Reform UK Proposes New Tax on Foreign Workers to Boost British Employment

Reform pledges new tax on hiring – Reform UK, the UK political party led by Nigel Farage, has unveiled a proposal to implement a tax on companies that hire foreign workers. The policy, outlined as part of the party’s manifesto ahead of the upcoming general election, aims to reduce the National Insurance (NI) burden on British employees by shifting costs onto employers who recruit international labor. This move is intended to incentivize firms to prioritize domestic workers over migrant staff, particularly in sectors where unemployment rates remain high among UK nationals.

The party’s Treasury spokesman, Robert Jenrick, emphasized that the tax would target lower-paid jobs, with a graduated structure designed to align with wage levels. He argued that the policy would dismantle the “cheap migrant labour racket” by making it more costly for businesses to rely on foreign workers for low-skilled roles. Jenrick highlighted that the tax would exempt British employees from the recent NI contribution increase, while maintaining higher rates for foreign staff. This, he claimed, would create a financial incentive for companies to fill positions with local workers instead of relying on overseas labor.

Graduated Levy Structure and Cost Estimates

According to Jenrick, the proposed tax would be calculated based on the salary of foreign employees. For instance, firms employing full-time foreign workers at the minimum wage would face an annual levy of £3,750. This amount would decrease as salaries rise, with workers earning £50,000 annually subject to a lower rate of £1,500 and those earning £100,000 facing just £500. The gradual reduction, he explained, ensures the policy remains fair while still encouraging employers to hire British workers.

Jenrick also noted that the tax cut for British employees is estimated to cost the Treasury £11.2 billion. However, he confidently asserted that this expense would be offset by the revenue generated from the new levy. The party’s plan is to create a balance where the cost of hiring foreign labor increases with wages, discouraging companies from using cheaper overseas workers without negatively affecting those who employ highly skilled individuals.

While the specific tax rates have not been fully detailed, Jenrick stated that releasing the complete framework would depend on consultations with businesses. He acknowledged the need for time, explaining that announcing precise figures three years before the next election would be “irresponsible.” The policy’s exact implementation, including thresholds and rates, is set to be finalized after gathering feedback from industry stakeholders.

Political Context and By-election Strategy

The announcement comes amid a critical by-election in Makerfield, where Reform UK is competing against the right-wing Restore Britain party, founded by former Reform MP Rupert Lowe. This contest is seen as a key battleground for the party’s ability to gain traction in working-class areas. Jenrick’s comments during a London news conference underscored the urgency of the policy, positioning it as a central part of Reform’s strategy to appeal to voters disillusioned with the current political landscape.

Reform UK has also pledged to abolish the right of migrants to permanently settle in the UK after five years. Under this plan, foreign workers would need to either apply for British citizenship or reapply for temporary visas with higher salary requirements. Jenrick acknowledged that this would likely shrink the tax base for the proposed levy, as fewer migrants would be eligible for long-term residency. However, he argued that the savings from reduced benefits paid to unemployed British nationals—many of whom would be offered jobs—would compensate for this loss.

The policy is expected to have a significant impact on industries such as retail, hospitality, and manufacturing, where foreign labor is often more readily available. Jenrick pointed out that these sectors are particularly vulnerable to the tax, as they frequently employ migrant workers at lower wages. He also criticized private companies hiring carers, noting that unlike public sector employers such as the NHS, they have not been shielded from the recent NI contribution rise. Jenrick suggested these firms should focus on raising salaries to attract British workers, rather than continuing to rely on foreign labor for essential roles.

“This would reduce in line with wages, he added, in order to reduce the ‘easy lever of cheap foreign labour’ without penalising firms hiring ‘the most skilled people’.”

Jenrick’s vision for the tax policy extends beyond employment costs. He argued that it would encourage a cultural shift in the labor market, promoting the idea that British workers should be given priority for jobs that could otherwise be filled by migrants. This approach is intended to address what the party perceives as a systemic issue in the UK’s employment practices, where foreign workers are often seen as a substitute for domestic labor.

Political Criticism and Opposition Reactions

Conservative shadow chancellor Sir Mel Stride has criticized Reform UK’s policy, calling it a series of “uncosted promises” aimed at winning the Makerfield by-election. Stride accused the party of “throwing out a litany of policies in the hope something sticks,” suggesting their approach lacks a coherent strategy. He highlighted the “reckless and expensive by-election campaign” as a symptom of Reform’s tendency to focus on sensationalism rather than substantive policy development.

Stride also pointed out that the tax proposal, while attractive to some voters, could lead to unintended consequences for businesses and the broader economy. He argued that without a clear cost-benefit analysis, the policy might fail to deliver the intended results. “Announcing tens of billions in entirely uncosted promises is not serious,” he said, emphasizing that Reform’s claims need to be backed by concrete evidence and economic modeling.

Despite the criticism, Reform UK continues to push its agenda, with additional measures such as a VAT cut for smaller businesses and a proposed ban on foreign nationals living in social housing. These policies are part of a broader effort to position the party as a credible alternative to both the Conservatives and Labour. Jenrick’s remarks during the news conference reinforced the party’s commitment to these reforms, framing them as necessary steps to revitalize the UK’s economic and social structure.

As the Makerfield by-election approaches, the debate over the tax on foreign workers is likely to intensify. The policy’s success will depend on its ability to resonate with voters, particularly those who feel that migrant workers are displacing British job seekers. With the Labour Party also vying for influence in the region, Reform’s ability to present a compelling case for their proposal will be crucial in determining the outcome of the election.