Reform UK Proposes Foreign Worker Tax to Fund National Insurance Cut for British Staff

Reform UK plans to impose a new tax on businesses that hire foreign workers, with the stated objective of reducing the National Insurance (NI) burden on employers for their British staff, should the party win the next general election. This move, according to Reform UK, would compel companies to “put British workers first, migrant workers second” and engage unemployed British nationals.

The proposed levy would be graduated, specifically targeting lower-paid positions. Full details are expected to follow a consultation period with businesses. Robert Jenrick, Reform UK’s Treasury spokesman, claimed the policy would “end the cheap migrant labour racket once and for all.”

If elected, Reform UK intends to decrease the employer NI rate from 15% to 13.8%, reversing an increase introduced by the Labour government. This reduction, however, would apply exclusively to British nationals, with foreign staff remaining subject to the higher rate. The party estimates this policy would cost the Treasury £11.2bn.

Jenrick indicated that the new levy on foreign workers would decrease as salaries rise, aiming to curb the “easy lever of cheap foreign labour” without penalising firms hiring highly skilled individuals. He suggested a charge of £3,750 for companies employing full-time foreign workers at the minimum wage, which currently stands at an annual salary of £24,784 for those over 21. This could fall to £1,500 for workers earning £50,000 annually, and further to £500 for those earning £100,000.

While Jenrick declined to specify exact rates, citing the potential three-year gap until the next election, Reform UK has previously pledged to abolish the right for migrants to permanently settle in the UK after five years. This would necessitate applications for British citizenship or reapplication for temporary work visas with increased salary thresholds. Jenrick acknowledged that this would lead to a “rapidly shrinking” tax base for the proposed levy, but argued that the reduced tax revenue would be offset by savings in benefits for unemployed British nationals who would secure jobs.

The policy is anticipated to significantly impact sectors such as retail, hospitality, and manufacturing, which frequently employ foreign workers. Private companies employing carers, unlike public sector entities such as the NHS, would also be affected, as they were not shielded from last year’s National Insurance increase. Jenrick suggested these firms should raise salaries to attract British workers, asserting that foreign nationals are currently undertaking “many jobs that the Brits should be doing.”

The announcement precedes a crucial by-election in Makerfield on Thursday, where Reform UK aims to counter a challenge from Restore Britain. Labour criticised Reform UK’s “latest half-baked plan” as one that would “leave British businesses and British people worse off,” threatening to “hike bills and leave working families paying the price.”