British Labour party's call for EU budget cuts 'a scandal'

The decision of Britain's opposition Labour party to vote in favour of real terms cuts to the European Union's long-term budget has been described as a "scandal" by Belgian liberal leader Guy Verhofstadt.

Labour allied itself with Eurosceptic Conservative rebels to inflict an embarrassing defeat on Tory Prime Minister David Cameron's government in a non-binding vote in the British parliament last night.

Cameron had said he would use the United Kingdom's veto to block any above-inflation rise in the EU's seven-year multiannual financial framework for 2014 to 2020, which sets spending ceilings for annual budgets. But the Tory rebels and Labour went further in calling outright for real terms cuts and won the vote by 307 to 294. 

Former Belgian prime minister Verhofstadt, who now heads the Alliance of Liberals and Democrats in the European Parliament, branded it a "scandal that the Labour party has sided with the most anti-European wing of the Conservative party".

"The Labour party has demonstrated that it has no shame in shedding what little European credentials it may have had for short-term political point-scoring," he added. "If Labour and Cameron's Europhobes team up this way, there will soon be no place left for UKIP."

For its part UKIP, which advocates Britain's withdrawal from the EU, expressed delight at the result. Its leader Nigel Farage MEP said: "That some have come to vote this way through naked political opportunism is no matter, there are many routes to the right result."

He went on: "It is outrageous that the prime minister was prepared to go to Brussels in November and argue for what he would call a freeze and the rest of us would call an increase in the amount of money removed from British taxpayers to be spent by the distant EU bureaucrats."

Labour's shadow chancellor Ed Balls, quoted by the BBC, denied the accusations of opportunism. "It is not about party politics," he said. "It is about the national interest. Parliament has spoken and David Cameron has got to listen and deliver."

But Hannes Swoboda, leader of the Socialist and Democrats group in the EU parliament, of which Labour MEPs are members, denounced the "absurd competition of who can cut the EU budget the most". 

"It is a disastrous race to the bottom and will have particularly negative consequences for those countries that urgently need financial support for growth and competitivity. The EU budget – or any EU policies – must not be the victim of domestic political fight."

Nick Clegg, the UK's deputy prime minister and Liberal Democrat leader, also criticised Labour's position, describing it as "hypocritical" and "dishonest". "There is absolutely no prospect of securing a real terms cut to the EU budget," he said in a speech in London today.

"But at the eleventh hour, and having stayed silent on this issue for month, Labour now proclaims that, actually, this is what they've wanted all along and they can wave a magic wand over the European Council negotiations and convince 26 other countries to agree."

Earlier yesterday Cameron had said he would aim in the negotiations with other member states for "at best" a cut in EU spending and "at worst" a freeze, which would see the bloc's funding rise only in line with inflation.

The European Commission's proposed budget amounts to €1,033bn and represents a 5 per cent increase on the previous seven-year period – although two new member states, Romania and Bulgaria, have joined since the last settlement and Croatia is due to join next year. EU leaders will discuss the budget at a summit on November 22.

An alternative put forward this week by the Cypriot presidency of the Council of the EU to slash €50bn off the original proposal was rejected by the commission, which said its own plan struck "the right balance in times of crisis, both in the overall amount and in the balance between policies".

Member states are divided, with some favouring cuts and others determined to protect agriculture or cohesion spending. Unlike annual budgets, which can be passed on a qualified majority, any deal on the seven-year framework requires the support of all 27 countries and the EU parliament.

If no agreement is reached, the spending ceiling for 2013, set as part of the current 2007-2013 framework, will continue into the next year's annual budget with an adjustment for inflation.

The row came after former Labour prime minister Tony Blair said this week that it was "massively in Britain's interest not to play short-term politics" with the issue of Europe.