But in a new report, the Family and Childcare Trust says that introducing the policy could lead to a rise in childcare costs, wiping out the value of the financial support for parents.
Rather than making childcare more affordable, Government subsidies during the past ten years have led to a rise in childcare fees for parents, the childcare charity claims.
It quotes figures that show that there were big price hikes in fees for parents in the 18 months following increased childcare support introduced through tax credits in 2003, when nursery costs for under-twos went up by ten per cent and by 11 per cent for childminders.
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