Oral Answers to Questions

Debate between Richard Holden and Guy Opperman

Monday 6th June 2022 Commons Chamber

[Guy Opperman]

You got there first, Mr Speaker, but I also congratulate the former Pensions Minister, the Chair of the Select Committee, on his knighthood, which is genuinely deserved. The whole House wishes him well when he goes to meet the Queen for his investiture.

The right hon. Gentleman is a former Pensions Minister and will recall that the present uprating policy started in April 1987 and has continued under successive Governments, including the 13 years of Labour Government. I will, of course, come to the Select Committee to listen to its suggestions, but the same process has been in place for the best part of 35 years. The level is set between September and November, and the uprating takes place thereafter.

[Mr Richard Holden (North West Durham) (Con)]

Pension credit is important, and I have been pushing take-up in my North West Durham constituency. The Minister will understand that ensuring better pension savings is the most important thing in the long term. I backed the 2019 manifesto, and I back the Prime Minister who delivered it. Will my hon. Friend the Minister implement the auto-enrolment review, and will he back my private Member’s Bill to deliver it as soon as possible?

[Guy Opperman]

Answer that one! The truth is that, in respect of the 2017 auto-enrolment review and the changes that my hon. Friend sought in his outstanding ten-minute rule Bill and the private Member’s Bill we did not get to debate before the close of the last parliamentary Session, he knows he has my full support. The matter will be brought before the House as soon as possible.

Pension Schemes (Conversion of Guaranteed Minimum Pensions) Bill

Debate between Richard Holden and Guy Opperman

3rd reading
Friday 25th February 2022 Commons Chamber

[The Parliamentary Under-Secretary of State for Work and Pensions (Guy Opperman)]

The Government propose to transform United Kingdom pensions. We are making them safer, better and greener and the Bill is a further way forward. I am grateful to the hon. Member for Rutherglen and Hamilton West (Margaret Ferrier) for introducing the Bill and for the support of the official Opposition and other political parties.

Let me briefly address the three points raised by the hon. Member for Westminster North (Ms Buck) on behalf of Her Majesty’s Opposition. I assure her that there will be full consultation on the legislation. There will also be broad communication, but I will write to her on that point and place a copy of the letter in the Commons Library and the House of Lords Library so that all peers and Members can see it.

In respect of gender inequality, the hon. Lady will be aware that successive Governments have concluded that the way ahead on that is automatic enrolment—that is the greatest change. There is no doubt that automatic enrolment has transformed saving in this country. For example, in terms of workplace pensions, women were at less than 40% in 2012 and are now at more than 80%, and young people aged between 22 and 29 were at less than 40% and are now at 80%.

[Mr Richard Holden (North West Durham) (Con)]

I agree with the Minister and welcome the Bill from the hon. Member for Rutherglen and Hamilton West (Margaret Ferrier). It is a great Bill and part of the reforms to pensions that the Government are making. As the Minister mentioned auto-enrolment, can he enlighten me on the Government’s position on my Bill, which is scheduled for later today, on expanding auto-enrolment to under-22s and part-time workers, particularly women as he just mentioned?

[Guy Opperman]

I will deal with that point, because it is relevant to this Bill and to the consideration of the House later. As my hon. Friend will understand, we are in the latter part of this parliamentary Session. It is the end of February and the Queen’s Speech will come, in all probability—obviously I cannot commit, but it is usually—on the second Wednesday in May, so the House has a relatively limited period of time.

The hon. Lady’s Bill had its Second Reading in November. It required a Committee stage in the House of Commons, then it had to come back for Report and Third Reading. It has not even gone to the other place for consideration. It will only just get under the line, although I am sure that the other place will be keen to accept it. The reality is that there is no real way for my hon. Friend’s Bill to get through this House and the House of Lords in the time allowed, and that is the requirement of private Members’ Bills of the nature of his and all others, to be fair.

I can confirm, however, that the Government remain committed to the 2017 automatic enrolment review. It remains the case that we will, in the fullness of time, bring forward or support legislation to take the matter forward. My hon. Friend will have to bear with me. He and I have had ample conversations. I am so pleased that he is my neighbour—a great improvement on the previous one. He is a doughty campaigner for his constituents and he is right to make this particular case.

I thank my hon. Friends the Members for East Surrey (Claire Coutinho), for Broxtowe (Darren Henry), for Hastings and Rye (Sally-Ann Hart), for Darlington (Peter Gibson) and for Meriden (Saqib Bhatti) who all supported the Bill and spoke extremely well and eloquently about these matters. I will not repeat my entire Second Reading speech, which lasted for, I think, nearly an hour, and of which I know all hon. Members enjoyed every word.

The greatest hits of pensions are often underrated in my experience, but the points that I made then should be repeated as if I were to speak for the next hour. We are correcting a simplification that was brought in by the last days of Mr Callaghan’s Labour Government in 1978. It is an utterly vital piece of legislation that addresses everything from survivor benefits to reforms in relation to HMRC and the need to get proper equalisation. To be utterly clear, all parties will benefit from this and there is no loser by reason of the Bill.

It is absolutely to the credit of the hon. Member for Rutherglen and Hamilton West that she has successfully brought the Bill forward on a cross-party basis and navigated its passage. She should be very proud of her work. I am delighted to restate that the Government support the Bill. We continue to support it in this House and will support it in the House of Lords. I wish it every success as it travels on to another place.

Oral Answers to Questions

Debate between Richard Holden and Guy Opperman

Monday 7th February 2022 Commons Chamber

[Mr Richard Holden (North West Durham) (Con)]

T5. Last Friday, I paid another visit to Consett jobcentre in my constituency to see the great work it is doing. This Friday, I am hosting an apprenticeships fair in my patch. Auto-enrolment in pensions has transformed the lives of millions of people in constituencies across the country, including in mine. Those aged 18 to 22, who will be attending my apprenticeships fair and going into work, will not benefit yet from auto-enrolment. Will the Minister confirm that he will look at that and do what he can to ensure that everybody in work benefits from auto-enrolment in Britain?

[Guy Opperman]

I congratulate my hon. Friend, who is also my constituency neighbour and a massive improvement on his predecessor. Auto-enrolment is a massive success as you know, Mr Speaker. I promise my hon. Friend that we will build on that work with the automatic enrolment review. I look forward to reading his Bill in great detail.

Automatic Pension Enrolment

Debate between Richard Holden and Guy Opperman

Wednesday 26th January 2022 Westminster Hall

[Mr Richard Holden (North West Durham) (Con)]

It is a pleasure to serve under your chairmanship, Mr Dowd. I pay tribute to my hon. Friend the Member for Grantham and Stamford (Gareth Davies) for securing this debate. I have been trying to secure one for a couple of months, but he seems to have managed to pip me to the post.

I thank so many hon. Members for mentioning my ten-minute rule Bill to look at extending auto-enrolment. Everyone who has spoken has pointed to the success of auto-enrolment. It has been a cross-party success, as my hon. Friend the Member for Darlington (Peter Gibson) said. It is slightly sad that there are not more Scottish National party or Labour Back Benchers here to welcome that success and talk about the future, but this is something we can proceed with on the basis of those on all sides of the House coming to an agreement.

The main point, which has been made by many Members, is that an extra 10 million people are now looking to save. The reason they are saving is that for every 50p they put in, they get £1 in their pension pot, because they get the tax relief plus the employer’s contribution. That is seen as a simple and straightforward thing. For every £4 an employee puts in, their employer puts in £3 and they get £1 in tax relief. That is a simple, straightforward way of explaining it to people. It is important for us to have this debate and to look at the success and the future of auto-enrolment.

Many hon. Members made the broader point that we want people saving for themselves, their families and their futures. This is a small “c” conservative principle that cuts across working class communities across the country, including mine in North West Durham. It provides a really important stake in society when people save into a pension over time and see that money invested in UK companies, as well as in companies across the world—although my hon. Friend the Member for Darlington made the important point that if we are looking to expand auto-enrolment, we need to enable people to see the benefits of those savings in their communities.

I therefore hope that the Government will look at ways to ensure that that patient capital can be invested more in things such as social housing projects and transport infrastructure schemes. I do think it is time to expand. I could understand why, in the past, employers were concerned about auto-enrolment, but it is great to hear from my hon. Friend the Member for Darlington, who ran his own business, that he has seen those concerns alleviated by the impact that it has had on his employees.

Let me say to my hon. Friend the Member for North Norfolk (Duncan Baker) that, as the hon. Member for Strangford (Jim Shannon) may know, Luke 15:7 states that

“there will be more joy in heaven over one sinner who repents than over ninety-nine…persons who need no repentance.”

I am glad to see my hon. Friend on board and helping to drive the agenda; as he mentioned, it is so important for those lower-paid part-time workers in his constituency and mine. I will come to that in a moment.

There are two groups that future changes could really affect. One, as my hon. Friend the Member for Grantham and Stamford said, is that younger age group. It is unbelievable to me that someone of my age—any person in this room, in fact—will benefit from the employer contribution and tax relief, but someone aged 18, 19 or 20 will not. That seems demonstrably unfair, and it is something that we really need to get a grip on. As the hon. Member for Strangford said, compound interest created by saving early makes a real difference in retirement.

Reflecting on what my hon. Friend the Member for Clwyd South (Simon Baynes) said, the statistics from before and after auto-enrolment kicks in are stark. Before it kicks in, a fifth of people are enrolled; after it kicks in, 17 out of 20 are enrolled. That is a massive change. We need to bring those figures into line, particularly for people who do not go on to university but choose a different path. As my hon. Friend also mentioned, that is a very important factor in the regional disparity of where people pursue their careers. My hon. Friend the Member for Sedgefield (Paul Howell) also made a very good point: how can it be right that those earning £50,000 or £80,000 per year get the tax relief and employer contribution, but others—particularly part-time workers—do not?

I mentioned some examples when I introduced my private Member’s Bill in the House. Women are particularly disadvantaged. Part-time workers often juggle multiple jobs around childcare or other caring responsibilities; it seems to me totally unfair that someone doing two part-time jobs that are above the threshold just does not get the tax relief and employer contribution. If we could reduce the age of auto-enrolment to 18, we would be looking £25,000 in younger workers’ pension pots. That is not going to be transformative in and of itself, but taken together, the changes will be transformative. Getting young people auto-enrolled early is crucial to allowing them to see their savings start to build early, and that is what we need to see.

In addition to what hon. Members have already said, I say to the Minister that we need to see an age reduction, we need the qualifying earnings amount to be reduced, and we need the threshold for earnings to be lowered too.

[Guy Opperman]

I thank my hon. Friend for his speech. I was ill when he introduced his ten-minute rule Bill, but I read his speech in Hansard. He will understand that Ministers are not able to respond to a ten-minute rule Bill in the normal course of events. Cleary, he is in the process of drafting his grave and weighty Bill, but am I led to believe that the intention is not to introduce the extension until the mid-2020s, which was the original intention of the December 2017 automatic enrolment review?

[Mr Holden]

Yes, it is. I think that it needs to be introduced in a phased way, exactly for the reasons that my hon. Friend the Member for North Norfolk and others have mentioned. We need to phase it in over time so that employers can be ready for the increased cost, but also so that we do not burden young employees very quickly with an enormous extra cost.

Phasing in the extension is exactly the right thing to do; that is how auto-enrolment has been such a success so far. If we had hit people by taking a large chunk of their income at one point, people would have withdrawn and auto-enrolment would not have been the success that it is. Instead, we are seeing take-up rates for full-time workers of nearly 90% now. The phased approach is so crucial. I would like to see it on that sort of timetable—phased in throughout the mid-2020s. That is where we need to be to ensure that as many people as possible take it up and can save for the long term.

We have come such a long way over the last few years. We saw the proportion of people saving for their pensions drop to around 45% before auto-enrolment was introduced. It had been between 55% and 45% for the previous 20 years or so. We have seen the proportion rise rapidly due to auto-enrolment; it is now well above 70%. If we can include part-time workers as well, as my hon. Friend the Member for North Norfolk alluded to, we could see the proportion reach 80% or 90%, which is exactly what we want. Some 6,000 employees in North West Durham are already auto-enrolled, with 1,500 employers. We need to see more people auto-enrolled to save for their retirement.

Overall, extending auto-enrolment is probably the strongest levelling-up measure that we could deliver. I want people across the country who work and play their part in our society to see the same response from the Government, with support to pay into their pensions, and support in their old age and retirement.

--- Later in debate ---

[The Parliamentary Under-Secretary of State for Work and Pensions (Guy Opperman)]

It is a pleasure to serve under your chairmanship, Mr Dowd. It is genuinely hard for me to disagree with anything that my hon. Friend the Member for Grantham and Stamford (Gareth Davies), who is an esteemed member of the Treasury Committee, put forward in his outstanding speech. I thank him for bringing this matter forward for debate. Contrary to popular opinion, I am always keen to debate all matters pension. I have done this job for about 1,680 days and continue to make the case for the change that we are driving forward.

I will address in more detail the speech of my hon. Friend the Member for North West Durham (Mr Holden), my constituency neighbour, who is a vast improvement on his predecessor. He helpfully enlightened us with the fact that St Luke is the patron saint of pensions, which I did not know. I will return to his ten-minute rule Bill and private Member’s Bill in due course.

I listened carefully to the speech of the hon. Member for Kilmarnock and Loudoun (Alan Brown). It is a bit like taking an SNP horse to water and trying to make it drink; his speech started so well, with the statement that, by and large, he could not disagree with anything that had been said, but that sentiment disappeared in general criticism of the Government. He will know that the state pension is up by more than 5% in 2021-22. He will know that pension credit take-up is increasing. He will know that winter fuel payments and cold weather payments are well in excess of £2 billion. He will know that there are free eye tests worth £900 million and free bus passes of £1 billion. I could go on to address various other points he raised, but I want to focus primarily on the automatic enrolment issues raised by my hon. Friend the Member for Grantham and Stamford.

I am slightly concerned that the story of today’s debate may be, “Minister admits that in 2018 he, too, was ambushed by a cake—a lemon drizzle cake—while on a ministerial trip to Newtownards, Northern Ireland”. There are many points that the hon. Member for Strangford (Jim Shannon) made that I want to address. It was an honour and privilege to visit his local credit union. I would love to take him up on his kind offer and return to Northern Ireland. Because of covid, so much has happened as regards ministerial visits and progress on so many things. Our country has acquired approximately £400 billion on the nation’s credit card, and there are difficult fiscal choices to make, which have clearly impacted the roll-out of many economic and fiscal policies. Certainly, in 2022, provided I continue to hold this job that I enjoy, I hope to make the case across Northern Ireland. I have not visited Derry/Londonderry; the credit union there is one of the most successful in the UK and it would be a great pleasure to visit it.

The hon. Gentleman mentioned consolidation and said that he had four pensions. It is right to celebrate and laud the fact that probably the second biggest project that the Department for Work and Pensions is rolling out is the pensions dashboard. Auto-enrolment is the first, and I will come to that in more detail. The pensions dashboard will be transformational: he will be able to see his four pensions on his mobile phone, laptop or iPad. Just as people have a savings app or banking app, we will be able to take the tens of thousands of pensions out there, access that information and understand what an individual has. Crucially, so many colleagues raised the issue of awareness, and the dashboard is the key to understanding that.

There are other things that we are doing, and I could talk in detail about our plans—which will come forward this October—for what are called simpler statements, which basically amend the traditional, very complex pension statements that very few people understand, save for independent financial advisers, which some colleagues present have worked as in the past. The man or woman in the street simply does not understand those statements in sufficient detail, so we are putting them into a two-page form that tells people what they have and gives them proper information; it will do what it says on the tin. We in the DWP and, to be fair, people across industry believe strongly that that is the right way forward, in order to enlighten members, so that they have a better understanding of what they have.

The dashboard will come forward in 2023 and simpler statements will come forward in October 2022. There is much that we could say on the issue of financial education. It is a credit to my right hon. Friend the Secretary of State for Levelling Up, Housing and Communities that he introduced financial education in secondary schools, but we need to do more to enhance awareness about all matters of finance—that does not need to be pensions: it is about all matters relating to money and the usage of money—in primary schools, and to encourage wider understanding of that among our children through their education. I would certainly support that.

The hon. Member for Strangford raised the issue of the self-employed, as did other Members. I will make a couple of points on that issue. The first is that there are already plenty of self-employed people who can perfectly properly sign up to a private pension. I am an example. I was a self-employed jockey—I was not very good at all and did not make much money—and then I was a self-employed barrister and helped to run a charity before coming to this place. However, it is much more complicated for those people, because they do not have any of the benefits of automatic enrolment.

There is a way forward, and we are working on a trial with HMRC to explore the opportunities presented through Making Tax Digital. There is a clear solution for how to change the tax system, on which we are working with HMRC and the Money and Pensions Service. It will almost certainly be a drop-down box with an automatic deduction, which will allow people to do what they can presently do on their manual tax return, and it will make self-employed automatic enrolment much easier. It is a work in progress. Today is Australia Day; it is appropriate that we laud the fact that Australia has showed us the way on so much of automatic enrolment. Certainly, the Australians have addressed the question of how to enhance self-employed take-up of automatic enrolment in a variety of ways, and I am looking at that closely through the HMRC trial. I hope to update the House and parliamentary colleagues on that point in the very near future.

Several colleagues raised the point about 8% plus, which I will come to in a second. Let me first deal with the issue of the 2017 automatic enrolment review, which is also largely the subject matter of the work in progress that is my hon. Friend the Member for North West Durham’s ten-minute rule Bill. The simple truth is that when I acquired this job, back in the dim mists of time in June 2017, I was given two primary responsibilities by the late, lamented David Gauke, who was the Secretary of State. The first was, “Get us to 8%”—bear in mind that automatic enrolment was not even at 5% at that stage. It is a massive triumph for this country, the employers, the employees—who quite clearly have not opted out—and government on a cross-party basis that we have got to 8%. The world has not come to an end and drop-out rates are really low, so without a shadow of a doubt, that is a massive success story. However, my hon. Friend the Member for Delyn (Rob Roberts) is totally right that more needs to be done, and I am going to address that point in a second.

The second thing that happened, pretty much as I arrived in the DWP as Minister, was that I received a copy of the 2017 review in the autumn of that year. We took the decision that we would support it without a shadow of a doubt. It was an independent review; we did not have to support it, and Governments often do not support them. However, we then made the decision that the measures should be introduced on a phased basis.

Clearly, events have got in the way—the past four or five years have been somewhat complicated—but the practical truth is that the Government have an unquestioned commitment to bring forward the 2017 review measures: the lower earnings limit and the 22 to 18 threshold. The way in which we do that and the phasing of it is still a matter of ongoing debate within Government.

People above my pay grade have to make decisions on that—it is dependent on other pieces of legislation and other considerations. Clearly, a consultation would have to take place, but in broad terms the timetable would involve primary legislation to introduce the primary measures and enabling powers, secondary legislation and a consultation to follow, and timings thereafter. Certainly, my hon. Friend the Member for North West Durham was seeking confirmation that the measures would be introduced in a phased approach after the next election, in the mid-2020s, and I hope that is helpful for his understanding.

It is not for me to decide what is in Her Majesty the Queen’s speech, either this year or next, but clearly there are a variety of ways in which we can progress such legislation. First, there is a private Member’s Bill. That is not impossible, but it is be complicated for Government business for primary legislation on a large matter, particularly given the timings of this Session. I welcome my hon. Friend’s ten-minute rule Bill, but it comes very late in this Session. Obviously, there will be future private Members’ Bills.

Secondly, we are clearly looking to bid for a third or fourth Session pensions Bill that can take these matters forward as normal Government business. My intention is to bring forward the legislation, subject to all the usual provisos about being a Minister with larger collective responsibility.

[Mr Holden]

In addition to this debate, which was secured by my hon. Friend the Member for Grantham and Stamford (Gareth Davies), and my ten-minute rule Bill, what more could we do to support the Minister in his bids to drive forward this very sensible agenda in Government?

[Guy Opperman]

The fact that there is cross-party support is relevant because, quite rightly—but sometimes wrongly—Oppositions oppose many pieces of legislation. Clearly, this legislation has the support of all political parties. I cannot speak for the one Member of the Green party, but I know that the Liberal Democrats and other smaller parties support the legislation. That is very relevant and needs to be shouted from the rooftops.

This matter has an impact, particularly on low earners, in every single constituency in the country. As my hon. Friend the Member for North West Durham said in his eloquent speech, such measures would be a really good example of levelling up in low-earning communities. Clearly, people above my pay grade—whether the Chancellor, Prime Minister or others—will decide what goes into the Queen’s Speech this coming May, and I wish them all good fortune with that. Some of the clarifications that my hon. Friend made will help, as will the way in which he is trying to bring legislation forward. Airing the matter in the House helps, confirming to all parties that such measures have cross-party support. So much pension policy is so long-term that the impact of pulling a lever is not felt until three to five years later, so it makes a massive difference to have cross-party support.

I will touch briefly on a couple of other points. With regard to longer-term plans to go higher than 8%, I totally agree with my hon. Friend the Member for Delyn that 8% is not enough. Again, subject to the ability to travel in future, I hope to engage with American colleagues to look at their 401(k) and the way they deal with it. Subject to the ability to take those things forward, the next goal after the 2017 review is clearly a discussion and a debate on how much above 8% is enough.

I am wearing my Australia Day tie, which was given to me when I and my hon. Friend the Member for Daventry (Chris Heaton-Harris) triumphantly crushed the Australians in the parliamentary cricket match a few years back. The Australians have got to 12% and are doing so much, particularly in utilising the defined contribution and automatic enrolment to do the things that my hon. Friends the Members for Darlington (Peter Gibson) and for Sedgefield (Paul Howell) mentioned —namely, safely investing those savings in local communities so that individual savers can say, “That is what is happening in my area.”

I can give examples. I have set up two banks, as colleagues will be aware: Atom bank, which I was a founder member of, and the Northumberland Community Bank. Another good example is the Cambridge and Counties Bank, which utilises the pension reserve to loan on asset-backed lending to assist with investment in the Cambridge local area. There are other examples—the Sparkassen in Germany do this all the time—of only lending to local communities in that way. Such examples will proliferate, which is a good thing, because this comes to awareness. Members are then aware of what their savings are invested in and are so much more engaged, and that can apply across the country.

I accept that we need to do more on awareness. The Money and Pensions Service is clearly doing great work, and I support totally what Pension Geeks is doing with Pension Awareness Day, and what Scottish Widows is doing with its pension awareness road trip. The reason I am a supporter of the statements season is that I do not think that pensions awareness or engagement is good enough, quite frankly. We have to have a product or process whereby people are engaged, much as we do in tax or educational results, so that they understand better what they have got at a time when they can really get engaged. Obviously there is a working group on statements season, and it is a matter of discussion with the industry, but we have to do more to create greater engagement.

In my last minute or so I want to try to address some of the final points. Clearly, consolidation is a matter that we are working on, and I can happily give colleagues more on that. My hon. Friend the Member for Grantham and Stamford raised two final points about the nature of savings and what we are saving for. The traditional product has clearly been a pension, but our parents and grandparents would all have had much greater awareness of rainy day savings. We should unquestionably laud and support all the companies that are already running a 1% savings club or working with credit unions and other organisations to ensure that our employers and constituents have the capacity for rainy day money. If that was a problem pre covid, it is a particular problem post covid. There is also a wider policy issue about how we enable products to be developed to ensure that people are saving for deposits, although that is about the wider culture of saving in the longer term.

To finish, I thank the 10 colleagues who came along this morning to make the case for pensions savings and the many who support this policy and are driving it forward. Certainly, we can find very little in my hon. Friend’s speech to disagree with. I thank all colleagues for coming along and making the case and for supporting our reforms. I accept that there is more to be done, but this Government are utterly committed to ensuring that that happens.

Pension Schemes (Conversion of Guaranteed Minimum Pensions) Bill

Debate between Richard Holden and Guy Opperman

2nd reading
Friday 26th November 2021 Commons Chamber

[Mr Richard Holden (North West Durham) (Con)]

I pay tribute to the hon. Member for Rutherglen and Hamilton West (Margaret Ferrier) for bringing this Bill to the House. As she mentioned, it will introduce a well overdue change. As hon. Members have reflected, given the passing of the Equal Pay Act 1970 and the fact that this matter has been highlighted as a major issue since 1990, it is not before time.

The hon. Lady said in her opening speech that the current situation seems wrong. Well, I think it definitely is wrong. I am so glad that she has introduced this legislation, because the subject of pensions is not talked about often enough in this House. The impact that pensions can have on people’s long-term prosperity is immense, especially in old age, and too many constituents in places such as North West Durham really do feel that there is a pensions divide.

Further to what the hon. Lady is doing today, I want to speak more broadly to the Treasury Bench about pensions. The change implemented through this Bill was recommended back in 1990. Several years ago, the auto-enrolment review of 2017 recommended that auto-enrolment be extended to 18 to 21-year-olds, as people are currently auto-enrolled only after the age of 22. That change would be hugely beneficial, particularly to constituents of mine, who start work at 18 at a far higher rate than the national average. Those 45 to 50 years of compound interest on four years of extra auto-enrolment could make an enormous difference to their income in later life.

Auto-enrolment schemes currently kick in only when someone is earning over £6,000 or so a year in a job. Many of my constituents, particularly women, have multiple jobs, and may work only 10 hours a week in them.

[The Parliamentary Under-Secretary of State for Work and Pensions (Guy Opperman)]

I am grateful to my hon. Friend for making that point. I will answer in a bit more detail in my closing remarks, but let me say that I endorse entirely his argument in favour of the 2017 auto-enrolment review, and the fact that expansion of automatic enrolment will unquestionably assist those in low-income areas, including those who have multiple jobs. With respect, it will be a progressive and good thing to do, but I will address the point more in my closing remarks.

[Mr Holden]

I thank the Minister for that intervention.

Some of the changes, particularly the lowering of the earnings threshold, could be introduced in secondary legislation, but primary legislation will be required to extend the auto-enrolment to 18 to 21-year-olds; I should let the Minister know that I have a date for a ten-minute rule Bill in the new year to do just that.

I very much hope that the Government will look at lowering the threshold. Low-paid women with multiple jobs in particular could be missing out on many thousands of pounds going into their pension pots. Low-paid women with multiple jobs in particular are potentially missing out on many thousands of pounds going into their pension pots due to issues around auto-enrolment. It is another inequality in the system that, as the hon. Member for Rutherglen and Hamilton West mentioned, tends to affect women disproportionately.

--- Later in debate ---

[Guy Opperman]

In a whole host of ways, the answer is yes. The state pension, by reason of the triple lock, is now £2,050 higher than it was prior to the introduction of the triple lock in 2010. There is automatic enrolment, and it would be fair for me to give a quick history of that because we have the esteemed former Minister in the Chair. Automatic enrolment was conceived by the Labour Government and the Turner commission. It was introduced by the coalition Government in 2012. Without a shadow of doubt, it has been utterly transformational. For example, 6,000 constituents of my hon. Friend the Member for North West Durham are saving the 8% thanks to the 1,580 employers in his constituency who support that. He made a very telling point about the 2017 automatic enrolment review, and given that he raised it—not for the first time— I will finish this point on automatic enrolment and the importance of this change before I go on to GMPs.

I am proud to say that the success of the provision now means that 10.5 million employees have been automatically enrolled into a workplace pension by more than 1.8 million employers. It was specifically designed by the Labour Government and brought in by various other Governments to help groups who historically have been less likely to save, particularly women, low earners and young people—this goes to the point made by my hon. Friend the Member for Hastings and Rye (Sally-Ann Hart). It has helped many in those groups to begin to save into a pension for the very first time. Workplace pension participation among eligible employees has grown to 88% overall compared with 55% in 2012. The proportion for women and young earners was less than 40% in 2012; it is now above 80%.

There is more that we can do, and we very much hope we will, and we recognise that challenges remain. Our ambition, as my hon. Friend the Member for North West Durham set out in relation to the 2017 review of automatic enrolment, is to enable people to save more and start saving earlier. Abolishing the lower earnings limit for contributions and reducing the age for being automatically enrolled to 18 in the mid-2020s will benefit younger people, the low-paid and part-time workers as they will receive contributions from their employer from the very first pound earned. I want to stress that as a Government, we remain utterly committed to those measures. I have been clear that the implementation will be subject to the learnings that take place from the 2018 and 2019 contribution increases. That is significant and it is important that that is done.

[Mr Holden]

The Minister is being generous with his time and in his remarks about me too. The Government have said that they will bring forward legislation to make sure that that happens. Does he have a timetable for that?

[Guy Opperman]

My hon. Friend tempts me to make commitments that I am unable to make. The Government have said that they will introduce the measure by the mid-2020s. It requires primary legislation and there is no doubt that there have been issues in its introduction because of the 2018 and 2019 increases. The impact of Brexit and the pandemic also clearly makes it more complicated to introduce such changes for employers.

It is still several years until the next general election, perhaps as much as two and a half years. My hon. Friend will be aware that the Government have to go through various processes to bring forward future legislation, including a Queen’s Speech setting out the Bills that will be brought forward in the third and fourth Sessions. He makes an eloquent point, however, as he always does—I assure the House that he is a massive improvement on the previous occupant of North West Durham, my neighbouring constituency—which I am certain will be heard not just on the Treasury Bench by the assiduous Whip, who is noting down his every word, but all the way in the Treasury, where I know he is making the case.

The practical reality is that the Bill of the hon. Member for Rutherglen and Hamilton West proposes a technical change. I will try to set out the position, which genuinely dates back to the 1970s and the last days of the Callaghan Government. Guaranteed minimum pensions were introduced to help employees to save affordably for an income in retirement, which is clearly a great concept. The state pension used to be made up of two parts: the flat rate basic state pension and the earnings-related additional state pension.

The flat rate state pension was simply funded through national insurance and paid at the full rate to those with sufficient qualifying years of NI contributions or pro rata for those with a partial record. The earnings-related additional state pension, also known as the state second pension or state earnings-related pension scheme, was linked to a person’s earnings. National insurance contributions were paid by an employee and their employer and gave the employee the right to an additional earnings-related state pension.

Many employers, however, were already offering their workers company pension schemes, so many people were building up an occupational pension and an earnings-related additional state pension. That was rightly thought to be overly onerous and potentially unaffordable for employers and employees. In effect, it was seen as a double provision and immensely overcomplicated.

To clarify the situation, the Callaghan Government introduced the system of contracting out and the provision of guaranteed minimum pensions in 1978. At that time, although I realise it may be hard to believe after hearing the description in the opening speech, that was considered a simplification. How they work is not simple, but I will attempt to explain it to the House to put it on the record, particularly for usage in Committee.

Employers who sponsored a salary related scheme were allowed to contract out their occupational pension schemes from the earnings-related additional state pension. Because employees in contracted-out employment were taken out of the additional state pension, the employer and pension scheme members paid lower national insurance contributions. Salary related contracted-out occupational pension schemes were required to take on the responsibility for paying their members the GMP as part of the occupational pension from the scheme.

The intention was that, on reaching retirement age, the amount of guaranteed minimum pension that the individual member would have built up would be broadly equivalent in value to the additional state pension that they would have received. However, the guaranteed minimum pension was literally that—a minimum.

Most employees would also have built up an occupational pension, but the scheme pension could not be lower than the guaranteed minimum. In addition, widows, widowers and surviving civil partners of members with a GMP received valuable survivor benefit rights—this goes to the point raised by several colleagues about ongoing survivor rights. Some of the technical details are complicated, but the crux of the idea is simple: rather than paying additional NI to the state to build up additional state pension, people built up a similar amount of occupational pension through a workplace pension scheme. The workplace pension scheme ultimately, of course, became automatic enrolment, as the Deputy Speaker, the right hon. Member for Doncaster Central (Dame Rosie Winterton), knows. The system ran in this way from 1978 to 1997.

Although the basic idea was simple, the technical details were extremely complex. I will not take the House through all the complexities, but, for example, GMPs can be subject to both revaluation and indexation. They are revalued before coming into payment to ensure they are protected against inflation, but once in payment any GMP accrued between 1988 and 1997 must also be protected against inflation, through indexation. Although revaluation and indexation are both intended to protect against the effects of inflation, the rates of revaluation and indexation are not the same, and, as the hon. Member for Rutherglen and Hamilton West set out, the reality is that men and women with the same employment history could receive different GMPs. That is what we seek to address.

So the GMPs were abolished in 1997. The whole system of contracting out was finally ended in 2016, with the introduction by the Conservative Government of the new state pension. But of course many of the people who worked between 1978 and 1997 still have a right to a GMP. We are talking about a significant number of our constituents—this is a very large figure. Some will already be retired, but some are still working. There have been a variety of court cases on this, which I am not going to go through in copious detail, but the first key one was something that has affected this House and all matters of state pensions dramatically since 1990. I refer to the European Court of Justice ruling in the case of Barber. It ruled that pensions were deferred pay and, as such, must be treated and paid equally to men and women. The Barber judgment was not specifically about GMPs but it meant that the impact of the differing rules for men and women had to be corrected. When we have come to a decision, as we have in his House on multiple occasions, about the state pension age correction exercise and the increases from 60 to 65 and 66, it can be traced back to the Barber judgment and the equality legislation that followed thereafter.

The House has already heard that the ECJ subsequently made the Allonby judgment, which enables schemes to use a scenario to work out whether someone has lost out or not, rather than being dependent on having a member of the opposite sex in the scheme to compare against. The Government are clear that in light of the Barber judgment, and subsequent decisions, including the Allonby judgment, occupational pension schemes need to equalise pensions, taking account of the effect of GMPs. Subsequently, the UK passed the Equality Act 2010, which also requires equal treatment between men and women for all pension accrued from the date of the Barber judgment. As has been said on several occasions, the Department for Work and Pensions has attempted, under successive Governments, to try to fix this problem without primary legislation. It is totally right that that there was a consultation, following which guidance was published. However, as the hon. Lady rightly set out in opening, it is simply not the case that all schemes can proceed on the basis of the guidance that has been prepared. The reality therefore is that schemes need to equalise the amount of pension their members receive to correct for the problems caused by the complex rules and the differences in retirement income these rules produce. This process is known as “equalisation”. How an occupational pension scheme corrects members’ pensions is up to the individual scheme, provided it is done properly. There are various methods of equalising that occupational pension schemes can use. However, the process can be very complicated and is specific to the individual scheme, and there are a lot of schemes. Some schemes have already felt very nervous and they have been concerned not just by the costs and the complexity, but by the judicial process that could follow and the perceived uncertainty about exactly how to undertake the process and be sure that they have met their legal obligations. As a result, as she set out, many schemes have still not equalised for the effects of GMPs.

What the Bill does is key. It makes it clear how the conversion legislation applies to people who are survivors, as well as to the earners. It also gives the Government the ability to set out in regulations the details of how survivor benefits will work for surviving spouses or civil partners of people with guaranteed minimum pensions. As my hon. Friend the Member for Berwickshire, Roxburgh and Selkirk (John Lamont)—who represents a constituency across the Border from me that includes Jedburgh and Galashiels—said, it is a piece of legislation that applies throughout the United Kingdom, and clause 2 includes specific regulations in relation to Northern Ireland that were requested by the Stormont Government.

Clauses 1 and 2 both clearly state that converted schemes must provide survivor benefits. One of the key purposes of the Bill is to make it easier for pension schemes to know the right amount that survivor benefit schemes using the conversion legislation must pay. The Bill also gives the Government the ability to set out in regulations details about who must consent to the conversion of guaranteed minimum benefits. Finally, the Bill removes the requirement to notify HMRC once a scheme has converted its guaranteed minimum pensions.

I opened by saying that debates on private Members’ Bills can be significant and serious days, and I genuinely appreciate the contributions that we have heard from a variety of colleagues. I thank my hon. Friend the Member for Stourbridge (Suzanne Webb) for her enthusiastic but pithy support, and my hon. Friend the Member for Hastings and Rye for an eloquent speech that set out in great detail her grasp of the issue. As always, my hon. Friend the Member for North West Durham is never backwards in coming forward on so many different issues, including his passion for automatic enrolment.

My hon. Friend the Member for Dover (Mrs Elphicke) raised a number of points and spoke with great experience. I am not of the view that this very specific Bill on very specific points would address the individual problems that she raised regarding her constituent, but I am happy for her to write to me about the issue and I will give her a detailed reply to confirm whether it is within the scope of the Bill. I suspect that it is not, but I want to be absolutely sure when I reply to her, which I will do prior to our entering Committee so that the House can be clear.

I cannot stress what a wonderful campaigner and asset to the House my hon. Friend the Member for Gedling is. He has made a tremendous impact through the work that he has done. It is great to see him here, and an honour and privilege to answer some of his points.

The hon. Member for Stalybridge and Hyde and I have clashed before—I think that this is our fourth Bill—but it is great that he and the House are in full support of this one.

The Department for Work and Pensions is attempting to make pensions safer, better and greener. We are doing a huge amount, including: the Pension Schemes Act 2021, with collective defined contributions, which will provide the third way of pensions; the pensions dashboard, which will be like a banking app that brings our pensions to our mobile phones, iPads and laptops, so that we have total access and knowledge of what we have; the reforms and support of defined benefit; action to prevent the investment scams that we know are out there and are trying to stop; the huge work that we are doing to develop on the environmental, social, and governance reforms that we introduced after the 2017 elections; and putting pensions at the heart of climate change by building on the work of COP26, and being the first country in the world to introduce climate-related financial disclosure, giving consumers—all our constituents —full understanding of what is being invested in on their behalf through pensions.

With respect, although this is a smaller Bill than the 125 clauses of the Pension Schemes Bill that we took through the House earlier this year, it affects a significant number of our constituents and I am genuinely keen to progress it. I can therefore confirm that it is with pleasure that I give the Government’s backing to the hon. Member for Rutherglen and Hamilton West, her Bill and the work that she has done. Excellent points have been made in debate that I will discuss in more detail in Committee. If I have missed any particular points, I will endeavour to write to colleagues in the intervening period. The Government support the Bill. We wish it well in Committee. I want to take the time to thank the hon. Lady, because it is not easy dealing with a highly technical and difficult Bill such as this. She should be very proud of the way she ensured that she got cross-party support and then introduced the Bill and outlined its provisions with great eloquence. I thank her for all the work that she has done.