Blair set to clash with Chirac

Tony Blair is facing a new and bitter battle with France over an effort to cut billions from the costs of the European Union.

The Prime Minister is fresh from a bruising encounter, at last week's Seville summit, with President Jacques Chirac over plans to toughen the EU's immigration policy.

But that will pale beside the new and most urgent effort yet to put the lid on aid to farms from Brussels, a package which costs £27 billion every year, almost half the EU's total budget.

The European Commission today unveiled its plan to curb the system which sees farmers paid more the more they produce and which, say critics, only spurs factory farming and food mountains.

While Britain sees the proposed changes as a modest but essential step, President Chirac has already vowed to block it.

Attempts to reform the Common Agricultural Policy have been launched, and scuppered, repeatedly for decades. But today's move is seen by many as critical because of the pledge to agree by the end of this year to admit 10 additional countries to the EU club.

Many of the newcomers rely heavily on farming and there are fears that, without radical reform, the cost of the CAP would explode.

The backers of change say that ending the incentives to farms to produce ever more unwanted crops would not only save billions but aid the environment. The proposals threaten to open a northsouth divide, with Britain and Germany leading the pressure for change and French opposition supported by Greece and Spain.