* Don’t drag Scotland out of EU, nationalists warn
* Eurosceptics: Funding could sink legitimacy of vote
* Cameron tries to avoid split in his Conservative Party (Updates after vote)
By Kylie MacLellan and William James
LONDON, June 9 (Reuters) - Lawmakers on Tuesday backed Prime Minister David Cameron’s plan for a referendum on Britain’s EU membership, but a heated debate highlighted passions that could split his Conservative Party and re-open Scotland’s bid for independence.
Cameron, seeking to put an end to a decades-old rift within his party over Britain’s place in Europe, has promised to negotiate a new settlement with Brussels and hold a referendum by the end of 2017.
Voters will be asked: “Should the United Kingdom remain a member of the European Union?”, a choice of wording which allows the “in” campaign to brand itself as “Yes”.
Lawmakers overwhelmingly voted to pass the EU Referendum Bill, which sets out the rules for the plebiscite, at Tuesday’s second reading in parliament, with 544 votes in favour to 53 against. It has the support of the opposition Labour Party, but in the debate, the government was assailed from all sides.
Cameron, who did not attend Tuesday’s debate, says he wants Britain to remain in a reformed EU and is confident he can get changes which would allow him to recommend that to Britons. But he has ruled nothing out if he does not secure reforms such as tighter restrictions on EU migrants’ access to welfare payments.
The issue of Europe is notorious for wreaking havoc within Cameron’s Conservatives, having contributed to the downfall of his predecessors Margaret Thatcher and John Major.
Conservative sceptics have so far been careful to say they support Cameron’s negotiations with Brussels. But several made clear on Tuesday they fear a pro-EU government stitch-up and were looking closely at the rules.
“Any attempt now to rig this vote now will simply amplify the distrust the voters already have,” Eurosceptic Conservative lawmaker Bill Cash, who led a rebellion against Major over the EU’s Maastricht treaty in the early 1990s, told Reuters.
Cameron tripped up over Europe on the eve of the debate by appearing to issue an ultimatum to his cabinet ministers to back his position, which angered some Conservative heavyweights. He later said he meant they must back his negotiations with Europe, but had not yet determined whether he would insist they take a particular line in the referendum itself.
Policy on Europe not only threatens the unity of Cameron’s Conservatives, but of the United Kingdom itself. The EU is more popular in Scotland, Wales and Northern Ireland than it is in England, which accounts for 85 percent of the UK population.
Scottish nationalists say they could demand a re-run of last year’s failed independence vote if England votes to leave the EU but Scotland votes to stay. They called for the rules of the referendum to be changed so that each of the United Kingdom’s constituent nations must back a withdrawal for it to go ahead.
“It would be outrageous, disgraceful, undemocratic and unacceptable to drag Scotland out of the European Union against the wishes and will of the Scottish people,” Alex Salmond, former Scottish nationalist leader, told parliament.
Tuesday’s second reading provided lawmakers their first chance to debate the referendum bill and propose amendments which can be added before a third, final reading.
Lawmakers rejected an amendment by the Scottish nationalists which sought to block the bill. They and other pro-Europeans had called for the right to vote to be extended to 16- and 17-year-olds. Cameron opposes extending the franchise to teenagers, who are less likely than older voters to support his Conservatives.
While many Eurosceptic lawmakers praised the chance for voters to express their view, they were angry about details in the bill, including plans to scrap restrictions on government campaign activity in the run up to the referendum.
Britain’s election watchdog has said it is concerned about the scrapping of a so-called “purdah” period, which bars the government from publishing anything which could influence the outcome, and warned it could see the government spend unlimited amounts of public funds on promoting its preferred result.
“There is a risk that ... could give an unfair advantage to one side of the argument,” it said.
Foreign Secretary Philip Hammond said the government would not use large amounts of public money to back any one side, but lawmakers remained unconvinced.
“If the British people sense there is no fairness, that this is being rigged against them ... that will go down extremely badly,” Conservative lawmaker and former minister Owen Paterson said. “This incredibly important moment could be seen to be illegitimate.” (Editing by Guy Faulconbridge and Crispian Balmer)