EU 'adds £470 a year to food bills'

Every family in Britain is paying an extra £470 a year on their food bills alone under EU tax rules, a new analysis reveals today.

The scale of the burden has been exposed by a Whitehall investigation into the impact of European taxes on products imported from the rest of the world.

Patricia Hewitt, Secretary of State for Trade and Industry, will today launch a scathing attack on a system which she believes is outdated and unfair - and affects not just food but many other every-day consumer products, increasing the cost still further.

In the first list of its kind to be drawn up by the Government, products ranging from a child's bike to clothing and even baby food are shown to be costing far more than they should. The list includes:

The taxes are levied on goods that are made outside the EU. For example, when a product such as New Zealand lamb is brought into Europe, a levy must be paid which goes directly to the EU to fund its controversial Common Agricultural Policy [CAP] and other schemes. The store selling this lamb will then pass on this extra cost in the price it charges to the high street consumer.

Although every EU country is subject to such taxes, Britain is seen to be losing out because it gets much less back from the EU pot than other countries.

In a speech in London today, Ms Hewitt said: "It's rigged against the high street. But it's difficult to see, because it's not always transparent and we pay for it twice." She said the Common Agricultural Policy added £8 or £9 a week to the food bill of a family of four - or £470 a year.

"Because CAP subsidies and EU tariffs-affect essential items, families can't escape them, and poorest families are hit worst. The poorest 10 per cent of households spend 10 times as much [proportionally] on food as the richest 10 per cent. Struggling mothers pay more too".

Her comments reveal the Government's determination to force reform of the controversial CAP and other EU tax schemes at the next round of world trade talks in Cancun, Mexico in September. CAP alone provides £30 billion of subsidies to European farmers by imposing taxes on food from outside the EU.

The tax is intended to encourage consumers to buy European products. But many people believe that the scheme not only costs British shoppers more money but also damages trade in developing countries.

It was widely hoped CAP would soon be radically reformed. But late last year France and Germany agreed to delay this until 2013 in an attempt to ensure their farmers continue to receive subsidies for another decade.

Estimates suggest that if tariffs in the developed and developing world were cut by half, developing countries would gain £150 billion a year - three times what they currently get in aid. The number of people living in poverty would be reduced by more than 300 million by 2015.