No 10 gloomy on looming EU budget fight

By Alex Stevenson

Britain faces a "difficult negotiation" in EU budget talks coming up next month, Downing Street has warned, as tomorrow's rebellion by Tory backbenchers looms.

Conservative MPs have taken Labour's bait by tabling a Commons motion calling for real-terms cuts to the EU's budget, setting up the possibility of a defeat for David Cameron tomorrow.

The government plans on calling for a real-terms freeze, but No 10 signalled that even that goal may prove hard to achieve when talks begin in November.

"We've been saying for some time the decisions taken on the EU budget need to reflect the decisions taken by EU countries on their domestic budgets," the prime minister's spokesperson said.

"I don't think it's surprising that parliament want to discuss that.

"If you look at the budgets in European countries, they are being cut and those difficult decisions that other countries are having to take should be reflected in the EU budget."

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."

Tomorrow MPs will vote on whether to call for a real-terms freeze, as government ministers want, or a real-terms cut, as Tory rebels would prefer.

Labour MPs could be whipped to support the rebel amendment after senior shadow Cabinet members made clear they also believed that the amount Britain spends on the EU – around £9 billion a year – should fall.

Twenty-eight Conservative backbenchers, including John Redwood, Bernard Jenkin, Patrick Mercer and Bob Stewart, have already put their name to the rebel text, which calls on the government "to strengthen its stance so that the next multiannual financial framework (MFF) is reduced in real terms."

Downing Street said yesterday the prime minister's focus was on the summit of European leaders coming up next month, when the MFF - covering the period from 2014 to 2020 - will be negotiated. But David Cameron will face a difficult challenge to avoid being defeated in the Commons tomorrow afternoon.

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.

The prime minister's spokesperson said yesterday that Cameron would seek to protect Britain's rebate and argue for a real-terms freeze in the EU budget. Brussels officials are calling for an overall increase of five per cent.

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.

"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."

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.