Government rejection of umbrella firm curbs leads to clamour for regulation

Campaigners for regulation of umbrella companies were let down again yesterday by the government’s failure to add ‘curb or kill’ amendments to the Finance Bill.

While observers praised passionate advocacy for the measures from MPs David Davis and Sir Iain Duncan Smith in last night’s parliamentary debate, the government received widespread criticism for failing to act to “tame the ‘Wild West’” of the unregulated umbrella market”, as described by ardent campaigner Dave Chaplin, the CEO of ContractorCalculator.

“The continued lack of regulation and impotence by the government on this issue will only fuel the non-compliance further,” Chaplin said. 

With the amendments tabled not put forward to a vote, “regulation, which will have a more lasting impact, is now the only way ahead”, said Rebecca Seeley Harris, chair of the Employment Status Forum, and James Poyser, founder of, in a joint statement. 

Seeley Harris and Poyser recently submitted a draft policy to regulated the umbrella market to Jesse Norman MP, the financial secretary of the Treasury, and the Department of Business, Energy and Industrial Strategy (BEIS). “For too long, rogue and unethical practitioners have exploited loopholes in tax and employment law,” Seeley Harris and Poyser said. 

Support for Seeley Harris’ and Poyser’s draft policy is growing within the umbrella sector. “I would urge every umbrella company in the market that genuinely wants to see regulation implemented to support this,” said Robert Sharp, compliance director of Orca Pay Group. Sharp went on to say: “I am absolutely gobsmacked that the government still doesn’t seem to understand the enormity and importance of protecting contractors and regulating our industry with immediate effect.” 

Of the proposed amendments, Sharp said: “This would have been an ideal opportunity to make a statement that they intended to start cleaning up the industry. Instead, it’s yet another opportunity lost.”

FCSA CEO Phil Pluck says the umbrella trade body is also supportive of the Seeley Harris and Poyser draft policy. In an open letter to Paul Scully MP, under secretary of state for small business, consumers and labour markets at BEIS, to be published tomorrow (26 May 2021), it has called for the prioritisation of introducing a single enforcement body in the employment arena.

Norman has claimed that adding enforcement to the remit of the Employment Agency Standards Inspectorate (EASI) will address the issues of non-compliance in the umbrella sector. 

However, Crawford Temple, CEO of assessor of payment intermediary compliance organisation Professional Passport, said: “I would like to remind the government that EASI is already struggling with its existing commitments of regulation, so I fail to agree that tasking an already over-stretched body with the job of regulating umbrellas will change anything, and that the government’s solution will merely serve to incentivise and fuel more non-compliance across the market.” 

A more positive tone was sounded by Julia Kermode, founder of iWork. “I take a lot of positives from the debate… We know that the Treasury is considering a policy proposal outlining how to regulate the umbrella sector, and the message they will have received from last night’s debate is loud and clear – action is needed and needed quickly!” 

Kermode added: “For far too long, umbrellas have been in the 'too difficult’ pot, with the government failing to properly understand the sector, failing to plan effective policies, and failing to take action. Umbrella regulation is long overdue now, and there is no excuse for the current hiatus.” 

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