The Government is said to be considering allowed self-employed parents to claim childcare vouchers to reduce the costs of childcare, but while any move to help self-employed parents is welcome, one businesswoman says it is just a start and will not help many entrepreneurs who are just starting out.
The news that the Government is looking at childcare vouchers for self-employed parents comes after the Childcare Voucher Providers Association put together a model for how such a system would work. It has been talking to Government departments and to the Conservative Women’s Forum about the model and says the response has been “very positive”. However, others close to the Treasury think it is unlikely to win funding.
The CVPA put the model together before Christmas and is currently finalising the exact costings for the Treasury as well as continuing its political campaigning around the issue of more support for self-employed parents.
The aim is to encourage more working mums to set up their own businesses.
According to the model, the vouchers would only be paid out to those who use an Ofsted-registered setting so that funds could be properly tracked.
The idea is that vouchers provide an affordable way for the Government to help self-employed people with childcare as they mean that there is a limit on what the Government will offer. If childcare was considered a business expense and could be claimed back on a self-assessment form expenses could be quite high depending on how much childcare a person used. Up to £243 a month can be claimed in vouchers.
“At the moment self-employed parents are discriminated against,” says a spokeswoman for the CVPA. “This would even the playing field. Vouchers can provide some support in a way that does not break the bank for the Government.”
She says there is anecdotal evidence from people ringing helplines that self-employed people are struggling with the cost of childcare, although it is hard to quantify whether childcare costs have stopped people setting up a business.
“If only 29% of self employed people are women there is clearly something that is stopping them since 46% of people in the workforce are women. There must be a lack of support somewhere,” says the spokeswoman.
Ideally, the CVPA would like to pilot their scheme to test it out and to show Government that it works.
Ben Black, managing director of My Family Care which provides childcare vouchers along with other forms of childcare and elder care support, says: “If the Government does introduce vouchers for self-employed parents it’s a brilliant, obvious and flexible extension of the childcare voucher programme and what we’ve been advocating for some time.”
A business expense
However, Cara Sayer, director of SnoozeShade, believes the move is just the “first step” in what the Government needs to do to support any parent who is the main child carer in a family and who wants to set up a business.
“It’s certainly a step in the right direction,” she says, “but how is it going to help parents who have the added cost of childcare in the early days when few businesses make any money at all?”
Cara has not yet paid herself a salary in the last two years since she set up SnoozeShade. She says she’s sure that many start-ups are in the same position. Cara says “ When you add in the cost of childcare to a new business, it could put many entrepreneurial parents off starting in the first place.”
Cara launched a petition several months ago calling on the Government to make childcare costs a legitimate business expense.
“If I go to a trade show or I have to buy a printer for my business, I can claim this as a cost, but I can’t claim childcare although it is just as essential to allow me to grow my business,” she says.
Cara thinks the voucher scheme will mainly benefit sole traders and freelancers, but may not be so helpful for start-up businesses like hers that are product-led and therefore need capital to invest in stock and everything else that goes along with manufacturing and selling.
“Every penny I have made in the last couple of years has been ploughed back into the business to buy stock to meet demand in the UK and globally,” adds Cara. She says that the voucher scheme may appeal to those on a salary or with regular income being generated because it allows the Government to cap childcare costs.
“We often criticise people on benefits for taking advantage of the system, I think there is resistance to the ability to claim childcare as a business expense due to a fear it will be exploited. Small businesses are the lifeblood of British industry and the country is losing the brainpower of parents who are at home as they can’t afford to work full time and fund childcare themselves – is it not better that they contribute positively to the economy while their children are young enough to need fulltime care?” she asks.
She says tax credits are not particularly useful to the self-employed because the system is complex and inflexible as you have to know exactly what your childcare costs will be in advance. Not every parent running a business will either want to have their child in full-time care on a regular basis or be able to predict what they will need before they need it – especially in the early days of a business when you have no idea how things are going to progress.
Cara says: “ When SnoozeShade took off at a very rapid rate I found it very hard to juggle being a full-time parent and the workload the business created. It would have been helpful to have been able to put my daughter into childcare for brief periods to allow me time to focus on the business and know that the business, which was the only reason I needed to do it, was contributing towards the cost of doing so. Day nurseries and childminders are very expensive when every penny you are making is going straight back into the business.”