Don't exempt Indian workers from NI, exempt everyone

Yahoo

07-05-2025

Britain owes Indian Prime Minister Narendra Modi a debt of gratitude.
Not only has he signed a deal expected to grow the UK economy by £5 billion a year, one which will increase trade between our two nations by 40 per cent. Tariffs on British car exports will be slashed by 90 per cent. UK food and drink will not pay any tariffs.
Not only has this deal strengthened the case for free trade in an increasingly protectionist world, a timely reminder that removing barriers to trade is one of the most powerful drivers of prosperity, which allows countries to specialise, brings prices down for consumers, and encourages mechanisation and innovation.
But this deal has exposed the great national insurance lie. Starmer has agreed to exempt Indian workers seconded to the UK from paying NICs for up to three years. The move has prompted accusations of a 'two-tier tax system' from 'two-tier Keir' and fears Britain will see an influx of Indian workers it cannot possibly sustain.
Delhi has pointed out those workers won't be receiving any of the benefits NI is supposed to pay for, including pensions and welfare payments. What Delhi doesn't appear to realise is that British workers don't receive those benefits either, at least not in the way they are told.
Since NI was introduced it has been framed as a contributory system. You work, you pay in and, at the end, can access the pot of money you've accumulated for retirement. This is hokum.
Though politicians are loathe to admit it, NI isn't a saving scheme, it's a glorified second income tax. The money paid in by workers today funds the pensions of retirees today. Contributions aren't hypothecated, they're spent by profligate governments. And if you think the situation now, where £1 in every £8 of public spending is on the triple lock, is unsustainable, just wait until our 'worker: grey' ratio worsens.
The NI agreement is being defended on grounds it amounts to double taxation, the exact same argument Rishi Sunak made last year when he pledged to set Britain on a path towards abolishing NI. At the time, Labour behaved as though such a move was the height of fiscal recklessness. Darren Jones, then shadow chief secretary to the Treasury, sniffed: 'Just like Liz Truss, you have so far refused to set out how you are going to pay for this latest shake of the magic money tree.'
Who knew this Labour government would have such scruples about double taxation? Will they now change the levies on dividends, paid out by companies already subject to 25 per cent corporation tax? Or on the interest on savings which exceed the paltry allowance? Or on inheritance tax, the most egregious and widely despised form of double taxation?
So my thanks to India, for giving Britain a post-Brexit boost and exposing our rotten, dishonest tax system. How superb that it is former Remainer-in-chief Keir Starmer who is seizing the great opportunities provided by our departure from the EU.
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