Tony Blair has hit out at claims that his concession over Britain's European Union budget rebate will end up costing £2bn a year, arguing that the costs could be considerably lower.

At last week's EU summit, Mr Blair agreed that the rebate would be cut by £7bn over the next seven years, creating a notional cost to the UK of £1bn a year. This week, however, Gordon Brown appeared to distance himself from the deal when he revealed its full costs. The chancellor said the costs would be "back-loaded", gradually rising from zero in 2008-09 to a full annual cost of £1.9bn a year by 2013.