In a surprisingly pro-European speech to MEPs in Strasbourg yesterday, he called for a common European energy policy including a pan-European electrical grid; a European Research Council; an EU programme for raising university standards; and a common immigration policy to attract foreign talent.

“People aren’t saying ‘we don’t want Europe’, but ‘let Europe answer the concerns that we have’. Let’s make Europe relevant to our citizens and reality,” Mr Blair told the European Parliament in a speech punctuated by frequent applause and infrequent heckling. “Globalisation is not a threat. It’s an opportunity for us. I support the social dimension in Europe, but it needs to be one that enhances our competitiveness, the prosperity and the living standards of our people.”

In a notable U-turn, Mr Blair also urged EU leaders to agree to a paper at today’s summit, which calls for more co-ordination of tax policies. The paper, produced by the European Commission, said that EU countries should align their tax policies, calling for “more co- ordinated approach at the EU level.”

Graham Brady, the Conservative spokesman on Europe, said: “A more co-ordinated approach on taxation is Brussels-speak for EU control of tax. It is deeply alarming that Tony Blair has signed up to this document.”

Britain, which holds the rotating EU presidency, convened today’s summit to try to forge a consensus on the way forward after Europe was plunged into crisis by the rejection of its constitution by French and Dutch voters last spring.

Mr Blair’s aim is to agree on the need to reform Europe’s rigid economies in the face of rapid globalisation. However, he also wants the summit to lay the groundwork for a deal on the EU’s seven-year budget, which he hopes to reach at the next summit in December.

Negotiations on the budget broke down in June after Britain refused to surrender its rebate and France refused to countenance a curbing of farm subsidies. Mr Blair mentioned neither issue in his speech, but told a subsequent press conference: “Obviously there are areas of disagreement, but you are not going to get Europe to move forward unless you find areas of agreement, and that’s what you have to find.”

He insisted that the EU had to agree the general strategic direction before it agrees the budget. To combat the looming energy gap, he proposed a Common European Energy Policy, including the creation of a pan-European electricity grid and nuclear power policy.

He said: “For far too long, we have been in the situation where in a haphazard and random way energy needs and energy priorities are simply determined by each country according to its needs, but without any sense of the collective power we could have in Europe if we were prepared to pool our energy and our resources.”

He said that the Europe should explore “how we compete with the US, how we get more private-public partnership into sustaining them and more graduate schools linking business and the academic world across the EU.”

He proposed a European Research Council to boost spending on research and development and urged a more positive approach to legal immigration, and reiterated his support for a globalisation fund to help workers who have lost out to competition from developing economies.

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