Theresa May will hold crunch talks with Jean-Claude Juncker tonight as she bids to thrash out a solution to the Irish backstop.
The Prime Minister flies to Brussels to meet the EU Commission President amid hopes of a breakthrough.
But those hopes appeared to be fading last night – and Mrs May risked a new Tory row over an ill-fated ‘compromise’ plab,
Chancellor Philip Hammond admitted a new plan backed by Tory Brexiteers to avoid a hard border between Northern Ireland and the Republic – the so-called Malthouse Compromise – would not be accepted by the EU.
It came just hours after Tory Brexiteers Jacob Rees-Mogg and Steve Baker insisted the Malthouse Compromise was “alive and kicking” after a meeting with Mrs May yesterday.
The pair said their plan was still in the offing.
But Mr Hammond said while it was a “valuable effort”, it could not address the “immediate challenge” or be accepted “now”.
He said: “However promising as an alternative arrangement to avoid entering a backstop in the future, it is clear that the EU will not consider replacing the backstop with such an alternative arrangement now, in order to address our immediate challenge,” he told the MakeUK annual dinner.
“The details of this initiative are still evolving, and would require significant changes to EU legislation and customs practices that would need to be negotiated with the EU member states and others who will be affected by them.”
It came after the Mail on Sunday reported the Tory Cabinet was told explicitly yesterday that the ‘Malthouse’ plan was not being presented to the EU this week.
In a tweet, the European Commission president’s deputy chief spokesperson Mina Andreeva quoted Mr Juncker as saying: “I have great respect for Theresa May, for her courage and her assertiveness.
“We will have friendly talks tomorrow but I don’t expect a breakthrough.”
The Malthouse plan was dreamed up to avoid the ‘backstop’ – a clause in the 585-page Brexit deal which would extend EU customs rules over the UK to avoid a hard border in Ireland.
It is split in two: Plan A for leaving with a deal and Plan B for leaving without one.
Plan A would keep the existing Withdrawal Agreement but with two big changes – extending a transition period by a year, and changing the backstop into a “basic free trade agreement”.
Plan B would mean the UK paid the money it owes in return for a “standstill” arrangement giving more time to thrash out trade.
Meanwhile Mr Hammond told last night’s dinner the “prospect – however small – of leaving without a deal is already too great, and is having very real consequences as you make difficult decisions about managing supply chains, about hiring people, about where and when to invest”.
Vowing to ramp up warnings of a no-deal departure, he told guests: “You – and we – need to carry on explaining the implications of a no deal exit, no matter who cries ‘project fear’, because it’s our duty to communicate the reality of the situation, to the people we represent.”