Pensions (Extension of Automatic Enrolment)

This Bill on the expansion of auto-enrolment is about helping people to entrench their ambition for the future, and about protecting them in retirement. It is about people’s ambition to look after themselves, their families and their communities—the towns and villages they live in. In North West Durham, that includes communities from Consett to Crook, and from Lanehead to Langley Park. It means an extension of the transformation that we have seen with auto-enrolment over the past few years—an extension that will be as big as the share ownership changes of the 1980s and right to buy under the then Conservative Administration, enabling people to look after themselves and provide for their families into the future. At the moment, three quarters of those aged over 22 are automatically enrolled into pension schemes and, for every 50p, £1 is saved. Yet for those under the age of 22, the figure is only 20%. The Bill will make a massive difference to the lives of those young workers.

For part-time workers, auto-enrolment stands at below 60%, compared with almost 90% of workers in full-time jobs. If we assume that a move from the age of 22 to 18 will bring about a similar take-up, the Bill will see roughly an extra third of the part-time workforce auto-enrolled, which is an increase of 50% on present numbers. That would mean that millions of people—mostly women, those from ethnic minority communities, and those who are socially disadvantaged—would be brought into lifetime savings for their futures. The Bill seeks to make a difference to the lives of those people.

Analysis by the think-tank Onward shows exactly where such people are located. They are in places such as North West Durham, Workington in Cumbria, Hyndburn in Lancashire and Mansfield in Nottinghamshire—the parts of the red wall that the Conservative party won at the last general election—as well as in large parts of the south-west, the midlands, Scotland, north Wales and the north-east. They are from areas of the country that are seeking the broad transformative change that this Conservative Government are seeking to achieve.

Let me give a couple of examples. First, the Bill would mean that a full-time worker on the national living wage would gain almost an extra £100,000 over their lifetime—a 60% increase on today. That is not money that goes out all in one block, but small savings over time when the change has been introduced after the next general election; it is about an incremental change to make real differences to people’s lives.

The average younger worker aged between 18 and 22 who is working full-time on the living wage would pay in just a few hundred pounds a year—literally a few pounds a week—but with 50 years of compound interest, £1,000 paid in over three years could mean £25,000 to £30,000 added to their pension pot at the end of their life. That is a huge difference.

There is one example that really astounds me. People who earn £9,000 from two separate jobs—who may be working 12 to 18 hours a week, juggling their jobs around childcare or caring responsibilities—do not currently get the benefits of auto-enrolment at all. Under this legislation, somebody in that position would see their pension savings almost triple to up to £300,000 over a lifetime. That might mean that they could give their children a deposit and help themselves out in retirement. It could give them that comfort, the ability to look after younger family members in later life, and security in retirement and old age, so that they are not reliant on the state, but self-reliant. Those are real examples from people I have met in my constituency, and our party should be doing everything possible to help those people with their long-term savings.

The Government’s programme of auto-enrolment expansion has been fantastic. It is not hyperbolic to say that it is one of the best changes the country has seen over the last 10 years. With all the evidence of the huge positive impact it can have, it is a no-brainer that we now need to extend auto-enrolment to those aged 18 and above. It is outrageous that the legislation currently says to graduates, “As soon as you graduate, you will be auto-enrolled,” but to kids in my constituency, 70% of whom leave school aged 18 and go into work, “You aren’t auto-enrolled until you’re 22 years old.” It is a scandal that we need to deal with. The more that young people save and the sooner they save, the more they will get into a routine of saving, and the more they will be providing for themselves and their security in retirement.

This is a serious piece of legislation that could make a serious change. It is about bringing people security in their old age, at minimal cost to them when they are younger. It is about engineering a revolution for working-class people who are undertaking apprenticeships, among other things. The changes were initially thought of back in the late ’70s and were talked about again in the late 1990s, but it is only now that they are being pushed for in this private Member’s Bill, which would mean a real expansion of auto-enrolment to everybody, so that everybody has their own pension in addition to their state pension in retirement and has that comfort in old age.

We must table legislation now so that businesses can prepare for the future. There is no better way to help low-paid workers in constituencies like mine who have gone through the pandemic, sometimes with great difficulty, such as those in the retail sector and the care sector. They are the ones who will directly benefit from this legislation.

I must be clear that this policy will have no fiscal impact before the next general election; it will just create the primary legislation necessary for the Bill’s implementation, without tying the hands of future Ministers. It leaves the details of secondary legislation for the future Government to stipulate and ultimately implement. The aim is not to tie anyone’s hands, but to have legislation that is ready to go. It is about giving a signal to business, and a signal to society and working people that we are on their side.

This legislation will transform the lives of the millions of working people who are often not in great jobs but in low-paid work, and who are the backbone of our country. Votes were lent to us at the last general election, and we have to deliver for those people. Alongside changes such as those to Solvency II, the Bill could help to put cash into communities such as North West Durham and help to provide the extra private sector money to deliver the levelling up we need, because it cannot all be delivered through the Government and taxpayers’ cash. We need to think creatively and constructively to deliver long-term investment outside of metropolitan London. This Bill seems like one of the clearest and easiest ways to do so, and to benefit the working people of the country. I commend the Bill to the House.

That Mr Richard Holden, Robbie Moore, Shaun Bailey, Nicola Richards, Miriam Cates, Simon Jupp, Mark Eastwood, Anthony Browne, Aaron Bell, Jonathan Gullis and Sir Gavin Williamson present the Bill.

Mr Richard Holden accordingly presented the Bill.