Cabinet rows `will wreck EU reform hopes'

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Deeper co-operation on defence, a leaner and fitter European Commission and tighter rules on devolved decision- making are set to be included in a shopping list of proposals being formulated by Douglas Hurd for next year's Inter-Governmental Conference.

But as preparatory work on the suggestions begins, the Foreign Secretary is understood to have delivered a stark warning to ministerial colleagues that further outbreaks of Cabinet squabbling will wreck Britain's chances of securing change at the conference on revising the Maastricht treaty.

A Whitehall source confirmed that Mr Hurd believes that the overall structure created by the treaty is right. But within that framework, he is said to favour seeing the Brussels commission reduced in size, and a possible change to the rotation of the EU presidency every six months.

He is also likely to support altering qualified majority voting rules to give bigger countries more weight, making the Commission and the European Court work better, renewed emphasis on rooting out fraud, and a tightening of subsidiarity - the principle that the EU only intervenes when action by individual states would be insufficient or ineffective.

One significant departure from his list of decentralising or efficiency suggestions concerns defence, the one area where a British opt-out would be unlikely and where Mr Hurd is understod to be preparing to back deeper integration.

While there is no question of accepting a common European defence policy dictated from Brussels, Mr Hurd wants to explore how EU member states could work together on defence issues in a way that would not undermine Nato. That will require detailed consideration of the future of the Western European Union, which includes only some EU states.

The final package of proposals, to be sent to the pre-IGC summit in June, is not expected to satisfy all Tory Euro-sceptics, still less the hard-line rebels who believe that the Maastricht treaty should never have been signed.

But while Mr Hurd is said to to be unmoved by the opposition of the nine die-hards without the Tory whip, he has emphasised that any breach of the Cabinet truce imposed by John Major after public wrangling over the single currency would prove highly counter-productive. Britain's EU partners would suspect the package had been cobbled together to stifle domestic divisions and the UK would come away empty-handed, he has warned.

Mr Hurd is also prepared, contrary to his earlier view, to contemplate a referendum on far-reaching constitutional issues.