However, once the pilot ended they struggled financially as they returned to the normal tax credit system. This led to them considering decreasing their working hours or using informal childcare.
The findings are revealed in a survey carried out for the Department for Education to examine the extent to which childcare costs act as a barrier against taking a job and staying in it and using formal childcare.
The Childcare Affordability pilot (CAP 09) offered parents who had a household income of less than £16,000 payment of 100 per cent of their childcare costs through the childcare element of Working Tax Credits, in place of the usual offer of up to 80 per cent of their costs. The costs were also paid at a higher level than was usual with tax credits. The pilot was trialled in five areas of London.
Most of those in the take-up group were female lone parents, consistent with the majority of tax credit recipients who are in work, on low incomes and using childcare.
The limit of 80 per cent of childcare costs after the pilot ended meant that in the long term, the parents' likelihood of staying in work was diminished.
'Only participants who had secured better-skilled work and also had dependable informal care available were relatively confident in the security of remaining in paid work and childcare,' the report said.
Responding to the research, the Daycare Trust called on the Government to reconsider its decision to lower the amount parents can claim for childcare costs in tax credits to 70 per cent.
Kate Groucutt, policy director at Daycare Trust, called this 'not only short-sighted, but a move entirely in the wrong direction'. She said, 'These pilots back up Daycare Trust's longstanding call to increase rather than reduce financial support towards childcare for parents moving into work.
'It comes as little surprise that parents who received 100 per cent of their childcare costs through the scheme reported the positive impact this has had on their family circumstances, finances and ability to return to work.'
Further information
'Qualitative research into families' experiences and behaviours in the Childcare Affordability Pilots (CAP09): 100 per cent Costs Pilot' is at http://www.education.gov.uk
