Blair faces row over veto in new EU constitution

A draft EU constitution will offer Tony Blair an important concession on foreign policy today. But it is certain to spark a political row because it suggests scrapping the national veto on some tax and social security policies.

Draft treaty articles to be unveiled today will suggest majority voting for taxation measures aimed at fighting fraud or improving co-operation between tax administrations, as well as on some social security issues. Mr Blair, who has resisted an abolition of the veto on tax and social security, is expected to fight the proposal.

The same text will ensure that the national veto applies, in effect, to all foreign policy - something which will be welcomed by ministers. But the first part of the document published yesterday by Valéry Giscard d'Estaing, who is drafting the constitution, provoked a row when Eurosceptics accused Mr Blair of allowing the EU take the first steps towards statehood.

The Conservatives launched an attack on the proposals, claiming they marked "the creation of a political union". Supporters of closer European integration in Brussels said they were disappointed that the plans did not go far enough.

The Tory assault exposed political faultlines over Europe a fortnight before Gordon Brown is to announce the result of the Treasury's five tests on entry to the single currency. The Tories said the constitution would give the EU wide powers over justice and home affairs, and warned that it would grant the union a "legal personality", giving it the right to sign treaties and sit on international bodies. The draft calls for the incorporation of the EU's charter of fundamental rights into law.

Peter Hain, the Welsh Secretary and the Government's representative on the convention, accused critics of trying to remove Britain from the EU.