Britain ‘must pay fair share’ in EU

Tony Blair has maintained he will not give up Britain’s controversial EU rebate without “fundamental” reform of the common agricultural policy (Cap).

But speaking from Hungary where he is in negotiations with eastern European leaders over the 2007-13 EU budget, the prime minister today said Britain would pay “its fair share”.

And in London, his official spokesman said plans to reduce the overall budget, due to be published on Monday, could see the £3.5 billion rebate cut by between 12 and 15 per cent.

This prompted accusations of “surrender” by the Conservatives, who say he has gone back on his promise that there would not be a reduction in the rebate secured by Margaret Thatcher in 1984 without corresponding reform of agricultural subsidies.

Britain is under pressure to come up with a deal on reforming the EU budget in time to reach an agreement at the summit meeting in a fortnight’s time. Negotiations have been in deadlock ever since discussions collapsed in the summer.

On Monday, ministers are expected to outline plans for a smaller total budget, which would see the funding given to accession countries cut by up to ten per cent but would also exempt those countries from paying into Britain’s rebate.

This has not gone down well with either the new member states – Hungary has said it would not accept such a cut in funding – or in Britain, where Mr Blair has been accused of betrayal.

Speaking after a meeting with the leaders of Estonia, Lithuania and Latvia yesterday, the prime minister said the Cap and the British rebate were still “inextricably linked” but admitted that “at this stage it looks very hard to achieve” reform of both.

A compromise deal would therefore have to include provisions that Britain “pay[s] our fair share of the costs of enlargement”, the budget be reduced, and a mid-term review be set up to allow for changes at a later stage.

In addition, he said: “We need to be in a position where there is rough parity on a national income basis between Britain and like-sized countries at the end of any budget deal.”

He reiterated this argument following talks with leaders of the Czech Republic, Hungary, Poland and Slovakia today, saying Britain had much to benefit from enlargement and it should be prepared to pay towards that.

Many of the new member states were natural political allies, Mr Blair said, while British business would benefit from the expansion of economic markets.

He also stressed the importance of reaching an agreement for the new member states – if no budget deal is made, the existing EU budget will roll over, delaying the delivery of regeneration funds into those countries.

However, outgoing Tory leader Michael Howard has accused the prime minister of leaving negotiations to the last minute, and in doing so, “squandered a tremendous opportunity”.

He said plans to give up even part of the rebate would cost British taxpayers dear, and doing so without reform of the Cap left the whole budget in a “mess”.

For his part, Lib Dem Treasury spokesman Vince Cable said while it was important that poorer EU countries not have to pay for Britain’s rebate, reforming the Cap was non-negotiable.

“The government will have only itself to blame if it misses the opportunity presented by Britain’s EU presidency and fails to put together a budget,” he added.