UK tries to hose down fears about India trade deal

LONDON — The new U.K. trade deal with India does not undercut British workers, a government minister insisted Wednesday, amid a bitter political row about the long-sought agreement's labor provisions.

Speaking to the BBC, Trade Secretary Jonathan Reynolds defended exempting some temporary Indian workers and their employers from paying the U.K.'s national insurance employment tax — and argued this would not disadvantage their British counterparts.

“There is no situation where I would ever tolerate British workers being undercut through any trade agreement we would sign,” Reynolds said. “That is not part of this deal.”

The trade secretary instead attacked his Tory critics — who have dubbed the measure a “two-tier tax” — and said they had failed to understand the reality of the deal.

When “a business in India seconds someone for a short period of time to the U.K., or a U.K. business seconds a worker to India for a short period of time ... you don’t pay in simultaneously now to both social security systems," Reynolds said.

Reynolds highlighted existing agreements with 50 countries including the U.S. and Canada — and pointed out that the last Conservative government signed an agreement with similar provisions with Chile.

The Double Contributions Convention agreed with India came as part of a wider trade deal that the U.K. has talked up as offering a much-needed boost to the country's stagnant economy. An economic forecast by the British government suggests the deal will increase the U.K.’s GDP by £4.8 billion by 2040.

The labor agreement with India is reciprocal, meaning British short-term visa holders also won’t pay social security taxes in India. SEC Newgate’s Allie Renison, an ex-government trade adviser, said: “This is a deal to avoid double taxation from falling on short-term workers in specific skilled occupations.” 

She added: “The fundamental underlying principle is that temporary workers posted to each other’s jurisdictions by their companies should not have to contribute to two parallel social security schemes at the same time.” 

Under the agreement, an existing visa route for some temporary workers will now be open to Indian employees, though applicants will still need to meet the usual requirements on salary and skills and a cap on overall numbers remains in place.

Conservative Leader Kemi Badenoch, who said she had refused to sign a similar deal back when she was trade secretary, was quick to leap on the row. She accused Labour of double standards at a time it has hiked taxes on British employers, and charged Wednesday night: “When Labour negotiates, Britain loses.”

Nigel Farage, whose right-wing populist Reform UK ate into both Labour and Tory votes to top last week's local elections in England, branded the deal "astonishing."

He added: "I cannot believe the sheer stupidity of this Labour government. No wonder it was announced after the elections last Thursday."

Stefan Boscia contributed reporting.