Blair stands firm on EU rebate

Prime Minister Tony Blair made a new European budget offer today - but refused any new concessions on Britain's EU rebate.

Fresh Government proposals ahead of tomorrow's EU summit would increase overall spending by a fraction, with virtually all the new money going to the newest and poorest member states.

But despite predictions that Mr Blair would give away more on the rebate, the Prime Minister stuck to his guns in a direct challenge to French President Jacques Chirac.

And Mr Blair is still demanding a full-scale review of the Common Agricultural Policy in 2008 - something the French have flatly refused to accept.

Today's modest changes in a budget package already rejected by most member states may not be enough to break the deadlock when the summit gets under way tomorrow.

But a Government official insisted there was nothing new to be offered in British concessions on the billions of pounds a year it claws back on its contributions to Brussels.

"We have consulted carefully and we have produced revised proposals that we consider to be fair and balanced," said the Government spokesman.

"We remain convinced that these proposals remain the best basis for agreement and that there is very narrow room for negotiations.

"This is a tough but realistic budget which represents a historic shift of spending towards the new member states. We have responded to their need for quicker and easier access to EU funding.

"We urge our partners to work towards agreement on this basis. We will see no better deal this week or next year."

Mr Blair's official spokesman said the small increase in the overall budget total from 847 billion euros to 849 billion euros would not change Britain's "headline" net contribution, but there would be a "very small" increase.

Officials said that with figures usually rounded to the nearest billion or million, the overall headline figure would appear the same because each nation's increased contributions were so small.

The official spokesman stressed that even the enlarged budget figure was still below the 1.03% of Europe's GDP which the UK regards as the maximum the EU should swallow up.

The spokesman said there would be extra money for the new accession states under complex measures designed to allow them to reclaim VAT on projects paid for by the EU's structural funds.

He said the proposals were designed to make it easier for the 10 new member states both to access and to use the funds available to them.

But the spokesman stressed: "There are no revisions to the rebate or the review clause."

The UK wants a mid-term review of the 2007-2013 budget, which would allow for the sums to be changed before 2014.

The spokesman stressed: "Our rebate will still go up, not down.

"We will still not give up any of the rebate that applies either to the CAP as a whole or to any money going to the 15 members pre the accession states joining.

"It keeps very much to the principles of our position as set out by the Prime Minister last week.

"We have said all along this is not going to be anybody's ideal deal, but what people have to consider is what the alternative is.

"And the alternative is, we do not get a deal for several years and it may well end up with the European Parliament simply simply rolling over the existing negotiations, which would end up with the accession states getting much less money."

Asked if he thought the accession states would accept the proposals, the spokesman replied: "This is a classic case of whether the accession countries accept a bird in the hand or hold out for some deal that may not come."

The spokesman repeated Mr Blair's assertion of last week that a deal was highly unlikely under the Austrian and Finnish presidencies which follow the UK.

He said that was mainly because of Austria's attitude to the CAP, and added: "I don't think anybody seriously believes a deal is possible under those two presidencies."

The newest member states were furious with Mr Blair's last offer, which including lopping about 10 per cent off the billions of pounds a year thenewcomers were expecting in restructuring and development aid under the 2008-2013 EU budget package.

Today Mr Blair has redressed the balance marginally, putting back about £1.5 billion over the seven-year life of the budget, which increases modestly from £564 billion to £566 billion for 2007-2013.

The change is so marginal that it effectively keeps a budget ceiling of 1.03 per cent of the national wealth of all 25 member states.

That will not satisfy the European Commission, which still insisted today that the expanded 25-nation EU needs to be able to draw up to 1.24 per cent of the combine national wealth of its members to be able to fund future spending programmes.

European Commission president Jose Manuel Barroso told Euro MPs in Strasbourg that Mr Blair was still not offering a budget big enough to meet the EU's need.

He accused the Prime Minister of claiming to have bold ambitions for continued EU expansion without being prepared to put up the money to pay for it.

Tomorrow Mr Blair flies to Strasbourg to try to woo European political party leaders to back his compromise. He then goes on to Brussels to begin intense bartering over the new plans at the EU summit.