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I hope that Members will forgive me for not going into as much detail as Ian Blackford. My comments will be considerably shorter, which will give people some comfort tonight.
If we are able to have the financial resources in the future to spend on things our constituents rightly take for granted, such as our NHS and our children’s education, one challenge for the Government is to rebalance the economy away from an over-reliance on the state. Where it is possible and appropriate to do so, the individual and their employers should take more responsibility for their future financial security. The national living wage, which was introduced by this Government—and at a far higher rate than that proposed by the Labour party—has helped to shift the burden back on to employers and away from the state, which had found itself topping up wages through in-work benefits. Many in-work benefits did nothing more than subsidise hugely wealthy businesses at the expense of the British taxpayer. With the introduction of the national living wage, employers will now be required to take more responsibility for paying their employees properly.
I see automatic enrolment in a pension scheme in the same way as I see the national living wage. It is a way of helping working people to save for their future and a dignified, funded retirement. Auto-enrolment requires employers to pay into a pension scheme along with their employees, and the Government do their bit by giving tax relief on employee contributions. I expected employers to be less than enthusiastic about auto-enrolment and the additional costs it would mean for their business, but if anything I have found that businesses in my Southampton, Itchen constituency are very supportive. In fact, one business even suggested making auto-enrolment compulsory to ensure that its staff are saving for their future and not choosing to opt out, as up to 50% of them currently do.
As with all legislation, it is sensible to review how auto-enrolment operates in practice and to improve it where possible. The Bill does that. It contains particular provisions on the role of master trusts and those who operate them. Master trusts are the favoured financial product for investing employees’ pension contributions for the majority of small businesses in the UK. Many of them, including the National Employment Savings Trust, operate within the Pensions Regulator’s guidelines and have the quality assurance mark. However, there is widespread agreement that regulation for trust-based pension schemes in general is inadequate. The Bill aims to address that and, in so doing, give comfort to savers and protect their retirement savings.
There seems little in the Bill that anyone can disagree with, although some Members have said that it does not go far enough. We insist that our taxi drivers pass a fit and proper person test so that they can carry passengers, but until now there has been no such requirement on all those who operate master trusts and are potentially responsible for a worker’s entire retirement savings. The Bill will ensure that those responsible for running master trusts have to demonstrate their suitability to do so—not before time, in my humble opinion.
The Bill also requires schemes to prove their financial sustainability—something that most investors would assume was already a requirement—and will give the regulator new powers to supervise master trusts and intervene if a scheme is at risk of falling below the required standards. With more than 10 million workers estimated to be saving in auto-enrolment schemes by 2018 and more than £17 billion of extra workplace pension saving per year by 2020, it is imperative that master trusts, which will be responsible for much of that investment, are more tightly regulated than is currently the case.
Once the Bill is passed, a consultation process will begin. When he responds to the debate, will the Minister inform the House of any specific regulations that will be presented in the consultation document? How frequently will those regulations be reviewed by the Secretary of State?