British moves to cut the EU's 2006 budget prompted a blunt warning that the UK, which holds the rotating presidency of the EU, will be seen as hypocritical in other capitals. The row follows comments from Margaret Beckett, the Secretary of State for Environment, Food and Rural Affairs, who appeared to back away from Mr Blair's demand for an early reform of agriculture spending.
Three weeks ago, Mr Blair launched the UK presidency with a dramatic warning that the EU risks failure "on a grand, strategic scale" unless it invests in economic development.
Yesterday the European Commission announced that Britain's presidency wants "a severe cut of €429m (£295m) from one of the EU's most forward-looking policies" next year.
At a meeting in Brussels today, Ivan Lewis, Economic Secretary to the Treasury, will try to push through the budget in an effort to trim overall spending.
The British presidency wants to cut €1.146bn from the Commission's proposed €112.6bn 2006 budget. About half the cuts would hit research and other "activities that will stimulate growth and create jobs", the Commission said.
Eva Hedlund, spokesman for the European budget commissioner, said there was "a contradiction between words and deeds" on the part of the British presidency. "The rhetoric does not match the reality."
Chris Davies, the leader of British Liberal Democrat MEPs, said: "This will be perceived as hypocrisy by many other member states. The Government has to be careful not to be regarded with huge cynicism by its European partners.
"Tony Blair has a track record of producing fine words but not backing them up with delivery. If the Government wants to cheese-pare the EU budget it will be cutting its nose off to spite its face."
The UK says the reduction was put forward because the EU failed to spend all the sums allocated to it last year. A British official added: "We are surprised to be singled out in this way. We do not think it is particularly constructive because the presidency represents the whole Council of Ministers [made up of all 25 member states]. The issue is poor forecasting".
In fact, the UK has always been ambivalent about the need for the EU to co-ordinate research spending, with some ministers saying such work can be done at a national level.
Ms Beckett was fiercely criticised after she appeared to suggest that farm subsidies would not be changed until after 2014. That was denied by a spokeswoman. But during a hearing with MEPs this week Ms Beckett was vague about British objectives and ruled out a reform under which payments to individual farmers would be capped at €300,000. Five MEPs walked out.
The 2006 budget is the last under the EU's present spending framework. Negotiations on the 2007-13 spending period broke down in acrimony last month after Mr Blair insisted France accept cuts in farm subsidies to shift funding to policies that would make Europe's economy more competitive.
The latest UK proposals for the 2006 budget would also eat into funds earmarked for external policy. The Commission said cuts of €83m contradicted a commitment by ministers not to allow aid to tsunami-hit regions of Asia to eat into wider plans to help poor nations.