NOTICE: Now in effect - Your paper counterpart is no longer valid
The government have announced they are abolishing the paper counterpart to the driving licence. As of the 8th June 2015, the paper section will become invalid and should be destroyed. https://www.gov.uk/government/news/driving-licence-changes
Please note, if you do not have the modern driving licence (plastic photocard and paper counterpart), i.e you have a licence issued to you prior to 1998, then do not destroy that one as that licence will remain valid.
Currently, the paper counterpart holds any endorsements you have for such offences as speeding, etc. This information maybe required by your employer or by a hire car company amongst others. After 8th June 2015, there will be a new system for these people to check your driving record called Share My Driving Record that will provide the minimum information required from the driver record to those who have a right to see it. The police and other authorities will have immediate access to your record as they currently do anyway, through a roadside PNC check.
You do not need to take any other action. Upon renewing your licence (example when changing address), you will only receive the plastic card section in future. The paper counterpart should be securely destroyed AFTER 8th June 2015, as it will no longer be valid anyway but contains personal information and you should avoid just binning it.
The government are taking these steps as part of the modernisation of Britains motoring bureaucracy, such as the previous abolition of the Tax Disc (see post http://www.hotukdeals.com/misc/car-tax-disc-changes-oct-1st-2014-aware-ready-1967654)
I will update this post as more information comes online and will try to answer questions, though please, follow the link and read the dot gov website info first to avoid asking easily answered by reading the article type questions. Thanks