Rt Hon Lord Lilley

    Mr Peter Lilley (Hitchin and Harpenden) (Con): Has my right hon. Friend noticed that the £3.5 billion savings on benefits for disabled people that the Chancellor needed to find is exactly equal to the planned increase since his previous Budget in our EU contributions over this Parliament? Given his success in persuading our partners—most of whom are not seeing any increase in their contributions—to be flexible over VAT, will he challenge them to forgo our increase? The British people will not take kindly to the idea that we must cut benefits for vulnerable people in order to hand over every penny to the EU.

    The Prime Minister: I respectfully disagree with my right hon. Friend about this fundamental European issue. The £46 billion that we spend on disability benefits is many, many times more than anything we give to the European Union. Indeed, if we think about it, for every £1 paid in tax, a little over 1p goes to the EU for our net contribution. My right hon. Friend and I will be on different sides of the arguments, but I believe that 1p out of every £1 in tax gets us the trade, investment and co-operation that we need. He takes a different view, but I am sure that we will have a civilised argument about it. Because of the budget agreement that I reached in the last Parliament, our contributions are much lower than they otherwise would have been. We have a falling EU budget, rather than a rising EU budget, and that is because of this Government and this House of Commons.