Keir Starmer has been accused of putting British workers last after it emerged that employers who hire Indian workers are to be given a major tax break under Labour’s new trade deal. The Mail has the story.
Sir Keir Starmer faced a furious backlash today after it emerged he is handing Indian workers in the UK and their employers a major tax exemption to secure a trade deal.
Delhi revealed that the terms mean Indian nationals on temporary visas and their firms will not have to pay ‘social security contributions’ for three years.
The agreement, which has been three years in the making, will see the UK lower tariffs on clothes, shoes and food from the subcontinent, in exchange for reciprocal cuts for products including whisky and cars.
But the tax break – which was omitted from the UK release on the pact – immediately provoked anger.
It comes as UK firms have been hit with a rise in national insurance contributions (NICS) that many warn will force them to slash jobs or even shut down.
Tory frontbencher Robert Jenrick said: “British workers come last in Starmer’s Britain.”
Last month the rate of employer NICS went up by 1.2 percentage points from 13.8% to 15%, despite calls for a U-turn at a time of poor economic growth.
The tax break was not mentioned by Downing Street in its announcement today. But a statement by the Indian Government said it would “lead to significant financial gains for the Indian service providers and enhance their competitiveness in the UK market that would create new job opportunities as well as benefit large number of Indians working in the UK”.
Questions also remain over what agreement has been made on other visas for Indian nationals wanting to study or work in the UK.
That was a key sticking point that held up talks under the previous Conservative Government and Labour.
Sir Keir said there were “tough negotiations on both sides” over the issue of visas.
He also promised the trade deal with India included “the best set of arrangements” to safeguard key British industrial sectors.
Jenrick points out that the trade deal means Indian workers in the UK for less than three years will not pay National Insurance – at a time when Starmer has just hiked NI for everyone else. This will only incentivise employers to hire from India rather than the UK, despite public concerns over immigration and Starmer pledging to bring numbers down.
Worth reading in full.
Conservative leader Kemi Badenoch has branded the deal “two-tier taxes from two-tier Keir”. She tweeted:
This is two-tier taxes from two-tier Keir. I refused to sign this deal because: 1) Tax refunds for Indians not available to us; 2) Visa requests too high; 3) Ceramics and aluminium industries would be screwed. When Labour negotiates Britain loses.
The Business Secretary Jonathan Reynolds defended the agreement, saying the exemptions only apply to a “specific” type of worker, not all Indian workers in the UK. The Telegraph has more.
National Insurance exemptions under the UK-India free trade agreement will only apply to a “specific” type of worker, the Business Secretary has said.
Jonathan Reynolds said some people were “getting a little bit carried away as to what this actually means”, following the announcement of the deal.
Mr Reynolds said: “We have agreed a double contributions convention with India at three years.
“Now this, just to be clear, is something we have with a great deal of countries already.
“We have 17 of these agreements with the EU, with South Korea, with the US and a whole range of partners, and what it is about is making sure when people are inter-company transfers between the UK and India – so for our people in India and Indian people in the UK – they don’t simultaneously pay into both social security systems.
“So I think some people are getting a little bit carried away as to what this actually means, but it means that when our people are moved by a company to India they will be paying into the UK system and not the Indian system, and when Indian people are temporarily in the UK they’ll be paying into their system and not to ours.
“But it’s very specific as to who this applies to and obviously [if] people were in the UK they would still be paying income tax, they would still be paying, for instance, the health surcharge and they wouldn’t be eligible for benefits from the national insurance system.”
The agreement does not apply to all Indian workers in the UK.
Conservative Shadow Business Minister Dame Harriett Baldwin said the trade deal is “subsidising Indian labour while undercutting British workers”.
She told the Commons: “This deal is indeed a landmark moment for the UK in terms of its global trading relationships, and it is the largest trade deal secured by this country, and I was therefore shocked that the minister didn’t acknowledge that progression of this deal was only possible thanks to our Brexit freedoms.”
Speaking about the change to national insurance provision for Indian workers coming to Britain and British workers in India, she said: “A double contribution convention will come at a significant cost to the British taxpayer and to British businesses.
“It means workers who have entered into the UK under this convention are eligible to only pay national insurance contributions in their home country, in this case, India.”
Dame Harriett also said: “Can the Minister outline what the cost is of this agreement on the Treasury? How many British nationals does the Government anticipate making use of these reciprocal rights in India, because I fear we have gone from ‘two-tier Keir’ to ‘two-tier taxes Keir’ for British workers?
“This Government is literally putting up taxes for British workers, but cutting them for Indian workers.”
She concluded: “This deal looks like it’s subsidising Indian labour while undercutting British workers. Can the Government back our domestic market by scrapping its job tax?”
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