Gordon Brown was put on notice yesterday that Brussels is to make a fresh attempt to scrap Britain’s £3.5 billion annual rebate from the EU budget.

The rebate, won by Margaret Thatcher in 1984 to compensate Britain for receiving relatively little from the EU in subsidies, has survived several assaults, although Tony Blair surrendered about £1 billion a year in tough negotiations on the current budget cycle in 2005. But in a review that started yesterday for the next six-year budget, the European Commission pledged to take a “close look” at the rebate, which, it suggested, was bringing the EU into disrepute.

José Manuel Barroso, the commission president, promised a “no taboos debate”. The budget review will aim to cut spending dramatically on the Common Agricultural Policy (CAP), which takes up more than a third of the EU’s €115.5 billion (£80 billion) annual budget on subsidies to farmers and landowners while making up less than 3 per cent of its economy.

A Government spokesman said that the rebate remained as justified today as when it was agreed.

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France has been the traditional stumbling block to CAP reform but with President Sarkozy telling French farmers on Tuesday to prepare for change, the European Commission said that it would start consultations with no preconceptions on the next budget, to run from 2012 to 2017.

That means that another pet scheme beloved by Brussels’s bureaucrats will be back on the agenda – the hugely controversial issue of an EU tax paid directly by everyone living in the member states.

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