Taxpayers are forking out extra billions of pounds to subsidise bosses who pay poverty wages, according to a TUC report published yesterday.

Increasing numbers of working people are living in poverty as real wages are forced down and new jobs are concentrated in low-pay industries, the report said.

In-work poverty triggers social security support for victims through payments such as tax credits despite
the government's continuing attacks on the welfare state.

The Is social security spending really out of control? report says spending is likely to be £9.2bn a year more than originally forecast by 2014-15.

It states: "The biggest area of social security overspending - £2.6 billion a year by 2014/15 - is on tax credits, two-thirds of which are going to working households.

"Recent figures from the Office for National Statistics found that the number of middle-income families receiving tax credits has almost doubled in the last five years.

"This overspend is a result of falling real incomes leaving more working families in need of tax credit support and has come in spite of cuts to tax credits that have left some families thousands of pounds a year worse off."

It says the next biggest area of overspending by 2014-15 will be £2.5bn a year on housing benefit.

"This overspending is also likely to be due to rising in-work poverty as most of the increase in the housing benefit caseload since 2010 comes from working families," says the TUC.

Recent TUC research identified "the longest real wage squeeze in over a century."

TUC general secretary Frances O'Grady said: "For all its rhetoric on tackling welfare, the government is set to spend almost £10bn a year more than it originally planned on social security payments by the end of this parliament.

"This is because Britain's living standards crisis has led to a rapid rise in the working poor. Even while tax credits are being cut, spending is going up because so many more working people are reliant on benefits to help make ends meet."