Keir Starmer is facing criticism over a "two-tier tax system" following the revelation that Indian workers will be exempt from paying National Insurance (NI) under the new trade deal with India. The agreement, aimed at strengthening economic ties between the UK and India, has sparked debate and controversy, particularly in light of recent NI hikes for British workers and companies.
Under the terms of the "landmark" trade deal, Indian workers migrating to Britain and UK citizens moving to India will not be required to pay NI contributions in both countries for the first three years. The Indian government views this exemption as a significant financial benefit for Indian firms and a way to enhance their competitiveness in the UK market, potentially creating new job opportunities for Indians working in the UK. Ministers have stated that the agreement is projected to add £4.8 billion a year to the UK economy by 2040, with reduced levies on products like Scotch whisky and cars.
Critics argue that this tax break creates an uneven playing field, potentially incentivizing employers to hire Indian workers over British workers, especially when UK firms are already facing increased NI contributions. Conservative leader Kemi Badenoch has called the deal "two-tier taxes from two-tier Keir". Robert Jenrick, a Tory frontbencher, said that "British workers come last in Starmer's Britain".
The agreement has been in the works for three years and involves the UK lowering tariffs on goods from the subcontinent, such as clothes, shoes, and food, in exchange for reciprocal cuts for British products like whisky and cars. The UK already has similar agreements with 17 other countries, including the US, EU, and Japan.
The Labour Party has defended the trade deal, emphasizing the overall economic benefits and the importance of fostering strong trade relationships with India. They argue that the agreement includes safeguards for key British industrial sectors. According to The Hindu, the agreement will avoid double contribution to social security funds by Indian professionals working for a limited period in Britain. It was a long-standing demand of Indian businesses operating in Britain to cut down on the additional cost burden associated with bringing in skilled Indian professionals on a short-term basis.
