Reform UK Proposes New Levy on Foreign Workers to Fund British National Insurance Cut

Reform UK intends to introduce a new levy on companies hiring foreign workers if it secures victory in the next general election. This proposed tax would offset a reduction in National Insurance (NI) paid by employers for their British employees.

Targeting 'Cheap Migrant Labour'

Robert Jenrick, Reform's Treasury spokesman, stated the policy aims to end "the cheap migrant labour racket once and for all." Under the plan, British employees would be exempt from last year's NI contribution increase for employers, while the higher rate would remain for foreign staff. Jenrick estimated the tax cut for British employees would cost £11.2 billion, which he is "very confident" could be covered by the new levy on foreign workers.

The proposed levy would be graduated, with higher charges for lower-paid positions. Jenrick suggested an annual charge of £3,750 for full-time foreign workers earning the minimum wage (£24,784 for those over 21), reducing to £1,500 for those earning £50,000, and £500 for those on £100,000. He declined to specify full rates, citing the timeframe before the next election.

Implications and Broader Policies

Jenrick acknowledged the tax base for the levy would "rapidly shrink" due to Reform's existing pledge to abolish the right of migrants to permanent UK settlement after five years. However, he contended that savings from reduced benefits for unemployed British nationals, now in jobs, would compensate for the diminishing tax revenue.

Sectors such as retail, hospitality, manufacturing, and private care companies are expected to face the most significant impact. These firms, unlike public sector employers such as the NHS, were not shielded from last year's NI rise. Jenrick indicated these businesses should increase salaries to attract British workers, claiming foreign nationals were performing "many doing jobs that the Brits should be doing."

This announcement precedes a crucial by-election in Makerfield. Reform UK leader Nigel Farage recently stated the party also seeks to ban foreign nationals from social housing and previously pledged a VAT cut for smaller businesses. Conservative shadow chancellor Sir Mel Stride criticised Reform, accusing the party of "throwing out a litany of policies in the hope something sticks" and running a "reckless and expensive" campaign in Makerfield.