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Mr. David Davis: The hon. Gentleman makes an interesting point. He is right to say that there has been no decrease in investment as a result of increased savings, but he must consider the source of the money, a large part of which now comes from outside the economy. If the money is not being generated within the economy, it comes from abroad, and one of the effects is that those who invest in portfolio investments in this country buy pounds, pushing up the pound's value and causing one of the problems that British industry faces today. So low savings lead to a high pound, which is a problem.

Mr. Purchase: I would not disagree for a moment with what the right hon. Gentleman says. That is clearly one of the dangers of the United Kingdom's current economics, and outside the eurozone it remains quite acute. The pound is strong, which is helpful and, in part, a reflection of the economy, but, without question, it is also overvalued, which reflects what the right hon. Gentleman says. I was trying to say that we have to find the balance between the savings ratio and the money available for investment coming into the country when interest rates are too high, so pushing up the pound's strength and value unacceptably.

In the circumstances, I do not believe that, in one Budget or five, the Chancellor can overcome the problems, many of which are detailed and require enormous analysis. The best arithmetical technology available must be used to understand them. I believe that we are going in broadly the right direction, given that we see around us investment in this country continuing at high levels--but other measures will no doubt have to be taken.

What we used to regard as the medium term--three to five years--is now very much the long term. We simply cannot see horizons as clearly as we did perhaps 10 or 20 years ago. The time scales involved are much shorter, and the velocity of change is absolutely incredible compared with what was happening 20 or 30 years ago. Overall, I believe that, in successive Budgets, the Chancellor has brought about an improvement in the management of the economy, which points us in the right direction, improves prosperity and decreases essential costs, such as mortgages, for our population. Generally, the moderate voice in our society would say that, on the whole, a good job has been done.

I am happy to say, as I have done before, that, towards the end, the previous Government's efforts were of considerable help. They started that movement, and we have been able to build on it. I know that hon. Members

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would expect me to say that, but a fair analysis will show that we have done so. I am not frightened of saying that there is a continuum; we went through a very poor period when enormous improvements in productivity were achieved almost wholly at the expense of rising unemployment. People obviously understand that increases in productivity involve less input for the same output, or the same input for greater output, depending on which way people want to dress it up.

The truth is that during the early part of the 1980s, we lost an enormous swathe of workers. To an extent, we are suffering from that in so far as there is a major shortage of highly skilled and technical people in our country. Some of that shortage was caused by the tremendous shake-out in the engineering industry at the beginning of the 1980s. This country has a long history of sons following in their fathers' footsteps and learning at their fathers' elbows, but we lost many skills, such as pattern making, tool making and print setting--all essential ingredients in a successful economy.

There has been an interregnum, and, to an extent, we are now paying the price. We are catching up, but more resources need to be put into the training and education effort in our country. That would not be altruistic but practical--without a well educated, well trained work force, any hope of improving productivity and thus world competitiveness goes out the window. A well trained and well educated work force with transferable skills will benefit us all.

Most of us have witnessed in our constituencies the tragedy that has befallen workers--usually men--who have worked for 20 or 30 years in a particular industry. The steel industry is a good example. Many of the men who work in it are highly skilled--they can roll steel and operate the furnaces--but those skills are not transferable. If a town has one major steel manufacturer and that closes, we have the pitiful sight of men of long experience and great skill being unable to transfer their skills into another enterprise without considerable help and assistance.

Often the culture among those men is such that they do not recognise as manly some of the opportunities that exist in the service industries. One of the United Kingdom's great successes has undoubtedly been the enormous growth in service industries, and financial services are an outstanding example. The boom in retailing has also provided many opportunities for good-quality work, but such jobs do not seem appropriate to those who spent many years working in trades that require great skill.

The more general mathematical skills that were required in tool making and pattern making were, to some extent, lost between 1981 and 1986. That is a great pity, because we will have to work hard to catch up. Such skills will be vital to this country's future success.

We are trying to move towards a society that is less dependent on the state. Let us confess that there is no question but that people became overly dependent on the handout; there is no other way of describing it. It is a great misfortune that what started as the wonderful idea of a safety net through which no one should fall became somehow distorted, so that people considered it a right that the state should take care of them if they were out of work, could not get work, were ill or felt ill because they

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had not been in work. Of course, the state should take care of them, but there is a limit to the number of people in that position that a successful economy can sustain.

Changes have had to be made. Rather than an erosion of benefits of the kind that the Conservatives tried to achieve in the 1980s and early 1990s, there has been a tightening up on people's ability to claim benefits willy-nilly, and many would claim that there is room for still more tightening. Through my right hon. Friend the Chancellor's Budgets and other measures for training and education, we have initiated a structural change that has created a different understanding among people. They realise that they must begin to take care of their general needs and cannot afford to fall back ad infinitum on the state.

I was a member of a local authority for 20 years that ran important services and I have been a Member of Parliament for nine years. Many young single women of not more than 21 or 22 years of age have visited my surgery and many of them have up to four children. The times I have heard a young woman say, "Mr. Purchase, how do they expect me to manage on this?" Let me clarify what that means. For those women and for many young people, the girocheque was their only understanding of wealth and income. That was a disaster. Those young people were totally disconnected from the idea of work, wealth and looking after their own welfare.

Young men and young women left school at the age of 16 and they often had very little in the way of qualifications. The thinking was, "Why should I? Our kid never got nothing". Many of the young women became pregnant and were unable to manage on what the state was able to provide. This is not a mean state, but there are practical limits to what it can do. People must reach the new understanding that they are involved in a partnership. In essence, we are talking about co-operation and about people making provision for themselves as far as they can, while leaving the safety net--and a generous one--for those who cannot make it over the high hurdles that life puts in front of them.

The girocheque became a symbol of income, but it meant that people had no understanding of wealth creation. This nation exists in its present form only because we have had a long history during which we have understood what is involved in wealth creation. People came from the countryside to the towns because they thought that they would find work and would be able to improve their lives and those of their children. Similarly, many people now invade America, Britain and Europe because they are looking for a better way to look after themselves and their families. In this country and many parts of Europe, the rural-urban drift began to take place and it became an avalanche. However, people in this country learned that they had to make provision for themselves.

In successive Budgets, our aim has been that of "making work pay", as my right hon. Friend the Chancellor would describe it. It is not a bad slogan, because people understand it. How many Members have heard their constituents--Conservative voters, Labour voters or non-voters--say, "It is all right for those who never go to work. They get everything they want and I get nothing"? I have heard that and it is still being said. However, the truth is very different. In my experience, unless they are doing something else as well, people on benefit generally just about manage. However, those who

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work--perhaps for low wages--have the perception that the state does everything for those who do not work and nothing for those who do.

My right hon. Friend the Chancellor has started to make work pay. The methods may be difficult. I agree with my hon. Friend the Member for Hackney, North and Stoke Newington (Ms Abbott) that there is a limit to what one can achieve with tax credits. In the end, productivity and improved performance at work will bring about the higher wages and salaries that will improve our lives and those of our families.

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