The government shouldn't be making up people's wages, it should also not allow people to be self employed officially but claim benefits, its dishonest call them unemployed.
The other thing here is that since the 1970's the real value of wages has been falling as the distribution of wealth has changed. The reason we are better off in terms of living standards is that we have been massively benefitted by cheaper goods being produced in the emerging economies across this time.
Since the Thatcher government no one has done anything to address this issue, the fact that the wealth produced by nations ( and facilitated by the provision of their services) has been massively redirected to the wealthy. The average middle class, and looking at mumsnet you're all average and middle class, have been duped into voting this way by been given the crumbs from the table, and whipping up of jealousy and disgust towards individual groups (benefit claimaints, single parents, government employees etc etc).
Tax credits have allowed ordinary people to get by, and have acted as a subsidy on corporate profit througout this time ( as a PP said they have existed in someway since the Heath government and CTCs/higher rate CB were a replacement for being able to claim children as tax dependent).
What we should be doing is demanding that the distrubution of wealth is done in a fairer way, that people are paid a decent wage, for job security, that WORK pays and that it pays for all, not just those who have capital to start with.
Oh god I sound like Karl Marx