Europe cannot wait another 10 years says Blair

Tony Blair will try to break the deadlock over the European Union's budget by offering a reduction of Britain's £3bn rebate in return for cuts in farm subsidies.

The Prime Minister admitted that Britain's payments to the EU were likely to increase under his plans to rebalance spending to curb the Common Agricultural Policy (CAP), which eats up 40 per cent of the budget, and switch resources to poorer member states.

He said he would use Britain's six months in the EU's rotating presidency to strive for a deal on the budget for 2007-13, on which talks collapsed at an acrimonious summit in Brussels on Friday.

An unrepentant Mr Blair, who was blamed by some European leaders for scuppering an agreement in Brussels, told the Commons yesterday he would propose a fundamental review aimed at rebalancing the EU budget midway through the 2007-13 period.

He disclosed that he had rejected a plan by Luxembourg, which chaired the summit, for a similar review because the terms were "so vague as to be meaningless" and would have preserved a 2002 deal on CAP spending until 2013.

The Prime Minister said the current EU budget was "not fit for purpose in the 21st century," adding: "Europe just cannot wait 10 years or more for change."

He went on: "It is those who believe in Europe most who should be the most ardent advocates of changing it."

He sought to rebuild bridges with the 10 members who joined the EU last year, some of whom were angry that he refused to surrender the rebate.

"I fully understand the concerns of the new European countries. They want an agreement. We will do our best to secure such an agreement and to make sure it is one that meets their needs," he said.

Mr Blair insisted that the deal he rejected in Brussels would not have helped poorer countries but would have been shared out among the wealthy ones.

It would have cost Britain 25bn (£17bn) and ensured that it paid 23bn more to the EU than France.

Referring to the recent "no" votes in France and the Netherlands on the proposed EU constitution, Mr Blair said: "The crisis is not about the failure of Europe's leaders to reach agreement with each other. The crisis is about the failure of Europe's leaders to reach agreement with the people of Europe about the issues that concern them."

Denying that Britain was isolated in Europe, Mr Blair insisted it had allies on both the budget and its call for reform. He dismissed criticism from France and Germany that he wanted the EU to be little more than a free market.

"It's a different vision of the European social model. It's not a vision that's abandoning that social model," he said.

Michael Howard, the Conservative leader, congratulated Mr Blair for preserving the rebate and welcomed a "real change" in ministers' approach to Europe.

While the Tories agreed that the CAP needed radical reform, Mr Howard argued: "If the EU does less, shouldn't the British people also pay less?"

He added that the Prime Minister was wrong in 2002 to sign up to the existing CAP arrangements.

Charles Kennedy, the Liberal Democrat leader, said Mr Blair had made a "mistake" in leaving it too late to make the case for reform of farm subsidies, saying he had done so only when the rebate came under threat.

- INDEPENDENT