Government loses vote on EU budget

The result – the first significant defeat for the coalition – is not binding, but will be an embarrassment for David Cameron who worked hard during the afternoon to persuade enough rebels to back down to avoid defeat.

Conservative eurosceptics want Mr Cameron to fight for a reduction in the EU budget and dozens have signed a Commons amendment urging him to hold out for a real-terms buget cut at a summit next month.

The Tory revolt’s ringleader Mark Reckless MP said many of his constituents could not understand why, when there were cuts to budgets in the UK’s public services, the EU was getting a larger budget:

“If there are inflationary increases as the Government proposes, we are looking at a net contribution going from #9.2 billion last year to #13.6 billion at the end of the process. We simply cannot, cannot afford that.”

Speaking to Channel 4 News, Mr Reckless said: “I think David Cameron can now go to Brussels with a very strong negotiating mandate from his parliament”.

In response, Europe Minister David Lidington declined to say whether the PM would ignore the vote when it came to the negotiations. He called on colleagues to recognise how strong David Cameron’s stance already is: “He’s taking a tougher line on this than any previous prime minister has done.”

A “remarkable victory” was the verdict of Peter Bone, another leading rebel who added: “Parliament spoke for the people, there was enormous pressure on colleagues to vote with the Government. It was a very significant victory for the people. It was because MPs have to face their constituents.”

Labour said on Wednesday that it would join forces with Tory rebels and vote to reduce the EU budget, in recognition of the problems faced by member states.

Their stance was condemned by Liberal Democrat MP Stephen Williams who said “when (the public) see naked, opportunistic opposition motions, that is when the Commons is at its worst, and that is what undermines public confidence in the work of Parliament.”

Downing Street argues that asking that EU budget should only rise in line with inflation – not by the 5 per cent recommended by the European Commission – is the best it can hope for.

Cut ‘at best’

But on Wednesday, Mr Cameron signalled that he would ideally like to see a cut in the EU budget, which will be seen as an attempt to pacify backbenchers. “This government is taking the toughest line in these budget negotiations of any government since we joined the European Union,” the prime minister told parliament. “At best we would like it cut, at worst frozen, and I’m quite prepared to use the veto if we don’t get a deal that’s good for Britain.”

The European Union‘s funding package for the next seven years is due to be decided at a summit next month, with Mr Cameron threatening to veto any increase above inflation – currently around 2 per cent.

At best we would like it cut, at worst frozen, and I’m quite prepared to use the veto if we don’t get a deal that’s good for Britain. David Cameron

During prime minister’s questions, Mr Cameron accused Labour leader Ed Miliband of “rank opportunism” by backing Tory rebels: “The nation will absolutely see straight through it. He’s playing politics; he’s not serving the country.”

Mr Miliband retorted that the prime minister was “weak” on Europe for calling for a freeze in the EU budget, and said that he had resisted bringing a mandate to EU negotiations.

Labour first signalled that a new policy position in an article by Ed Balls and Douglas Alexander in The Times on Monday, supporting a cut in the EU budget.

Read more on Gary Gibbon's blog: Tory rebels not there yet - and time is running out

Up to 60 rebel MPs

The result is not binding but it would be difficult for the prime minister to defy the will of the House of Commons.

Tory rebels said they believed 40 to 60 of their colleagues were ready to back the amendment, including Mark Reckless, Mark Pritchard, Zac Goldsmith, Bill Cash, John Redwood, Bernard Jenkin and Peter Bone. Many more could abstain.

Government whips were reportedly “working very hard” and “going bananas” as they seek to convince backbenchers not to do anything to harm the coalition.

“It is possible this could turn out to be a damp squib,” one MP admitted, dismissing the idea that last year’s 81-strong rebellion in favour of a referendum on EU membership, could be matched.

The European Commission has proposed an £826bn budget ceiling for the 2014 to 2020 period – a 5 per cent hike compared to 2007 to 2013.

But despite other members such as Germany joining calls for restraint, Downing Street has previously suggested that a rise in line with inflation is best possible outcome that could be achieved.

Read more: EU budget: what Britain pays and where it goes 

If no deal is reached at the summit, the budget is automatically “rolled over” to next year with a 2 per cent increase.

Veto

Conservative MPs Mark Reckless and Mark Pritchard are tabling a motion saying that any budget rises should be below inflation.

Mark Pritchard, who played a prominent role when 81 rebels voted for a referendum on Europe last year, has said Mr Cameron should be prepared to wield Britain’s veto during the negotiations at next month’s summit.

In his blog, Mr Reckless said: “Although many of us would wish to see a substantial reduction in EU spending, at least in line with cuts at home, today we are only asking the government to strengthen its stance so that there is some real-terms reduction in the EU budget.

“Some real-terms reduction is surely not an unachievable or excessively radical goal, given the extent to which we and other EU countries are making less palatable cuts at home.”