What you need to know this week
- UK payrolled employees fell by 121,000 year-on-year to December 2025, with a further 134,000 annual decline estimated for January 2026.
- Annual earnings growth was 4.2% for both regular and total pay in October–December 2025, with public sector growth at 7.2% and private sector at 3.4%.
- Median monthly pay in January 2026 was £2,588, equating to approximately £31,056 per annum before tax.
- The Bank of England is engaging industry via AI roundtables to assess implications for financial services.
- The FCA’s PS26/1 on Deferred Payment Credit (BNPL) takes effect in July 2026, with potential for increased declines.
- The Money and Pensions Service standards toolkit will apply from April 2026, reflecting significant market and regulatory change.
- DWP’s Data Strategy 2023–2030 aims to break down silos and enable seamless data sharing across government and third parties.
- 10,843 individual insolvencies were registered in England & Wales in January 2026, 12% higher than January 2025.
- Breathing Space registrations fell to 5,008 in January 2026, 39% lower year-on-year following policy changes.
- StepChange completed 17,998 full debt advice sessions in January 2026, with 91% starting digitally.
- Council tax arrears in England totalled £6.6 billion at 31 March 2025, up £659.5m year-on-year.
- The Affordability Summit takes place on 14 April 2026 at the Core Technology Facility, Manchester, and the VRS Conference on 7 May 2026.
Key Themes
Labour market softening and earnings resilience
- Payrolled employee numbers declined year-on-year, with early 2026 estimates showing continued contraction.
- Earnings growth remains at 4.2%, with stronger public sector growth.
- Median pay data indicates gradual income growth alongside cost pressures.
- Matters for affordability assessments, disposable income modelling and credit risk calibration.
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AI and regulatory scrutiny across financial services
- The Bank of England is consulting industry on AI implications.
- Ofgem and the Energy Ombudsman issued guidance on AI transparency, fairness and consumer rights.
- The FCA has fined influencers for unauthorised promotions and is implementing PS26/1 on BNPL.
- Reinforces governance, transparency and Consumer Duty expectations in AI-driven decisioning.
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Affordability, innovation and sector collaboration
- The Affordability Summit (14 April 2026, Manchester) will focus on AI, open banking, income optimisation and CRA integration.
- PS26/1 implementation in July 2026 may alter onboarding and decline rates in DPC.
- Collaboration spans banks, utilities, debt buyers, CRAs and vulnerability specialists.
- Signals continued convergence of technology, regulation and affordability frameworks.
Debt advice standards and market evolution
- The MaPS standards toolkit takes effect April 2026 following sector engagement.
- The sector has experienced consolidation, digital migration and regulatory reform since 2014.
- 89% of StepChange debt advice sessions began digitally in December 2025.
- Advisers must adapt to updated standards amid regulatory change and demand pressures.
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Data strategy and cross-government integration
- DWP aims to become fully data-driven by 2030, improving reuse and interoperability.
- Strategy includes modernising legacy systems, cloud migration and AI enablement.
- Emphasis on data sharing under the Digital Economy Act and cross-government coordination.
- Data integration underpins targeting of debt relief, social tariffs and vulnerability identification.
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Insolvency and Breathing Space trends
- 10,843 individual insolvencies were registered in January 2026, with IVAs at 6,216.
- Backlogs and system changes affected December and January figures.
- Breathing Space registrations fell significantly following StepChange policy changes.
- Volume shifts affect creditor recovery strategies and DMP portfolio management.
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StepChange client demand and arrears composition
- 17,998 clients completed full debt advice in January 2026.
- 18% cited cost of living increases as their main reason for debt.
- Average number of debts increased from 8 to 9; 27% presented with a deficit budget.
- Essential service arrears remain prevalent, affecting utilities and local authorities.
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Council tax arrears and enforcement reform
- £6.6 billion in cumulative council tax arrears outstanding at March 2025.
- Awareness of Council Tax Reduction remains low.
- MAT recommends extending liability order timelines and exempting support recipients from bailiffs.
- Enforcement Conduct Board statutory powers are proposed.
- Impacts local authority recovery models and enforcement strategy.
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Key Statistics
- 121,000 decrease in payrolled employees between December 2024 and December 2025.
- 30.3m payrolled employees estimated in January 2026.
- 4.2% annual growth in regular and total earnings (Oct–Dec 2025).
- £2,588 median monthly pay in January 2026.
- 10,843 individual insolvencies in England & Wales in January 2026.
- 6,216 IVAs registered in January 2026.
- 5,008 Breathing Space registrations in January 2026.
- 17,998 full debt advice completions at StepChange in January 2026.
- £6.6 billion total council tax outstanding at 31 March 2025.
- 95.9% in-year council tax collection rate in 2024–25.
Newsletter Contents
- Labour market data and earnings update.
- Bank of England AI roundtables summary.
- Affordability Summit update and sponsor announcements.
- FCA enforcement against unauthorised financial promotions.
- Rising use of bailiffs and ECB developments.
- FCA-approved MaPS standards toolkit overview.
- DWP Data Strategy 2023–2030 implications.
- January 2026 personal insolvency statistics.
- StepChange January 2026 client data.
- MAT council tax arrears report.
- Sector appointments and partnerships.
- Upcoming VRS Conference on 7 May 2026.
Find the full DEMSA newsletter, commentary and links here
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