DH: I don't just want a referendum on Europe. I'm always and everywhere in favour of referendums: they're a splendid device to remind people in our profession for whom we work. The reason I want a referendum on EU membership isn't that I think it's the easiest way to get out of the EU — it's that, on an issue of this magnitude, it's right in principle to consult the people. But what should the tripwire be? Well, the coalition seems to be inching towards a citizen's initiative procedure — in other words, a way to trigger a vote by getting enough signatures, so that we can have referendums on issues that people, rather than just MPs, want. Surely that's the right way to test the strength of public opinion on the European question. If enough people demand a referendum on EU membership, we should hold one. If not, then I've plainly misjudged the temper of my countrymen, and I'll be in no position to complain.

NB: No, I think that would be reasonable and one would have debates about how many people would have to sign up. If a million wanted it, then...

DH: Or instead of setting an arbitrary figure, why not say that there should be referendums on, for example, the top three proposals over a parliamentary term, the ones that had attracted the most signatures? 

DJ: Is it conceivable that a Cameron-Clegg coalition could survive that kind of constitutional crisis in which the two leaders would be arguing on opposite sides?

NB: I think they could survive the argument. They couldn't survive the result, particularly if the result were the result that Daniel [Hannan] would like, which is for us to pull out. There is no way the Liberal Democrats would continue for more than ten seconds in a government that then had to implement a negative result on an in-or-out referendum. But could they survive the process of having a debate? Well, they are doing it on AV. I think there is a lot of nonsense speculated about the AV referendum. People keep saying, if the Lib Dems lose the referendum, then how will the coalition stay together? It's completely the wrong way round. The risk for us, in a narrow way, is that if they were to win the change to AV, then there would be a very strong argument within the Liberal Democrat ranks that after they got what they came for, they would then need to make themselves an independent force as much as possible. They would need to get out as soon as they could. If they lose the AV referendum, as I hope they do, then I genuinely think they only have one thing left to them, and that's to demonstrate to the British people that even within first-past-the-post a more than two-party system is a good thing and the Liberal Democrats are a good party to have in government. Then they've got to stay and see it through. 

DJ: Is there anything that the coalition can learn from America? Dan, your book [The New Road to Serfdom: A letter to America, Harper, £15.75] is very much addressed to America, urging them not to go down the European route in dealing with this economic crisis. Do you agree with that, Nick, or have we more to learn from them?