Blair begins fightback over Europe, but with a war chest of just £200,000

Tony Blair yesterday said he wanted to strike a deal on a new European constitution at the Brussels summit this weekend, but the Government has only £200,000 in its budget to promote Europe in this country.

Tony Blair yesterday said he wanted to strike a deal on a new European constitution at the Brussels summit this weekend, but the Government has only £200,000 in its budget to promote Europe in this country.

The Independent learnt that the Foreign Office has the money in its coffers to pay for pro-European propaganda before the general election. Foreign Office ministers are demanding more in the Treasury spending review.

This disclosure will fuel criticism of Mr Blair's failure to give a stronger lead on Europe in the wake of last week's gains by the UK Independence Party. Ministers fear that, after UKIP's huge gains, the Government will find itself outgunned by wealthy Eurosceptics eager for a "no" vote on the constitution.

The minuscule Foreign Office budget - the equivalent of four days spending on British security contractors in Iraq - has been condemned by Labour MEPs who say it is inadequate for promoting the EU to the British people.

The MEP Gary Titley, who was yesterday re-elected as head of the Labour group in the European Parliament, said the annual sum for promoting the EU in Britain should exceed £1m if the Government is serious about winning a referendum on an EU constitution. "£200,000 is not very much," he said. "It is one of our problems. Some of the stuff the Foreign Office is doing is very good but there is not enough of it. We should be selling Europe to people."

The £200,000 annual budget is spent on road-shows, printing leaflets, including those on cross-Channel ferries, but calls for the promotion budget to be increased have been ignored.

"They squeeze an enormous amount out of £200,000 but the sum is ridiculously small," one senior minister said. Gordon Brown will be pressed in this year's spending review to write out a big cheque to make the case for Europe, and for EU-funded projects in Britain to be publicly acknowledged.

Government sources say without extra cash it will be exceedingly difficult to outgun the well-funded Eurosceptic lobby, which has wealthy business backers such as Paul Sykes, who helped fund UKIP's election success. The ministers warned that unless the Foreign Office begins to promote Brussels in Britain actively now it will be too late to convince the British people to vote "yes'' when a campaign on the constitution formally kicks off after the general election.

But the Government is understood to be reluctant to accept cash from the EU to promote Europe because it fears a public backlash. The "no" campaign received an estimated £1m before the Euro elections and is expected to bring in £4m.

Michael Howard, the Conservative leader, is likely to warn Mr Blair, who faces Commons questions today, against using taxpayers' money to support a new treaty on the constitution, which the Tories oppose. Mr Blair made it clear yesterday that he was optimistic of a deal, and was confident Britain would protect its so-called "red lines" to preserve the veto on taxation, defence, justice, foreign affairs and social security.

"I am reasonably optimistic we will have an agreement," he said. "The reason for it is that with 25 countries, not 15, a lot needs to change. It is important to have changes but there are real gains for us."

Mr Blair said one sticking point for Britain was a need to embody in the treaty text a guarantee that the proposed charter of fundamental rights would not give the European Court of Justice the right to interfere in Britain's employment laws. He said: "We are not prepared to have anything that takes away our ability to make sure our industrial laws remain flexible as they are now.

"We have high levels of employment, low levels of unemployment, and we have to be sure our legal basis is very clear. There has to be no question of the European Court of Justice whether in the front door or the back door, being able to change these laws."

On tax, the Irish presidency of the EU suggested scrapping any plans to introduce qualified majority voting, though this has yet to be agreed by EU partners, including France. But proposals that the national veto on foreign policy should be axed have disappeared.

Under the latest compromise, the veto would be scrapped on very limited areas of social security, concerning migrant workers, but with a new "emergency break", a mechanism that ensures no country can be outvoted on a measure it dislikes.

Under this system, if a country thinks a measure infringes the principles of its social security system it can refer it to the European Council, where it has a veto.

A similar system would also apply to measures to create cross-border laws on justice and home affairs.

A threat to the British budget rebate appears to have been seen off. Under the latest compromise decision on the system of raising cash for the EU, Britain would keep the veto. Majority voting would apply only on how to implement rebates.