Labour has insisted the UK’s new trade deal with India does not undercut British workers after the Conservatives claimed the government are introducing “two-tier taxes”.
Hailed as a “landmark” agreement by Keir Starmer, the government announced on Tuesday that it had reached a deal to boost bilateral trade with India by £25bn – in what marks Britain’s biggest post-Brexit trade agreement.
The new deal – similar to those already in place with more than a dozen other countries – will immediately cut tariffs on whisky, gin, cars and cosmetics, while reducing barriers to imports of Indian textiles, food and jewellery.
But opposition politicians criticised a provision in the deal exempting some temporary Indian workers from national insurance payments, claiming this would undercut British staff.
The Tories seized on the national insurance contribution (NICs) exemptions as an example of what they claimed was “two-tier taxes” under the Labour government.
Trade secretary Jonathan Reynolds rejected the claims, telling the BBC they are “completely false”.
The row comes ahead of PMQs today, with Keir Starmer set to face a grilling on the newly-struck agreement. It also marks the first session since both Labour and the Conservatives suffered heavy losses at the local elections and by-election last week.
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Key Points
- Labour accuse Tories of ‘made-up tax row’ after striking £25bn India trade deal
- 'Absolutely false' to say India trade deal undercuts British workers, insists business secretary
- UK could sell weapons to India as war with Pakistan looms, business secretary admits
- Red Wall MPs demand Starmer 'acts now' to reverse winter fuel cuts as backlash grows
- Reform UK hit record high in polls, according to YouGov figures
Reform also gains ground in Wales while support for Labour collapses, YouGov poll reveals
11:19
,
Tara Cobham
Reform UK has also gained ground in Wales while support for Labour has collapsed, according to a new YouGov poll.
While Plaid Cymru leads the race for next year’s Senedd election, according to the YouGov/ITV Wales Welsh voting intention poll, Nigel Farage’s party is now in second place, with Labour far behind.
Plaid Cymru lead on 30 per cent of the vote for the May 2026 Senedd election, while Reform sits at 25 per cent, the figures revealed.
Meanwhile, Labour, who have won every previous devolved election, is in a distant third place on just 18 per cent, which is half the 36 per cent of the regional vote that they won back in 2021.
The Conservatives are even further back, sitting at only 13 per cent, which also marks half their vote share in the 2021 election.
Then the Lib Dems take 7 per cent, while the Greens sit at 5 per cent.
Watch: UK-India deal does not undercut British workers, says trade secretary
11:00
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Tara Cobham
Government refuses to be drawn on reports UK closing in on US trade deal
10:45
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Tara Cobham
The government has refused to be drawn on reports the UK is closing in on a trade deal with the US.
The Financial Times reported an agreement could soon be reached that involves lower tariff quotas for cars and steel.
But a government spokesperson told The Independent: “The US is an indispensable ally and talks on an economic deal between the US and the UK are ongoing - but we are not going to provide a running commentary on the details of live discussions or set any timelines.
“We will continue to take a calm and steady approach to talks and aim to find a resolution to help ease the pressure on UK businesses and consumers.”
Government insists deal will involve 'no impact' on immigration system or numbers
10:40
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Tara Cobham
The government has insisted the new UK-India trade deal will involve “no impact” on the immigration system or immigration numbers.
The agreement includes some easing of rules on “business mobility” for temporary visitors and up to 1,800 chefs, yoga instructors and musicians providing contracted services.
Full story: Red Wall MPs demand Starmer ‘acts now’ to reverse winter fuel cuts as backlash grows
10:21
Sir Keir Starmer has been urged by his own MPs to “act now” to reverse the cut to winter fuel payments as backlash over the move grows.
There has been growing public anger over the policy after Labour suffered a disastrous result at last week’s local elections, which saw Reform pick up 10 councils and more than 600 seats.
The Red Wall group of Labour MPs, made up of around 45 MPs from Red Wall constituencies, warned that Sir Keir’s response that he would "go further and faster" in delivering his plans had "fallen on deaf ears".
Political correspondent Millie Cooke has the full story:
Watch: Northern female MPs target of hostile media briefings from people working in No. 10', says former Labour minister
10:00
,
Tara Cobham
What is national insurance aspect of UK-India trade deal – and row that's broken out over it
09:45
,
Tara Cobham
Under the terms of the UK-India trade agreement, staff working for an Indian company who transferred to the UK for less than three years would pay into the Indian social security system rather than paying into both British and Indian systems as they do now.
UK workers temporarily in India would remain subject to national insurance, but be exempt from Indian social security levies.
Trade secretary Jonathan Reynolds pointed to similar deals with 50 other countries, including the EU, the US, Canada and Japan, saying that the previous Conservative government signed a similar deal exempting Chilean workers from national insurance for five years.
Seconding Indian staff to the UK will also involve additional costs such as the immigration health surcharge and relocation costs, Mr Reynolds said.
He added that the overall impact of the deal would mean more tax revenue for the treasury, and said he expected more UK workers to be seconded to India as a result of British companies gaining access to Indian government procurement contracts.
However, Kemi Badenoch claimed she had “refused to sign this deal” while trade secretary, in part due to the condition that some Indian and British workers will avoid paying national insurance for the first three years in their destination country.
Red Wall MPs demand Starmer 'acts now' to reverse winter fuel cuts as backlash grows
09:26
,
Tara Cobham
Labour’s group of Red Wall MPs have demanded Keir Starmer “acts now” to reverse winter fuel cuts as backlash against the prime minister grows in the wake of the party’s local election losses.
In an open letter, they also said Sir Keir’s “further and faster” pledge on his Plan for Change has “fallen on deaf ears”.
Statement from the Red Wall Group of Labour MPs following the local elections pic.twitter.com/RKgJbhmU6z
— LabourRedWallGroup (@RedWallGroup) May 6, 2025
Minister call claims home office not informed on aspects of India trade deal 'nonsense'
09:15
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Tara Cobham
Claims the home office was not informed about aspects of the Indian trade deal are “nonsense”, the trade secretary has said.
Asked about reports the home office was not informed about parts of the deal that could increase the number of Indian workers in the UK, Jonathan Reynolds told ITV’s Good Morning Britain: “That’s absolute nonsense reporting.
“Of course, all colleagues are involved in this, but because there is no impact on the immigration system, on immigration numbers from this trade deal, it’s not an immigration issue.
“It’s about us selling more to India, services, goods, a whole range of things that benefit every part of the UK, and some cheaper goods for UK consumers in terms of footwear and clothing because of the tariffs we have reduced on Indian goods coming here.”
Reform UK hit record high in polls, according to YouGov figures
08:57
,
Tara Cobham
Reform UK have hit a record high in the polls, according to YouGov figures on voting intention.
Nigel Farage’s party is up three points to 29 per cent, extending their lead over Labour, which is down one point to 22 per cent, according to the poll conducted for Sky News and The Times.
The Tories are down by even more – three points to sit at 17 per cent – marking the party’s lowest score since the Brexit years.
Meanwhile, both the Lib Dems and the Greens are up one point, with the former now at 16 per cent, and the latter at 10 per cent.
YouGov / Sky News / Times voting intention
— Sam Coates Sky (@SamCoatesSky) May 7, 2025
Reform 29 (+3),
Lab 22 (-1),
Con 17 (-3),
Lib Dem 16 (+1),
Green 10 (+1)
** Tories last polled 17% in June 2019 just before Theresa May successor chosen
** This is Reform UK's highest vote share
** Brexit Party highest share June…
Farage accuses Starmer of ‘betraying’ British workers with India trade deal
08:34
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Tara Cobham
Nigel Farage has accused Keir Starmer of having “betrayed” British workers with his “truly appalling” UK-India trade deal.
In a video posted to social media, the Reform UK leader said: “This government doesn’t give a damn about working people. The labour party have this time in a big, big way betrayed working britain.
“And that’s why many people voted for us last Thursday. But for some reaosn the government just doesn’t seem to understand.”
He went on to describe the agreement reached as “truly appalling”.
Two-tier Keir betrays British workers. pic.twitter.com/4Aiw7W8lBf
— Nigel Farage MP (@Nigel_Farage) May 6, 2025
India trade deal shows UK are ‘grown-ups in room’ as Trump tariffs 'sow global confusion', says IPPR
08:21
The India trade deal shows that the UK are “the grown-ups in the room” as Donald Trump’s tariffs “sow global confusion”, a think tank has said.
Reacting to the agreement struck between the UK and India, Marley Morris, associate director for trade at The Institute For Public Policy Research, said: “After three prime ministers failed to get a trade deal with India over the line, this is a major win for Starmer – especially at a time when Trump’s tariffs are making international trade even more fraught.
"This deal will cut tariffs, boost growth, and create jobs. It shows that even in a tough global economic climate, the UK can be the grown-ups in the room – and turn uncertainty into opportunity, in stark contrast to Trump’s approach.
“Crucially, the deal was possible by negotiating a social security pact for Indian workers alongside the free trade agreement. This demonstrates the value of international diplomacy and compromise for unlocking economic growth."
Starmer to face PMQs for first time since local elections
08:14
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Tara Cobham
Keir Starmer will face Prime Minister’s Questions today, for the first time since Labour and the Tories suffered heavy losses in the local elections last week.
The prime minister will also be questioned over the new India trade deal in the Commons at midday.
UK could sell weapons to India as war with Pakistan looms, business secretary admits
07:54
Political correspondent Millie Cooke reports:
The business secretary has failed to rule out supplying India with weapons, amid escalating tensions with Pakistan.
While Jonathan Reynolds said military equipment is "not a specific part of the trade deal" - noting that France is a more significant supplier of weapons to India - he said the UK would "always be willing to talk to a fellow democracy if that was something they were interested in".
He told Sky News that Britain should "not be squeamish" about exporting our defence sector to other markets around the world, adding that the UK "should be proud that we've got the capacity to defend ourselves".
It came just minutes after he told the BBC's Today programme that the situation in Kashmir was "hugely worrying", adding that Britain is ready to support both India and Pakistan to de-escalate tensions following an exchange of fire between the two nations.
Watch: UK and India trade deal will 'grow the economy', promises Starmer
07:47
,
Tara Cobham
Full story: Starmer secures Britain’s biggest post-Brexit trade deal with India in ‘landmark’ agreement
07:46
,
Tara Cobham
Sir Keir Starmer has struck Britain’s biggest post-Brexit trade deal, hailing a “landmark” agreement with India that will boost trade with the country by £25.5bn.
In what the prime minister is billing as a major coup, he said the agreement, which focuses on whisky, gin, cars and cosmetics, will boost the economy and cut prices for consumers.
The opening up of international trade with one of the world’s biggest and fastest-growing economies comes as the prime minister attempts to deal with Donald Trump’s latest moves in the battle over tariffs on imports to the US.
Read the full story from The Independent’s politics team here:
UK ready to 'support' India and Pakistan to de-escalate tensions, minister says
07:45
,
Tara Cobham
The UK is ready to “support” both India and Pakistan to de-escalate tensions following an exchange of fire between the two nations, a minister has said.
Trade Secretary Jonathan Reynolds said the situation in Kashmir was “hugely worrying”.
He told the BBC’s Today programme: “Our message would be that we are a friend, a partner to both countries. We stand ready to support both countries.
“Both have a huge interest in regional stability, in dialogue, in de-escalation and anything we can do to support that, we are here and willing to do.”
UK-India trade deal criticism is Tories 'unable to accept' government has 'done what they couldn't do'
07:43
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Tara Cobham
Criticism of national insurance provisions in the UK-India trade deal is a result of the Conservatives being “unable to accept” that the government has “done what they couldn’t do”, the trade secretary has said.
Jonathan Reynolds told Sky News: “This is not a tangible issue. This is the Conservatives – and Reform – unable to accept that this Labour Government has done what they couldn’t do and get this deal across the line.
“This is presenting a false reason why they couldn’t (do it).”
'Absolutely false' to say India trade deal undercuts British workers, insists business secretary
07:40
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Tara Cobham
Political correspondent Millie Cooke reports:
It is "absolutely false" to say the trade deal with India is undercutting British workers, the business secretary has insisted, arguing that the criticism is a result of the Conservatives being “unable to accept” that the government has “done what they couldn’t do”.
"To present this as something undercutting British workers or unique to India is absolutely false", Jonathan Reynolds told Sky News said. "This is just what we have in place with a whole range of key trading partners."
He argued the system is fair, because it avoids foreign workers from being "taxed twice" - by the UK and their home nation.
"I don't accept anyone is being undercut by this. I don't accept what we have with all these 50 other countries undercuts British workers. It means the foreign workers pay into their system, and UK workers abroad pay into our system. They're not taxed twice. I think that's fair, but it doesn't mean that anyone is being undercut", he said.
Dismissing the criticism, Mr Reynolds added: “This is not a tangible issue. This is the Conservatives – and Reform – unable to accept that this Labour government has done what they couldn’t do and get this deal across the line. This is presenting a false reason why they couldn’t (do it)."
Labour accuse Tories of ‘made-up tax row’ after striking £25bn India trade deal
07:32
,
Tara Cobham
Labour has accused Tory leader Kemi Badenoch of confecting a “made-up row” over the newly-struck India trade deal to “distract from her failure” to secure a similar agreement.
Hailed as a “landmark” agreement by Sir Keir Starmer, the government announced on Monday that it had reached a deal to boost bilateral trade with India by £25bn – in what marks Britain’s biggest post-Brexit trade agreement.
While Boris Johnson famously promised to make such an agreement by Diwali in October 2022, an India trade deal has remained elusive for UK successive prime ministers. The new deal will immediately cut tariffs on whisky, gin, cars and cosmetics, while reducing barriers to imports of Indian textiles, food and jewellery.
However, Ms Badenoch claimed she had “refused to sign this deal” while trade secretary, in part due to a condition – similar to those already in place with more than a dozen other countries – that some Indian and British workers will avoid paying national insurance for the first three years in their destination country.
A Labour spokesperson accused Ms Badenoch of “desperately seeking to distract from her failure with a made-up row about a standard tax agreement that will benefit British workers abroad”.
