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.