The taxpayer faces a multi-million-pound bill after the Government announced plans to opt out of 130 EU measures on law and order, including the European arrest warrant.
Theresa May, the Home Secretary, delighted Conservative Eurosceptics today when she confirmed plans to return power over a swathe of criminal justice and policing measures from Brussels to Britain. They include the sharing of criminal records and DNA samples between member states, as well as information about money-laundering and passport fraud.
The move caused fresh strains in coalition ranks and warnings that the country would suffer a large financial penalty as a result of exercising the opt-out agreed by the previous Labour government.
The Tories are hostile to EU powers for a European-wide public prosecutor and to force British courts to take foreign convictions into account.
Critics also say the arrest warrant is being misused as EU police forces invoke it to ask for the return of people facing relatively trivial charges. However, its supporters argue that it allows the speedy return of criminal suspects such as Jeremy Forrest, the teacher arrested last month by French police on suspicion of child abduction.
As Britain cannot pick and choose which measures it remains signed up to, Ms May said the Government’s “current thinking” was that it would opt out of the laws en masse and then “negotiate with the [European] Commission and other member states to opt back into those individual measures which it is in our national interest to rejoin”.
Nick Clegg blocked the Conservatives’ original plans to announce the decision at their party conference last week, fearing the agreement might be exaggerated to please Tory activists.
A Lib Dem source said: “It seems a bit odd to opt out of something when you know you will opt back into key parts of it such as the European arrest warrant. It’s just pandering to the Eurosceptics.”
In Brussels, diplomats believe Britain faces a bill of pounds for the administrative cost of pulling out of policing and judicial co-operation and then rejoining parts of it. Officials think there could also be a political price for Britain opting back into measures such as the European arrest warrant. The moves would require the unanimous agreement of all 26 other EU members and some might emand concessions in return. For example, Bulgaria and Romania might ask for more freedom for their citizens to come to the UK.
A European Commission spokesman said: “The Commission will now assess the consequences of the cessation of the UK’s participation in those areas.”
Ms May’s move was welcome by the Tory Right, with Peter Bone praising her as a “star” and Dominic Raab declaring: “We want focused co-operation, not blind loss of democratic control.”
Yvette Cooper, the shadow Home Secretary, accused the Coalition of sending out conflicting messages on the issue, adding: “It’s like the Government is playing a giant game of hokey-cokey and yet the fight against crime is at stake.”
She said there was no guarantee that the Commission and member states would support British requests to opt back in to individual measures - and also protested about the “financial penalty” the UK would face.
Ms May pointed out that Labour had helped negotiate the Lisbon arrangements, including the potential costs of opting out and in again.
Mr Cameron suffered a second setback on Europe yesterday when it emerged that a proposed banking union for the 17 Eurozone nations could see some rules and regulations imposed on the City of London against its will. Although Britain will not join the banking union, its formation by the end of this year could influence decisions of the European Banking Authority (EBA), which sets standards for all 27 EU members. Under plans to be discussed by EU leaders this week, Britain would need the support of three eurozone members and two other non-euros to block proposals at the EBA.
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