Demand for EU reforms in drive to win Tories

The Liberal Democrats demanded the reform of Brussels institutions yesterday in return for continued support for EU policy, in a move intended to tone down their reputation as zealous pro-Europeans.

The party unanimously approved a new European policy that dampened the party's enthusiasm for increasing power to Brussels and stressed the importance of modernising EU institutions and making their work more transparent. The strategic shift was being interpreted yesterday as an attempt to appeal to Tory voters.

MPs in the South-west have struggled to convince Eurosceptics that the party is not slavishly pro-Brussels. The policy calls for the strengthening of anti-fraud controls in the EU, more accountability and controls on EU spending.

Activists were buoyed last night after the party recorded its highest showing in an ICM poll in 14 years. The poll had the Liberal Democrats up six at 28, the Tories at 30 and Labour at 35. The party agreed yesterday to call for a referendum on the new European constitution, which will help Liberal Democrat MPs convince voters that they believe change in Brussels should not be automatically approved. Activists approved a policy paper that will form the basis of the manifesto at the European elections next year, restating the party's commitment to Europe while stressing the need for modernisation and accountability. The paper, Common Problems Shared Solutions, included six pages on how the EU should change the way it operates, and one paragraph on the benefits of entering the euro. The paper acknowledges a "minority" in Britain believe "membership of the EU has benefited the UK" and there is a "widely held public perception the EU is somehow distant and suspiciously foreign". It says that to build confidence there is "a great need to reform the EU".

A spokesman for the party was keen to stress the new emphasis on reform of the EU, and said this represented a shift away from the party's reputation for enthusiasm for Brussels. "We are saying we are committed to Europe. We don't think we should be withdrawing, but it does need significant reform to restore faith in EU institutions," he said.

Nick Clegg MEP, who made the keynote speech in the debate, said reform was needed because of the quickly evolving nature of the EU. "Eurosceptics would like to portray us as people who are always satisfied with the status quo. But the EU moves very fast. It's a moving target and we have got to adjust. To be a good European is not to be satisfied with the status quo," he said. "We have got to occupy the space on the debate on the direction of reform."

David Laws MP, a Treasury spokesman, said reform was compatible with "the party's commitment to decentralisation". He said: "Until we persuade the people that Europe is going to be reformed, it is going to be difficult to sell the euro." The paper said the Liberal Democrats should "actively pursue" the conditions for euro entry. But Britain must enter the euro at the right rate. "Membership of the euro at a competitive and sustainable rate would offer Britain considerable benefits," it said.

Chris Davies MEP said the party's shift away from the euro was a practical response to the Government's assertion that it will not hold a euro referendum. "We can just forget about it as a matter for political debate until the next parliament is formed. The issue for next year is the European constitution, not the euro," he said.

The party also approved proposals to replace the council tax with a local income tax that would help low-income households and pensioners to pay their local authority bills.