Britain softens line on Delors' New Deal plan: Major now expected to support elements of jobs package earlier described as 'rubbish'

BRITAIN has drastically reduced its opposition to Jacques Delors' European New Deal package, making it possible that elements can be agreed by European Union leaders at their summit here today.

The plan aims to create 15 million new jobs in the EU by the end of the century. Although sceptical about that target, Britain could join other governments in agreeing limited increases in EU-funded transport, communication and energy links.

Mr Delors, who will step down as the President of the Eurpean Commission next year, hopes his plan will be a greater success than has been presumed. He believes the political need to deliver, in such a climate of social unrest, will force heads of government to approve the main thrust of his strategy.

While still strongly criticising new borrowing proposals, British sources in Brussels last night said the jobs and competitiveness plan by Mr Delors was an 'interesting mixture', and John Major is today expected to express support for some elements of Mr Delors' white paper.

Kenneth Clarke, the Chancellor, also modified the tone of his denunciation of the document earlier in the day by welcoming its anti-protectionist tone.

After warning earlier that the Delors borrowing plans could raise interest rates across Europe, Mr Clarke, one of the most pro-Union members of the Cabinet, last night said he agreed with a 'very great deal' of the Delors plan.

Downing Street had dismissed the white paper as 'rubbish' and Mr Clarke said: 'Parts of it are rubbish, but they are getting better.'

British officials expect the support of the Germans and the Dutch in efforts to prevent massive new Commission spending and borrowing programmes.

The sections on job flexibility that stress labour market deregulation as a means of bringing down unemployment are broadly welcomed. Britain is focusing its discontent on the borrowing proposals. Mr Delors has suggested that the Commission should launch a borrowing programme over an unspecified period, raising 7bn ecus ( pounds 5.25bn) a year partly through 'union bonds', partly by drawing down funds already in the budget, to finance spending on transport, telecoms, energy and the environment.

The proposals have annoyed the Chancellor and some of his colleagues because they would reduce finance ministers' control over EU borrowing. Mr Clarke said the document was 'curiously contradictory' with an agreed Europe-wide policy among member states to reduce public sector borrowing, which will again be underlined in a separate text to be agreed in Brussels today.

But Mr Clarke was himself accused of contradictory policies by John Smith, the Labour leader, attending a meeting of socialist leaders in Brussels. He pointed out that Britain had led efforts to increase EU borrowing at the Edinburgh summit last year.

'It's odd that something which seemed a good idea during the British presidency is not a good idea during somebody else's,' said Mr Smith.

Mr Smith has put the Labour Party behind European attempts to create new jobs. He said it would lead to more employment in Britain, pointing to investment in the Channel tunnel rail-link and cleaning up Britain's water as obvious targets for new cash.

With the world close to the most far-reaching Gatt free-trade deal in history, designed to spur a global recovery, ministers may be inspired by a general mood of optimism to buy into this - the only medium-term European-wide plan going to combat joblessness - even if they cannot agree to all its prescriptions.

The heads of government will also have to consider the future of a 16-strong Union, as they discuss what alteration of the rules is necessary to accommodate Norway, Sweden, Austria and Finland - assuming they join.

This is a battle that potentially sees the smaller countries in the Union ranged against the giants, but that may not yet draw blood. Extra members must be apportioned votes - historically determined on the basis of population - and these will distort the traditional balance between small and large countries when decisions are taken at ministerial level.

Since many key decisions are taken on the basis of the vote of a qualified majority, the issue is a chance for smaller countries to increase their overall power in Union decision-making. There is a difficult argument over how this should be done - the smaller countries want to see the new weighting strengthen their ability to stand up to an alliance of the bigger states. These, by the same token, do not wish to weaken their blocking majority. The fight will probably be left to the incoming Greek presidency to arbitrate.

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