Problem created by overbearing regulation
The State makes using a nanny very difficult, because it treats the parent as an employer of the nanny. The implication of this is that:
- The parent must calculate and pay all tax and NI on the nanny’s behalf;
- The parent must adhere to statutory employment rights (e.g. provide paid leave, redundancy pay, meet employer’s health and safety obligations in the workplace, obtain employer’s insurance etc); and
- The parent must make sure the nanny has the right to work in the UK etc
Meeting these obligations is daunting and expensive. The parent must nevertheless do this in their own time and at their own expense, all paid for out of taxed income.
Effect of overbearing regulation
This situation creates a strong disincentive to give a nanny a job. This makes it less likely that it will be cost effective for the parent to get a job. This is bad for:
- The State, which receives less tax and perhaps has to continue to support the parent and nanny;
- The nanny, because her services are less attractive;
- The parents, who does not fulfil their economic potential; and
- The economy, which has lost out on two potential jobs.