TONY BLAIR will veto plans for a new European constitution this weekend unless he prevents any Brussels interference in taxation and British industrial relations laws, senior government officials have disclosed.

Mr Blair will head to Brussels tomorrow for a certain confrontation with his French and German counterparts, Jacques Chirac and Gerhard Schröder, after making plain that changes to the constitution to satisfy Britain on tax, social security, criminal justice and the charter of fundamental rights have not gone far enough.

He will oppose moves to end the veto over measures to stamp out tax evasion and fraud, arguing that the need for unanimous voting should apply for all taxation decisions. And he will insist that the charter must give no new rights that would allow unions to challenge British laws such as those on secret ballots and secondary picketing.

The Prime Minister’s toughened negotiating stance, coming after his battering in the European elections, emerged yesterday after the German and French foreign ministers, Joschka Fischer and Michel Barnier, rejected British demands for further concessions at a meeting of EU foreign ministers in Luxembourg.

The Times has been told that they complained that the Irish presidency had made enough concessions to help Britain in the latest draft of the constitution and that there should be no more watering down of the controversial proposals.

Jack Straw, the Foreign Secretary, and Mr Blair were understood to be deeply frustrated that the French and Germans showed no understanding that the British Government could never win the promised referendum in Britain if it allowed vital national interests to be weakened. “They just don’t seem to get it,” one official said.

Mr Blair pinpointed tax and the charter yesterday as the sticking-points for Britain in negotiations that could drag into the weekend. His words were clearly designed to put pressure on the French and Germans as the EU enters a crucial few days in which it will also have to choose the next commission president.

The last attempt to reach agreement on the constitution collapsed last December and diplomats believe that the fear of a second failure, and consequent ridicule for the EU, should somehow enable an agreement this time. British diplomats put the chances at “more than 50 per cent” but said they would not bet on the outcome and had no idea when the summit would end.

There are a range of issues, going beyond the British objections, on which the summit could founder, notably the dispute over the voting strengths of Spain and Poland, which stopped a deal in December.

The Irish changed the draft to allow majority voting on tax fraud measures but only where they did not affect the “fiscal regimes” of member states.

But that does not meet the demands of Mr Blair, Gordon Brown and Mr Straw that there should be no dilution of the veto on anything relating to tax. They fear that otherwise the measures might eventually lead to some form of tax harmonisation.

Mr Blair said at his monthly press conference: “We are still in discussion on that issue but let me make it clear — it’s got to be absolutely clear that there’s no way we are going to have tax harmonisation or other people deciding on our tax rates.”

On the charter, Mr Blair has been under pressure from the CBI to prevent a weakening of union laws brought in by the Conservatives. Concessions in the form of language making explicit that the charter could not be used to allow the European Court to intervene over British employment laws have not been included in the charter text, but only in the preamble which is not felt to have legal force.

Mr Blair said: “There’s a basic problem here and it is an issue, but I hope people understand why Britain takes the position it does. We are not prepared to have anything that takes away the ability to make sure our industrial laws in this country remain as flexible as they are now. We think that has stood us in good stead.”

Mr Blair and Mr Straw still remain to be satisfied over proposals to weaken the veto over social security, as it applies to migrant workers and benefits, and criminal justice. There have been fears that the latter would interfere with ancient principles of the British legal system such as habeas corpus.

The Irish have suggested “emergency brakes” that would allow the issues to be referred to heads of government and unanimous voting if the principles of the social security system and national law were being breached. The safeguards are not yet thought to be tough enough.

Britain is also dubious over the plan to allow the the EU budget to be distributed by majority-voting decisions.

Changes to the proposed system of “enhanced co-operation”, allowing countries to proceed at their own pace on agreed areas, are also needed, Britain says. The draft suggests that once countries have been allowed to go ahead on their own by a unanimous vote, future decisions should be by majority voting.

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