UK

Workers on the breadline: the families struggling to eat

Image caption Mark and Agnes are one of more than three million households claiming tax credits

Last year 3.3 million households claimed what are now called tax credits.

When this sort of financial support was introduced in the 1970s, it was claimed by just 71,000 people.

In-work benefits now cost taxpayers £28bn a year, so why do so many workers in Britain find it impossible to pay their own way? BBC Panorama's Richard Bilton has been investigating.

Life hasn't turned out as John O'Harrow expected. He studied hard to qualify as a chef. He works full-time, but he still can't afford to live. His weekly wage simply isn't enough to support his family.

"The way it's going, all I can see is us getting more and more in debt. I can't see us getting any better. If things don't change and this carries on the way we are, we potentially could lose this house," he said.

Mr O'Harrow lives with his wife Zoe and their three children Caitlin, Amelia and Ruby in Melksham, Wiltshire.

Mrs O'Harrow also works part-time in a hotel, and between them the couple earn about £20,500 a year. But Zoe says two wages are not enough. They depend on handouts from the government to survive - around £9,000 a year in tax credits.

£28bn benefits bill

Image caption Zoe and John O'Harrow say two wages are not enough

"We couldn't live without it. It's the difference between getting by and not getting by," the couple told Panorama.

They spend £700 a month on rent - including arrears - and have to pay for gas, electricity and phones, food for five people as well as other typical family costs.

Mrs O'Harrow said living so close to the breadline creates tension - the couple often argue about money: "We get angry with each other. I've had his bags packed at the door."

The O'Harrow's story is far from unusual. It is one of the UK's most pressing economic issues: millions of workers do not earn enough to live.

For the first time, the majority of people living in poverty are from a working household.

More than three million families are earning too little to make ends meet and that means the taxpayer has to top-up their wages. The bill for tax credits and other in-work benefits is now £28bn.

In the past six years, the cost of basics - including bills, food and clothes - has risen 28%, but average earnings have only gone up 9%.

And the world economy has shifted; the sort of work available in the UK has changed.

Chris Goulden from the Joseph Rowntree Foundation said: "There is a longer-term trend, particularly here in the UK to have more lower-skilled, low paid work."

Even people working for some of Britain's biggest companies rely on large state payouts.

Mark Payne and Agnes McFadyen both work for Tesco in Port Glasgow. He's a full time delivery driver and she works part-time on the checkout, as well as looking after their three children. Together they earn about £15,500 a year, topped up by the government with tax credits of around £7,000 a year.

Image caption Mark and Agnes live in Glasgow with their children

"Might not eat"

Ms McFadyen said that even with the government help they are struggling to make ends meet: "As hard as we try, and we budget, we can never, ever, ever put any money away and there's never money free."

Although the couple both work at Tesco, they say they can't afford to do their main shop there. They look for the best bargains at discount stores, but they say they still struggle to buy enough food as payday approaches.

"The past couple of weeks it's got to a stage where, say come Wednesday, it'll be like, 'there's not enough there for our tea, we'll just feed our weans, and we might not eat'," said Ms McFadyen.

Low pay has become one of the clear battlegrounds for next year's election. All of the main political parties have promised to support working families.

But poverty experts like Donald Hirsch from Loughborough University say there is no easy solution to our £28bn problem.

"I don't think you can say that somebody has a real plan. A lot of people have been saying, for a long time now, you need to make sure that you pay attention to people's education and you also need to encourage employers to pay more,"

But if you improve qualifications and then people come out qualified and end up stacking shelves then that doesn't solve the problem," he said.

Helen Dickinson, from the British Retail Consortium, said people can beat poverty by getting promoted: "There are a huge number of jobs at slightly above minimum wage level, but there is also a huge number of jobs that are above that. What we see is a large number of people who come in on lower pay scales but that move up."

Working longer hours could also be a route out of poverty, but for many low paid workers that is difficult to do.

Back in Wiltshire, Mrs O'Harrow said it is the rising cost of childcare that is stopping her from working more hours.

"It's hard. The nursery fees for just Ruby would mean I'd be on a pound an hour, after paying nursery. But obviously I've got Amelia as well so that would be even less money. So I would be paying more money to nursery than I would be earning."

"We're both doing what we're supposed to be doing - we look after our children, we're working. So we should be getting enough money, but it just doesn't work out like that."