Despair in No 10? EU budget defeats loom

Downing Street is facing EU budget setbacks in the Commons and Brussels, prompting an outbreak of despair in No 10.

The prime minister's spokesperson today warned Britain faced a "difficult negotiation" in next month's EU budget talks, downplaying the prospects of a successful outcome for the UK as tomorrow's rebellion by Tory backbenchers approaches.

Around 60 Conservative MPs are expected to defy David Cameron by calling for a real-terms cut to the multiannual financial framework (MFF) – covering the period from 2014 to 2020 – which will be negotiated by EU leaders next month. Brussels officials are calling for an overall increase of five per cent on the 2007-13 budget.

"The whips are working very hard to put the pressure on," one Tory rebel told Thirty-five Conservative MPs have already signed up to the rebel amendment, which calls on the government "to strengthen its stance so that the next MFF is reduced in real terms".

The prime minister is calling for a real-terms freeze to the EU budget in the run-up to next month's negotiations, but this morning No 10 signalled that even that goal may prove hard to achieve when talks begin in November.

Downing Street pointed out that a large number of the EU's 27 countries are net recipients of the budget.

"You wouldn't be surprised there are different views around the table," the prime minister's spokesperson added. "It is not going to be straightforward to reach agreement."

With Labour MPs expected to be whipped to support the rebel amendment after senior shadow Cabinet members made clear they also believed the £9 billion Britain spends on the EU each year should fall, a further 25 Tory rebels are all that is needed for the result to be put into doubt – handing Cameron another big blow to his authority.

That makes this division more serious than the October 2011 rebellion in which 81 Tory MPs defied government whips over whether Britain should have a referendum on Britain's membership of the EU. Then Cameron only avoided a defeat because Labour and Liberal Democrats voted with the prime minister.

This afternoon No 10 responded to the threat of a major setback in parliament by downplaying the importance of the Commons vote, which is non-binding.

"Parliament is expressing a view, there's going to be a negotiation, but ultimately it's about what can be agreed by those 27 countries," the prime minister's spokesperson said.

'No government stooge'

An alternative amendment tabled by Tory Jacob Rees-Mogg calls on the government to "veto anything other than a cut or a freeze". The North East Somerset MP told this would encourage the prime minister to "stick to his guns", toughening up the language but nevertheless making clear the Commons believes a real-terms freeze is acceptable.

Asked whether Rees-Mogg's gambit would be welcomed by the government, the prime minister's spokesperson replied: "I don't think other countries in the European Union are advocating a real-terms cut."

Rees-Mogg himself denied that he was a "government stooge", but instead insisted he was concerned that if Britain insists on a real-terms cut other EU countries which are net recipients of the EU's budget could veto any deal. That would result in a default formula being triggered next year which sees the budget increase by two per cent.

"The recipient nations have an interest in the 2013 formula, if nothing better can be got for them," he explained.

"Though I would like a cut in the EU budget, if the government gets a freeze that would be an amazing success. A freeze is better than the 2013 formula."

Conservative eurosceptics are angry with that approach and want the UK to adopt a hardline strategy instead.

"The prime minister needs to show real fiscal leadership on this issue and be prepared to exercise his veto if the EU does not listen," Tory MP Mark Pritchard, one of those who tabled the rebel motion, said earlier.

"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."

In addition to backing both the rebel amendment and Jacob Rees-Mogg's alternative, backbencher Peter Bone has tabled another amendment focusing on the rebate – which he wants to see renegotiated.

"This argument about one or two per cent inflation [of the EU budget] is irrelevant – it's the rebate that's killing us," he told

In Labour's last five years the rebate cost Britain £19.5 billion, but that has increased to £41 billion over the period of the present parliament, he claimed.

"If you put our rebate back to the way it was, we would save £21 billion over five years," Bone said. "That's a huge amount of money."

'A very tricky task'

Cameron will not have been cheered by former prime minister Tony Blair observing in a speech at the Council for the Future of Europe in Berlin that the 2005 EU budget negotiation was "the most difficult negotiation I ever participated in, even including the Northern Ireland agreement".

Blair warned the current prime minister against playing "short-term politics" with the issue.

"Personally I would like to see the UK take a constructive role in shaping this new union, recognising the imperative of closer political union for the eurozone countries and trying to keep the necessary divergence in economic decision making between ins and out, from spilling over into a complete divergence in political structures," he said.

"It is a very tricky task. But it is an essential one if the UK is not to be sidelined and Europe to be without the active participation of such a large and significant member of the existing union."

Talks over the EU budget would provide an "interesting test-case of whether such constructive engagement can yield an optimal outcome", he added.

Blair's focus since leaving Downing Street has been primarily on work arising out of his Catholic faith and working towards peace in the Middle East.

Yesterday's speech was an unusual move into European politics – but one in which he raised the idea of a more politically unifying European president.

"A Europe-wide election for the presidency of the Commission or Council is the most direct way to involve the public," Blair argued.

"An election for a big post held by one person – this people can understand."

Pundits interpreted the speech as an attempt by the former prime minister to put himself forward for the role.