Brexit | Business | IR35 | Legislation | Tax

New Prime Minister: What might this mean for the recruitment sector?

Mini-Budget 2022: What impact will this have on your recruitment business?


The cost of living crisis, which is fuelled by rising energy prices, will undoubtedly be top of the agenda for Liz Truss, the new PM, but there are plenty of other issues affecting the UK economy. In particular, businesses will be looking for the PM to deliver on her promises of tax cuts and deregulation and she’s already partly done that with the bold but risky mini budget.

Key policies to watch out for

Employment issues include cracking down on trade unions with rules on minimum service levels on critical national infrastructure, such as the railways. This will aim to reduce the impact of future strike action.

The seasonal worker scheme should be extended to help fill the labour shortage in the agricultural sector. It is also expected that more than 20,000 police officers will be recruited, with extra spending for the Border Force, NHS and defence industry.

The National Insurance increase, which had been earmarked to fund social care reforms, is set to be scrapped on 6 November as well as the expected increase in corporation tax.

Challenges for the UK labour market

Data shows that job vacancy levels still remain high across all sectors, meaning positions are not being filled. This will be hurting the UK economy as it struggles to recover from the pandemic, while also dragging down productivity.

The ongoing skills shortage means employers are finding it increasingly difficult to find qualified candidates. However, this has positives as permanent and contract recruitment remains buoyant as companies use agencies to fill posts.

What does the recruitment industry want?

APSCo, the trade body representing the UK’s recruitment sector, has published its policy recommendations ahead of the mini-Budget last week.

The delayed Employment Bill needs to be pushed through to protect workers and to ensure that supply chains remain compliant with the latest labour rules. An update is required for the Employment Agencies Act and Regulations, so that umbrella companies are properly regulated with more support for contractors and the self-employed.

Brexit and the recent labour shortages have highlighted the importance of the professional recruitment sector and access to specialist temporary contracting. Creating a flexible labour market will help the UK to respond to a changing economic climate. As part of this, IR35 Off-payroll reform that happened in 2017 for the public sector and 2021 for the private sector will be scrapped from April 2023. This will have a huge impact on recruitment sector with contactors coming back into the market and away from full time employment.

The second element of APSCo’s recommendations seeks to create a “truly global Britain” by promoting a flexible workforce which is fit for the future. This requires improvements to the regulatory environment, work visas and the recruitment market, so the UK can attract talent from across the world.

Finally, APSCo is also suggesting that the skills shortages should be tackled by creating flexible and practical training schemes to utilise the talents of people of all ages. The aim should be to equip UK businesses with the experience and expertise needed in the years to come.

Ideas include devising a national strategy recognising existing industry strengths located in regions across the UK. APSCo is also calling for a reformed Apprenticeship Levy and for greater inclusion, flexibility and fairness so everyone can participate in the labour market.

It’s tough in some sectors due to the labour shortages and quality candidates are being snapped up quickly with multiple job offers on the table. The pressure on clients to offer much higher salaries to combat the cost of living increases is mounting. Liz Truss has a completely different approach to Rishi Sunak in boasting the economy. The tax cuts will hopefully make the UK economy a more attractive market place for investors and employees.

Need advice?

If you have a question about the impact of the mini-Budget on your recruitment business, call our friendly team on 0845 606 9632 or email

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