THE notorious expenses system that enables MEPs to boost their salaries by thousands of pounds a month by claiming for a set amount, rather than what they actually spend, is to be reformed.

EU leaders hope the deal over staff allowances and travel costs will help to restore confidence in the Union at a time when it is engulfed in crisis.

Reforms have been on the agenda for more than a decade, but have always failed because either a powerful group of MEPs opposed them or because member states failed to reach a compromise.

All EU governments agreed the latest scheme and outlined it in a letter yesterday to the European Parliament. Although the Parliament can veto the plan, a British official said parliamentary leaders had signalled agreement: “We are very close to a deal to end the outrageous expenses regime that has done so much to bring Parliament into disrepute.”.

Under the reforms, MEPs will be able to claim only what they actually spend on travel each week and the salaries of staff they employ. At present, MEPs are entitled to claim a business class airfare to Brussels or Strasbourg even if they take a budget airline and are not required to provide proof that they pay staff.

In return, all MEPs will get the same fixed salary of €7000 (£4,730) a month, equivalent to an annual salary of €84,000. Under the present system, MEPs get paid the same as their national Members of Parliament, which varies from €761 a month in Hungary to €12,007 a month in Italy. The new scheme will mean a slight cut in basic pay for British MEPs, who are paid just over £59,000 a year, but they will be compensated by having their pensions paid for, which is worth about €1,000 a month.

It will mean huge pay rises for eastern European MEPs, some of whom will get paid more than their Cabinet ministers. Tax rates on MEP salaries are set by individual countries. British MEPs pay the same as their Westminster colleagues.

Although many MEPs admit that their expenses system is little more than legalised corruption, the Parliament has repeatedly defended it as a way of balancing the disparity in pay between the worst-paid and best-paid. Those from poorer states have often been resentful at earning a fraction of the Italians’ rate for doing the same job. To stop Italian MEPs objecting, their salaries will be topped up by the Italian Government. The change in expenses comes into force for all MEPs in 2009, although there is a phase-out clause for salaries that would enable sitting MEPs to maintain present arrangements until 2019 if they choose. Parliamentary authorities believe that the political crisis in the EU makes it even more important to clean up their image and will make it difficult for MEPs to object to the reforms. Timothy Kirkhope, the leader of the Conservative Party in the European Parliament, said: “We have reservations about what would amount to a pay cut for British MEPs. We have always believed we should be paid the same as Westminster MPs.”

Times Recommends

• Michael Jackson: Not the final chapter
• Indian Army spends10m rupees on golf buggies
• Brüno toned down for 15 rating