Reform UK's Treasury spokesman, Robert Jenrick, has announced the party's intention to partially undo the £25bn increase in employer National Insurance Contributions (NICs) introduced by Rachel Reeves in her first Budget. This proposed tax cut would exclusively benefit businesses that employ British workers, with a new levy on companies hiring migrant workers intended to fund the reversal.
Under the Labour Party's initial Budget, the salary threshold for employer NICs was lowered to £5,000, and the tax rate was raised from 13.8 per cent to 15 per cent, a move estimated to generate £25bn. Reform UK's plan involves reversing the increase in the tax rate back to 13.8 per cent for British employees, but crucially, it would not reinstate the higher salary threshold for NICs. Employers hiring foreign nationals would still face the 15 per cent NICs rate, along with a new tapered levy based on the number of migrant workers employed.
Mr Jenrick stated that the policy is designed to put "British workers first, migrant workers second," arguing that the current system of allowing in "millions of low-wage migrants" while many Britons are on benefits has "failed catastrophically." He suggested that the NICs cut for British workers would be funded by the new tax on foreign workers and a reduction in welfare spending, as more Britons would be encouraged into employment. Furthermore, he indicated that foreign workers who become unemployed should leave the country.
While Reform UK has outlined these proposals, a full assessment of the policy's costs has not been provided, with Mr Jenrick citing the potential for up to three years until the next scheduled General Election. This announcement follows other recent economic policy proposals from Reform, including a plan to raise the VAT registration threshold from £90,000 to £150,000 to assist small businesses, a measure that has also drawn scrutiny regarding its potential economic impact.
For UK businesses, particularly those reliant on a diverse workforce, this policy could introduce significant operational complexities and potentially higher labour costs. Companies employing a mix of British and foreign workers would need to navigate different NICs rates and the proposed new levy, which could affect hiring decisions and overall profitability. The Bank of England closely monitors labour market dynamics and inflation, and any policy impacting employment costs could have broader economic implications for the UK.