The Chancellor’s 2025 Spending Review sends a clear signal: enforcement, regulation, and economic efficiency will be central pillars of the government’s agenda going forward. With billions allocated to strengthening HMRC and the establishment of the new Fair Work Agency (FWA), FCSA members and other payroll intermediaries should be prepared for a more regulated and scrutinised labour market, one that rewards transparency and compliance.
Among the standout announcements is the formal commitment to launch the FWA, which will tackle low pay, job insecurity and poor conditions. For umbrella companies and recruitment businesses, this is a long-overdue step towards a consistent, regulated sector, something FCSA has been advocating for over a decade. If implemented well, the FWA could finally provide a credible framework to root out payroll pirates in our sector, while giving compliant providers the recognition they deserve.
But it’s not all positive. Efforts to reduce public sector reliance on contractors, particularly in departments like Defra and the FCDO, may cause concern for members who supply into government contracts. Efficiency savings driven by “insourcing” digital and professional expertise should be closely watched. What we need is a balanced approach, where contingent workers remain a valued and flexible part of the solution, not a line item to be cut.
HMRC’s resource uplift is perhaps the most significant move. With £1.7 billion earmarked over four years to fund 5,500 new compliance staff and 2,400 debt management roles, the government is doubling down on enforcement. For compliant umbrella firms, this could help level the playing field, particularly if HMRC uses its expanded capacity to focus on non-compliant operators and payroll tax abuse.
FCSA will continue to push for smarter enforcement: using tools like veriPAYE and Diligence Hub to empower end-clients and recruiters with real-time visibility, while also lobbying for proportionate and well-targeted regulatory frameworks. We also remain strong advocates for a statutory licensing scheme, something the FWA could deliver with the right political will.
The message is very clear: compliance is no longer optional. The businesses that invest in getting it right, whether through accreditation, transparent processes, or technology like veriPAYE and Diligence Hub, are those best positioned to thrive in this new environment.
As ever, we’ll continue to represent our members and the wider sector, ensuring our voice is heard where it matters most.
