CBI urges Blair to defend veto on EU tax and social policy

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The CBI will today urge Tony Blair to stand firm at next weekend's key inter-governmental meeting in Brussels to agree a new EU constitution, warning that otherwise fundamental damage will be done to Britain's business interests.

The employers' organisation has identified half a dozen "business red lines" which the text of the Treaty must not cross if the UK's position on tax, employment and economic policy are to be safeguarded.

In particular, it is concerned that Britain's veto on tax and social policy and its control over North Sea oil and financial regulation would be undermined as the draft constitution stands.

Digby Jones, the director general of the CBI, said: "The draft constitution includes serious threats to British business, hidden in a fog of bureaucratic language that leaves so many questions in the air. It is imperative that the text is unambiguous and absolutely watertight."

After a three-month consultation involving 800 of its members, the CBI has identified six key areas where it wants Mr Blair to insist on the constitution being beefed up to protect UK interests.

It wants member states to have the power to "red card" any proposals from the European Commission if they are opposed by a third of national parliaments. As it stands, the draft constitution says only that future laws would be "reviewed" if that were the case, not altered or withdrawn.

The CBI also wants to make watertight Britain's ability to veto any move towards harmonisation of taxes or social policy throughout the EU. It fears that proposals in the draft treaty to allow qualified majority voting in respect of tax fraud and administration could prove the "thin end of the wedge".

Another area of concern is the increasing influence of decisions handed down by the European Court of Justice. The CBI wants the Treaty to provide explicit protection to member states from ECJ decisions which have already pushed Europe towards tax harmonisation. It also wants a guarantee that the inclusion within the constitution of the Charter of Fundamental Human Rights will not give the ECJ the right to interfere with or re-interpret UK employment law.

Furthermore, the CBI says Mr Blair should expressly reject clauses in the draft text which could threaten UK control over North Sea oil and gas and open up the possibility of a single European financial services regulator.

John Cridland, deputy director general of the CBI, said it was "obsessive and obdurate" in its insistence that these red lines must not be crossed if business was to support a new EU constitution.