with Switzerland, Chile, the Palestinian Authority and the Faroe Islands shortly.

Source: Financial Times

UK financial regulators seek agreement on information-sharing in No Deal Brexit

The Financial Conduct Authority (FCA) and the Prudential Regulation Authority (PRA) are negotiating agreements with European authorities and the EU27 national financial regulators to continue sharing financial data in a No Deal Brexit scenario. The Head of the FCA, Andrew Bailey, yesterday told the Commons Treasury select committee that the PRA’s chief executive Sam Woods and himself were “in the business of negotiating MoUs with the EU authorities in the event this situation comes to pass to enable us to have access to information to enable us to do our job, and we obviously take that very seriously.”

Source: Financial Times

No Deal draft law prepared by MoD restricts EU access to procurement bids

The Ministry of Defence has tabled proposals for legislation which would ensure that only UK-based companies could have the automatic right to bid for UK defence and security contracts in case of a No Deal Brexit scenario. Under the legislation, EU companies would only be allowed to place bids on an ad-hoc basis and upon invitation from the UK Government, as is currently the case with companies from third countries. A Government spokesperson said,  “Competition remains at the heart of our approach in defence procurement and the Government is accelerating No Deal preparations to ensure the country is prepared for every eventuality.”

Source: Financial Times

European Parliament Committee proposes visa-free travel for UK citizens in EU after Brexit

A European Parliament Committee proposed yesterday that UK citizens should be allowed to travel to the EU visa-free after Brexit, whether the UK leaves with or without a deal. Current EU visa exemptions cover short trips of up to three month, are designed for business and tourism, and do not cover the right to work in the EU. The Committee’s proposal will need to be endorsed by the full European Parliament next month, as well as the Council and Commission.

Separately, the Government said yesterday that UK nationals who have retired in EU and EEA countries may no longer have their healthcare covered by the NHS in the event of a No Deal Brexit. A technical notice published this week reads, “An S1 certificate helps you and your dependents access healthcare in the EU/EEA country where you live. If you have an S1 certificate, it will be valid until 29 March 2019. After this date, the certificate may not be valid, depending on decisions by member states.” The Department of Health said it was “working closely with countries, including Spain and France, to make sure patients can continue to access healthcare, whatever the outcome.”

Meanwhile, another government technical notice yesterday clarified that British students on Erasmus+ placements in the EU will continue to receive funding in the event of No Deal. However, this would only apply to grants which have already been agreed as there is no commitment to cover further funding for students planning to undertake Erasmus+ placements. A spokesman for Universities UK urged the government to “reconsider its decision and commit to fund 2019/20 study abroad placements in the event of No Deal.”

Source: Reuters The Guardian Universities UK

Henry Newman: It’s unlikely the backstop will be scrapped. But supplementing it can win what we want

In a joint piece with Guglielmo Verdirame published in ConservativeHome, Open Europe’s Henry Newman writes that while “replacing the entire backstop is something the EU is unlikely to ever accept,” other changes may be more realistic. They argue, “The biggest [issue] is the weakness of its exit mechanism. The Government must improve this…A clearer mechanism allowing the UK to leave the backstop, if the EU fails to negotiate in good faith on a future relationship, is preferable.” They write, “At this stage, an unfettered unilateral right of withdrawal may not be realistic. To address the exit from the backstop and what could replace it, the UK may need a further (and more robust) exchange of letters with the EU. International law does not have the same formal rigidity as domestic law, and MPs should be careful not to close the door to solutions that are politically achievable and legally viable.”

Elsewhere, writing for CapX, Open Europe’s Stephen Booth argues, “The so-called ‘Malthouse compromise’ is a classic political gambit: if you don’t want to answer the question, try to change the question,” adding, “The question is whether what has been branded a compromise between different wings of the Conservative Party would be considered a compromise in Brussels.” He writes, “While it is highly unlikely that the EU would accept a complete rewrite of the Backstop or ditching it altogether, it has suggested it is open to further discussions,” concluding, “With the parliamentary numbers as they are, the Prime Minister clearly needs a mandate to try again in Brussels. The exact details of the mandate are probably of less importance.”

Separately, Open Europe’s Henry Newman yesterday gave evidence to the House of Lords EU Committee on preparations for No Deal. Newman told the Committee, “There are obviously things you can do to manage No Deal,” but added, “A managed No Deal in the sense of… a transition period without a Withdrawal Agreement or a backstop… seems far-fetched.” While commenting that Government preparedness for No Deal is “very good,” he added, “there is a limit to how prepared you can be… there are things you cannot agree by yourself.” Newman further argued that in the event of No Deal, the Republic of Ireland will face “an invidious choice” between checks on the border with Northern Ireland, or checks between Ireland and the EU26.