Want women to succeed in business? It’s the childcare, stupid

Liz Truss, who doubles up as the UK’s equalities minister as well as our foreign secretary, recently launched a new taskforce to boost the number of women starting high-growth companies. 

It’s a high-powered affair: Anne Boden, chief executive and founder of Starling Bank which she started in her 50s, is the chair, while the 13 members come from the top of their fields in finance, pharmaceuticals and cybersecurity. They include Poppy Gustafsson, chief executive and co-founder of Dark-trace, Judith Hartley, boss of British Patient Capital & British Business Investments at the British Business Ban, Sam Smith, chief executive and founder of finnCap, the City investment house, and Angela Scott, founder and chief operating officer at TC BioPharm Ltd.

It’s also ambitious: the aim is to double the number of female entrepreneurs by 600,000 by 2030. Truss wants to close the gap between male- and female-run businesses: at present, one in three entrepreneurs in the UK are women which is equivalent to 1.1 million “missing” businesses. 

What’s more, male-led SMEs are five times more likely to scale-up to £1m turnover than those led by women. At the same time, the taskforce has set itself the aim of encouraging the next generation of female entrepreneurs – particularly those living outside of London who have less access to capital and other important resources. Boden and her colleagues have been asked to build on the work of the Rose Review, which found that breaking down the barriers for women entrepreneurs could boost the economy by £250bn. 

As well as looking at how best to encourage women to do their own thing, the group has been asked to look at how best to help female entrepreneurs find access to capital – a problem in today’s climate for men too – both to start-up and to scale-up, and to tackle any barriers to investment.

This is all worthy stuff. Any boost to entrepreneurialism in the UK right now has to be commended, independent of gender. That Truss has brought together such a powerful group of women is also commendable as their relevant experience in raising funds and doing deals in hardcore industries such as pharma and tech will be invaluable.

Yet, as Truss herself points out, there is indeed something “missing”. But it’s not the number of businesses run by men or women. What Truss – along with all politicians of whatever colour – have missed completely, is that the main impediment to doing business is the abysmal standard and high cost of the UK’s childcare. 

That is the Achilles heel which holds back women from building their own businesses – or working full-stop – not lack of ambition. Quite the reverse. Until the pandemic proved to men that it is perfectly possible to work from the kitchen table – or indeed any table – and be hugely productive, a big proportion of women when asked what they hoped to do with their lives, would say they want to run their own business. For women with children, working for yourself or setting up on your own makes perfect sense: you can organise the time to suit yourself and be more flexible about working around school hours.   

But even when working for yourself or when starting up your own business, you still need solid, reliable and reasonably priced childcare, whether it’s a full-time nanny, au-pair, nursery, crèche, child-minder, friend or grandparents. 

Yet in Britain today – where more than half of all women work – the state of childcare is lamentable: a patch-work of child-minders and nurseries. It is also the most expensive in the world: a recent survey showed that the UK has the dearest childcare in the world after Cyprus, with women spending nearly a third of their income on net childcare compared with about 10 per cent in countries such as Norway.

On my phone I have a picture of a calculator which shows £197.35. This was sent to me by a young friend, who works in the NHS at a relatively senior level, showing what she will take home in a month after paying childcare for her two young children. Hardly worth getting out of bed for: full-time nurseries for one child can cost £20,000 a year. 

No wonder that a recent survey by Mumsnet together with Pregnant Then Screwed found that two-thirds of parents said childcare cost as much as rent or mortgage payments. This rose to 73 per cent for single parents and for parents who work full time, demonstrating that high childcare costs are a key driver for women being pushed into low-paid part-time work. Nearly half of mothers surveyed (43 per cent) said that the cost of childcare has made them consider leaving their job and 40 per cent said they have had to work fewer hours than they would like because of childcare costs.

Whether it’s the rising cost of looking after your children, or the impact of the pandemic changing people’s behaviour, the number of women entering the workforce is declining in a significant manner for the first time in 30 years. Recent figures show that there are now 25 per cent of women aged between 16 and 64 who are not working – or what’s called economically inactive – a fall of 5 per cent in the last year. This compares with 17.7 per cent of men. 

This is not to say that women should be discouraged from staying at home to look after their families. Quite the reverse: it’s about whether they have the choice to go out to work should they wish, and whether they can afford to work. That, surely, is the point.   

If our high-powered women on the taskforce are serious about promoting women in business – and therefore families – then they need to put childcare at the top of their agenda. They should also consider co-opting another member to the group, someone with experience of childcare from one of the lobbying groups such as Pregnant Then Screwed or Mumsnet who can look at the services and come up with ideas for reform and improvement. After all, it is these new female start-ups which will be the employers of the future. But if they cannot find a talented workforce – of women or men – to work with them because of childcare costs, then there is little point in doing the next big deal.

There are various government schemes to help ease the costs: families can claim up to £2,000 a year per child up to the age of 11, or up to 17 if they are disabled. But according to Laura Suter at wealth manager, AJ Bell, there are about 800,000 families which are eligible for tax-free childcare but do not claim it, saving the Treasury about £3bn a year. Guess what: a recent government survey looking into why so few families took up the offer was because the scheme was burdensome and had to be updated every three months. Who has time for such fiddly admin when you are trying to run the next Google from your kitchen table?

There was also another £300m support package, Start for Life, in last autumn’s budget. This was to cover setting up 75 family hubs where parents can access services in one location. Yet again, this is another fiddly bit of government intervention and does absolutely nothing to solve the fundamental problem: the lack of quality childcare provision and the cost. 

Here’s an example of what could be done to help ease the situation: it’s estimated that grandparents spend 1.7 billion hours a year looking after 1.5 million children but there is no way to pay them because they are not regulated. 

Yet there is a blindingly obvious solution which Truss, and her fellow policy-makers, don’t seem to be able to see. Get rid of all the various schemes and make childcare costs – whether it’s a nursery or paying the grandparents to help with care – tax deductible. Simple, effective and straightforward. By making costs more reasonable and competitive, you would soon see a rise in the provision – and quality – of childcare rise to meet the demand. But maybe that’s way too simple for the politicians to get their head around.