The June 2025 Spending Review (SR25) sets a clear direction for public investment while simultaneously enforcing aggressive cost-saving measures. These opposing forces will reshape the staffing and recruitment landscape across healthcare, the public sector, education, and infrastructure.
For recruitment agencies, umbrella providers, and contingent workforce platforms, the message is mixed: there are huge opportunities in digital transformation and infrastructure, but also tightening restrictions on agency use and heightened compliance expectations.
This report explores both the upside and downside implications across the core sectors impacted by SR25.
1. NHS: Growth in funding, cuts in agency use
SR25 commits to increasing NHS day-to-day spending from £178 billion in 2023–24 to £226 billion by 2028–29. However, this budget uplift does not translate into expanded use of recruitment agencies. On the contrary, NHS England has begun a determined effort to reduce reliance on agency labour, cutting spend by £1 billion in 2024–25, with a further 30% reduction target for 2025–26, and an aim to eliminate agency use entirely by the end of this Parliament.
New restrictions include bans on agency use in entry-level roles, limitations on ‘resign and return’ tactics, and stricter controls on internal bank rates. These measures form part of a wider strategy to manage workforce costs, reduce dependency on temporary labour, and reinvest savings into core services and technology.
For those of us in the staffing sector, this shift is significant. Agencies that have traditionally served NHS trusts must rethink their positioning. The opportunity lies in aligning with staff banks, focusing on hard-to-fill clinical and leadership roles, and delivering direct hire models with embedded compliance and cost tracking. Umbrella companies, too, must adapt, those that offer real-time reporting, accreditation, and digital audit trails will have a competitive edge as NHS procurement tightens.
Figure 1: NHS Resource Budget (Real Terms): 2018–2029
2. Civil Service reform: Job cuts, transformation demand
The civil service is undergoing a dual transformation. On one side, we’re seeing sweeping budget cuts, 16% reductions to administrative budgets and more than 10,000 roles expected to be lost through voluntary exits. On the other, departments are receiving ringfenced investment to digitise, regionalise, and modernise operations.
It’s a paradox that those of us in professional staffing are familiar with: fewer permanent posts, yet rising demand for project delivery, transformation expertise, and specialist skills to execute reform. We anticipate increasing reliance on contractors and interims in departments managing restructuring, shared service integration, and digital enablement.
Firms positioned to supply skilled change agents, with compliance baked into their delivery models, will stand out. The key will be navigating budget sensitivities while delivering value, agility, technical depth, and understanding of government culture will matter more than ever.
Figure 2: HMRC Compliance Staffing Levels: 2018–2029 (Illustrative)
3. Local government and education: Efficiency with targeted growth
Local authorities and schools are seeing meaningful investment, £3.4 billion and £2 billion respectively, but this comes alongside an agenda of reorganisation, digitisation, and value-for-money scrutiny. Councils are expected to restructure services, reduce headcount in non-essential areas, and stretch outcomes through smarter delivery.
Rather than fueling demand for broad agency support, this presents a narrower but more strategic opportunity. We expect demand for SEND specialists, transformation consultants, and educational technology support to grow, especially where funding is tied to early intervention or infrastructure projects. Recruitment partners who understand local delivery frameworks and emerging digital roles in education will be well-placed.
4. Infrastructure and clean energy: Long-term growth
There’s no ambiguity here, SR25 doubles down on the UK’s energy and infrastructure strategy, allocating more than £60 billion across clean power, R&D, and housing. This is a multi-decade pipeline of skilled labour, compliance-sensitive projects, and complex stakeholder work.
We see huge potential for agencies that can support the engineering, renewables, construction, and regulatory sectors. Not only will these roles be in demand, but the scarcity of experienced professionals will drive higher margins for those who can source reliably and compliantly across UK regions and even internationally.
Figure 3: Spending Review 2025 - Transformation Fund Allocation by Category
Conclusion: A balancing act with strategic openings
The Spending Review tells a tale of two truths: yes, investment is flowing, but not freely or without caveats. If you’re a staffing provider in 2025, you’re no longer just a supplier, you must be a strategic partner. That means understanding sector reform, mapping cost controls to value-added services, and offering intelligent solutions that meet both workforce and budget challenges.
This is a market for the bold: those who adapt will not just survive the shift, they’ll lead it.
Article written by:
Robert Arnold
Managing Director, QPS Group
Robert Arnold is Managing Director at QPS Group, a specialist in contingent workforce solutions, umbrella compliance, and outsourced payroll services. With over 15 years’ experience in the recruitment and employment services industry, Robert regularly advises on regulatory shifts, workforce trends, and commercial risk strategies. His insights bridge the gap between legislative complexity and operational opportunity for staffing businesses across the UK and Europe.
