Germany to block crackdown on MEPs' lavish perks

National Governments are today likely to throw away the last chance before the EU expands to clean up the notoriously lax expenses regimes for MEPs.

Germany is leading the opposition to the plans to reimburse MEPs' travel expenses only if they can produce receipts. In return, most MEPs would receive higher salaries.

Germany argues that the increase in pay for its Euro MPs will cost up to €100m (£69m) a year to fund at a time when it is trying to rein back spending.

Austria, Sweden and France also have reservations because of the difficulty in persuading the public of the need to pay Euro MPs more.

But Berlin's opposition is a huge blow to those who have spent years battling to cast off the parliament's gravy train image. The president of the European Parliament, Pat Cox, appealed for this opportunity for change not to be "squandered" when the issue is discussed today by EU foreign ministers.

Under the present system, Euro MPs are paid the same as MPs in their own country's national parliament, leading to huge differentials in salaries, with Italian and German deputies earning significantly more than, for example, their Irish or British counterparts.

Because of these disparities, many Euro MPs boost their incomes by abusing an expenses system that allows them to claim full business fares even if they only pay for seats on low-cost airlines.

Reformers say that if the present system remains when MEPs from the 10 new countries take up their seats after June's European elections, the pay discrepancies will become untenable. Some of the new Euro MPs from eastern Europe would be earning €800 to €1,000 a month, a pittance compared with the salaries of their colleagues from many of the other EU countries.

When MEPs gave their backing to the proposal in December, many were surprised. Italian members, for example, who are currently paid €11,000 a month, would have had the largest pay cut. But Euro MPs were persuaded of the need for reform by the growing disparity in earnings.

The new system would give all MEPS a gross monthly salary of €8,600 which is equal to 50 per cent of the earnings of a judge at the European Court of Justice. At current exchange rates, that works out at around £71,000 a year for British MEPs; a rise of around £14,500 on their current pay of £56,358 which is based on a Westminster MP's pay.

German MEPs now receive a salary of €7,009, but the proposed €8,500 does not include pension and health insurance and can be subject to national tax in addition to the EU tax of 25 per cent. Supporters of reform say that means they would not be receiving higher salaries than their national counterparts. In a letter to the German Chancellor, Gerhard Schröder, Mr Cox argued: "Contrary to what has been alleged, in particular by the populist press of your country, this reform will not result in any real increase in the salary of German MEPs."

Under EU laws, all 15 EU governments need to give the green light to the changes that were approved by the European Parliament last month.