Cameron suffers first major Commons defeat on EU budget vote

Tory rebels and Labour vote by 307 to 294 to support a real-terms cut in the EU budget.

It turns out that the government wasn't bluffing when it briefed that it would lose tonight's EU budget vote. David Cameron has just suffered his first major Commons defeat after Conservative rebels and Labour combined to vote in favour of a backbench Tory amendment (tabled by the aptly-named Mark Reckless) calling for a real-terms cut in the budget. MPs voted by 307 to 294 to support the motion, a majority of 13.

Since the vote was non-binding, the government's negotiating position remains unchanged - Cameron will go to Brussels on 22 November vowing to veto any above-inflation increase in the budget (the rebels, as I said, want him to go further and veto anything other than a real-terms cut). But the result is further evidence of just how divided the Tories now are on Europe. Fifty one of the party's MPs (excluding the tellers) voted against the government, making the rebellion larger than any before 2010, including the Maastricht revolts. The new Conservative chief whip, Sir George Young, has failed the first major test of his ability to control the party.

The result is also a significant victory for Ed Balls, who has long argued that Labour should seek to exploit Conservative divisions on Europe by forming tactical alliances with Tory rebels. While the party is vulnerable to the charge of opportunism, tonight's result will embolden those who argue that Labour should do all it can to maximise Cameron's discomfort in this area.

David Cameron gives his final press conference on the second day of an EU summit in Brussels earlier this month. Photograph: Getty Images.

George Eaton is political editor of the New Statesman.

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Scotland's vast deficit remains an obstacle to independence

Though the country's financial position has improved, independence would still risk severe austerity. 

For the SNP, the annual Scottish public spending figures bring good and bad news. The good news, such as it is, is that Scotland's deficit fell by £1.3bn in 2016/17. The bad news is that it remains £13.3bn or 8.3 per cent of GDP – three times the UK figure of 2.4 per cent (£46.2bn) and vastly higher than the white paper's worst case scenario of £5.5bn. 

These figures, it's important to note, include Scotland's geographic share of North Sea oil and gas revenue. The "oil bonus" that the SNP once boasted of has withered since the collapse in commodity prices. Though revenue rose from £56m the previous year to £208m, this remains a fraction of the £8bn recorded in 2011/12. Total public sector revenue was £312 per person below the UK average, while expenditure was £1,437 higher. Though the SNP is playing down the figures as "a snapshot", the white paper unambiguously stated: "GERS [Government Expenditure and Revenue Scotland] is the authoritative publication on Scotland’s public finances". 

As before, Nicola Sturgeon has warned of the threat posed by Brexit to the Scottish economy. But the country's black hole means the risks of independence remain immense. As a new state, Scotland would be forced to pay a premium on its debt, resulting in an even greater fiscal gap. Were it to use the pound without permission, with no independent central bank and no lender of last resort, borrowing costs would rise still further. To offset a Greek-style crisis, Scotland would be forced to impose dramatic austerity. 

Sturgeon is undoubtedly right to warn of the risks of Brexit (particularly of the "hard" variety). But for a large number of Scots, this is merely cause to avoid the added turmoil of independence. Though eventual EU membership would benefit Scotland, its UK trade is worth four times as much as that with Europe. 

Of course, for a true nationalist, economics is irrelevant. Independence is a good in itself and sovereignty always trumps prosperity (a point on which Scottish nationalists align with English Brexiteers). But if Scotland is to ever depart the UK, the SNP will need to win over pragmatists, too. In that quest, Scotland's deficit remains a vast obstacle. 

George Eaton is political editor of the New Statesman.