A political commentator I most certainly am not, but I do try to follow the goings on as much as my sleep deprived little brain will allow and yesterday’s budget has left me rather bemused to say the least. As a self employed parent with a fledgling business, some of Philip Hammond’s announcements have a huge impact on me and my family.
We’ve known for a while that there would be 30 hours per week childcare funding for 3- and 4-year-olds of working parents. This is bittersweet in that I think anything that helps parents who want to work be able to is good, but there is a deficit in the funding the government pays to childcare providers, meaning nurseries will end up either closing or hiking their prices up. With Martha starting at Toby’s nursery once he gets his allowance, we would then be paying more for her place. That is, of course, if we are even considered eligible for the 30 hours.
You see the eligibility criteria is that both parents (or the lone parent in a single parent household) must be earning at least minimum wage for 16 hours a week, which as of April 2017 will mean £120 per week. For employed parents this simply means having a 16+ hours a week job, but for those of us who are self employed it means earning £120 per week come what may. It’s not a huge sum, however new businesses don’t make a whole load of money when they first start and the business owners work every hour they can to try and be successful. The upshot of this is that Toby goes to nursery twice a week at the moment and Martha not at all, I’m working my bum off to build Apples & Pips (more than 16 hours a week!) but my actual income is negligible because it’s a start up and whilst my lovely customers are placing orders and loving their products, it takes a while to actually make money.
I’ve stepped back from a lot of my freelance work in order to focus on my shop, so basically in order to achieve the £120 per week needed to get Toby into nursery for 30 hours a week during the term time, and afford to pay top-up charges for his food and out of term hours, and pay for Martha to go to nursery at least a couple of days a week, I will have to either hope I find a lovely long-term freelance contract, lots of short-term freelance work, or get a part-time job. Any of those things mean either stepping back from Apples & Pips or working additional hours to also continue to grow the business. Needless to say that those 16 hours become 70 very quickly, but for the same money.
Then there’s National Insurance. I pay Class 2 voluntary contributions in order to get my state pension and maternity allowance (no more kids, don’t read into that, but it meant I got MA after having Martha!). Mr Hammond has announced that with the scrapping of Class 2 National Insurance Contributions (NICs) in 2018, the Class 4 contributions for self employed people earning above £16,250 will see a 1% increase in their NICs next year to 8% and a further 1% in 2019. Those who don’t earn above the threshold and currently pay Class 2? Who knows. If I’m not paying my Class 2 because it’s been scrapped, but am not earning enough to pay Class 4, do I still get a state pension and the other associated benefits?
What the Chancellor has neglected to factor in, with his proclamations to make things fairer, is that for most self employed people the very reason we need the lower NICs, the additional childcare allowance etc is because we work well above full time hours for well below minimum wage, without sick pay or holiday pay. For myself and other small business owners, being off sick or having a holiday means either shutting up shop or paying someone to cover for us – both resulting in a loss of earnings.
Tory MP for Berwick-upon-Tweed, Anne-Marie Trevelyan, had this to say:
“It impacts people who are putting themselves at risk, their houses on the line, to create new growth. It’s the wrong way round and sends a very poor message.”
I’m not an expert and I’m sure that there are other details that I’ve either not read about or don’t understand. If you do have a more in-depth knowledge and can clarify anything I’ve said here then please do so.
All I know for sure is that right now I’m feeling somewhat disheartened. I’m unsure how I’m meant to put the additional hours required into building Apples & Pips, whilst also working 16 hours a week at minimum wage (or earning the equivalent) so that we can get the help with childcare. The alternative is Toby having the 15 hours that everyone gets for 3- and 4-year-olds, then paying the top-up fees and a couple of days for Martha, which would still leave us out of pocket versus what we pay now without me yet earning the additional money.