Mark Payne and his partner Agnes both work but are struggling to survive. They have not yet had to resort to food banks to feed their three children but know many who have.
The couple, from Port Glasgow, Inverclyde, work for a major supermarket and have lost out under cuts to tax credits from the last government. They have also been hit by the two-year freeze on in-work benefits and expect to lose out further on future tax credit changes.
“Things are really bad,” said Payne, 43, an Usdaw union official. “I’m working full time, my partner is working, we are doing everything we can, but sadly we are not paid enough. They keep cutting and freezing [tax credits] and are pushing hardworking families into poverty.”
There are more than 5 million people like Mark and Agnes in the UK who work full time but still do not earn enough to live on, according to David Cameron’s former adviser and new champion of the poorly paid, Steve Hilton.
He and Rohan Silva, who worked with Cameron at No 10 from 2010-13, have called for companies to be forced to pay the living wage – an hourly rate well above the national minimum wage.
As the government looks set to cut in-work benefits, potentially including child tax credits and housing benefits, Hilton’s conversion from fighting against the minimum wage to clobbering big companies over low pay is timely for his old boss.
The government is hoping to sweeten the pill of welfare cuts by offering help to low earners through the tax system, and by pressuring or incentivising employers to pay higher wages.
Retailers have been particularly targeted by Hilton. Citizens UK, the campaign group lobbying for workers to be paid at least the living wage, calculates that staff at the big four supermarkets alone collect £956m in government support. This year, they have led a high-profile campaign to highlight low pay at major retailers’ annual shareholder meetings.
The big retailers who have spoken to the Guardian say the government and its backers are trying to hijack that campaign to divert attention away from the planned benefit cuts.
They say calculations of the amount their staff collect in benefits are likely to be inaccurate as not even they know how many of their workers are claiming such payments.
“The government is putting the blame, and raising pressure, on everybody else to do something [about low pay],” said one executive at a major retailer.
“In effect, it is a trial by media, and not a constructive way of moving things forward,” said another retail boss. “Broadly speaking, our objectives are the same – to create aspiration, improve employment and help business drive scale so they can employ more people and pay more money. If it becomes about beating people up on paying the living wage without addressing other things, it becomes one-dimensional grandstanding.”
The removal of child tax credits would particularly affect women, who make up 60% of the retail workforce. “We encourage the government to take care with any policy that makes a disproportionate impact on working women,” said John Munro, of the British Retail Consortium (BRC).
“We don’t have detail on the number of people affected by changes such as cutting child tax credit, but I can imagine it will impact a good number of employees … We implore the government to think beyond [budget cuts] to the consequences for the individual.”
According to a recent survey for trade union Usdaw, which represents many shop staff, 19% of workers are claiming some form of in-work tax credit.
Citizens UK, which has led the campaign on the living wage, also says simply cutting tax credits is not the answer. It says its position differs from the likes of Hilton and Silva because it is advocating a strong national minimum wage with a voluntary living wage.
“We want to see how government and businesses can work together to increase the number of people receiving at least the living wage. We believe work should be the surest way out of poverty,” said Gillian Owen at the campaign group.