GORDON BROWN’S claims that British companies are losing out unfairly in the battle for European public contracts backfired yesterday when the European Commission revealed that it was investigating the Scottish Parliament for allegedly breaching EU rules.

The Commission also pointed out that Britain was one of the few European countries not to have fully implemented rules designed to ensure a level playing field.

The Chancellor published a report yesterday that claimed that European governments were unfairly favouring their own national companies in the £1,000 billion-a-year contracts market.

He pointed to Spain and France as the worst offenders against EU internal market rules, which require governments openly and fairly to put all contracts over a certain amount to an EU-wide tender.

The Commission dismissed the claims, and revealed that it is investigating alleged breaches of EU rules over the award of the design contract for the controversial new £431 million Scottish Parliament building in Edinburgh.

An official said: “We have been investigating for several months a complaint that the public procurement rules were not followed in the award of the contract to design the Scottish Parliament, a design which played its part in the whole budget going hugely over budget.”

The Commission accused the UK of being one of the few countries not to be fully implementing single-market rules designed to ensure that foreign companies had fair access to government contracts.

The Commission gave a formal warning to Britain in March that it must introduce measures to make it easier for companies to seek legal redress if they feel that they have been unfairly discriminated against.

A government spokesman admitted: “We are in the process of amending our national legislation to take into account developments since we implemented the original directive.”

As revealed in The Times, Mr Brown yesterday published the Wood report, which suggested that British companies face serious obstacles in competing for lucrative European government contracts, such as building roads or supplying police helicopters.

The report claimed that foreign governments still favoured their own countries’ companies. It found that although there were few examples of “clear breaches” of EU rules, there were many “grey areas” that allowed governments to favour their own national firms at the expense of British ones.

The report was aimed at the incoming Commission under José Manuel Durão Barroso, which contains a large number of free-market commissioners, rather than the outgoing Commission under Romano Prodi.

Mr Brown said yesterday: “We’re losing out substantially in terms of contracts. I’m hoping we’ll get a series of market investigations, that the Commission will clamp down on this practice that is happening in other countries.”

The Commission insisted that it already “cracks down hard” on any evidence of abuse of the rules. A spokesman for Frits Bolkestein, the Internal Market Commissioner, said: “There is no evidence that the UK is being singled out for unfair treatment.

“It would be helpful, if Mr Brown had some concerns, if he informed the Commission rather than just Westminster journalists. The Commission has not received a copy of this report.”

Mr Brown’s accusations were also dismissed by other governments. A German diplomat said: “Germany authorities always follow the obligations that EU membership implies.”

A French government spokesman said: “We respect the EU rules, so there is no reason for UK companies to be unfairly treated by the French Government.”

Mr Brown said that he would raise the matter at a meeting of European Union finance ministers in Brussels today, but no one has been shown the report and the subject is not on the agenda of the meeting.

The Chancellor has attacked the EU on the eve of previous meetings, on topics including VAT on children’s clothes, economic reform, tax on savings and tax harmonisation, although usually the subject of his attack is not on the agenda.

An EU official said: “He always does this whenever he comes to Brussels, but he is unlikely to win them around. It tends to be along the lines of ‘Johnny Foreigner would learn from what we do in Britain, where we do things better’.”

Chris Davies, leader of the Liberal Democrats in the European Parliament, said: “Tony Blair doesn’t have a hope of winning the referendum on the constitution so long as every three months his Chancellor launches a tirade against the EU saying Britain is the only one that knows what it is doing and other countries are trying to do us down.”

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