Blair defiant on EU rebate stance

Anger at EU summit

Tony Blair says he could not accept the "usual cobbled together compromise" as he updated MPs on the European Union's failure to agree a new budget.

He said he was right to refuse to give up the UK's £3bn a year rebate without a wider deal to cut EU farm spending.

The EU budget was not "fit for purpose" he said, adding the EU could not afford to wait 10 years or more to reform it.

Tory leader Michael Howard praised Mr Blair "for protecting the rebate" but urged a wider rethink on the EU.

The prime minister was explaining the crisis after last week's EU summit broke down amid a row over the UK's EU rebate and French opposition to reform of farm subsidies.

'Inadequate' budget review

France, Germany and Luxembourg criticised Mr Blair for rejecting the deal with French President Jacques Chirac describing the UK's budget stance as "pathetic and tragic".

It was not the right deal for Britain - it was not the right deal for Europe Tony Blair

Mr Blair will fly back to Brussels later this week to address the European Parliament about his plans for the British presidency of the EU, which begins on 1 July.

Addressing MPs, Mr Blair said the current EU budget arrangements were not "fit for purpose in the 21st century".

But he said attempts to correct this and come up with a better deal "fell way short" of the need for a fundamental review.

To cheers from MPs he said the "inadequate" budget review put forward at the two day summit was one he could not have recommended to Parliament.

"It was not the right deal for Britain - it was not the right deal for Europe," he said.

Mr Blair said the UK's EU rebate was "merely a corrective mechanism designed to address an underlying imbalance in the budget".

Credibility

In a veiled attack on the position taken by France and Germany, Mr Blair insisted: "Europe's credibility demands the right deal - not the usual cobbled together compromise in the early hours of the morning but a deal which recognises the nature of the crisis."

This will be seen as something of a turning point for the European Union Jack Straw Blair looks on bright side Internal feuds on show

He also told MPs that the proposed European constitution "cannot proceed" after "no" votes in France and the Netherlands.

The French ambassador to the UK told ITV News: "I think we shouldn't play the blame game.

"I think that the job of the president is to bring people together, especially in times of crisis, not to impose views, especially when those views are not shared by the majority."

Mr Howard accused Mr Blair of "wasting" two years trying to sell an "outdated vision of the EU" through the proposed constitution.

"Wouldn't it be much better for you to accept that the constitution is dead and that the EU should abandon its attempt to smuggle in any further powers?"

Liberal Democrat leader Charles Kennedy said people who favoured close ties to Europe would be feeling "a sense of pessimism" and said it was time to "build a new consensus" and "a new sense of optimism".

The row is threatening to overshadow the G8 summit on 6-8 July at Gleneagles, with reports that Mr Chirac will arrive a day after talks get under way.