Paid to stay in a poverty trap: The benefits system is forcing good workers to turn down good jobs, says Hannah Richardson

How come there is supposed to be an army of unemployed people out there, and yet our small business in north London has found it so hard to attract anyone employable?

Admittedly, we cannot afford to pay big money, but I always thought unemployed people wanted to keep their skills honed. And everybody agrees that the longer you are unemployed the less credibility you have for prospective employers. Wouldn't it be better to work, even for less money than you'd really like, at least while looking for something better?

Sadly, it is not so simple.

In the world of skilled and semi- skilled labour, the qualities you quickly learn to love are maturity and reliability. You want your workers to have grown out of the habit of bringing their personal problems to work - quite literally in some cases. One worker's wife turned up on a customer's doorstep with her three children in tow, to check up that he was where he'd told her he was going and to bawl him out for not coming home the previous night.

You cannot have people handling potentially dangerous machinery if they have been out boozing until four in the morning. When they are working with wood and solvents, as our employees do, they must not smoke. And if you are leaving them to work unsupervised in someone's home, it is imperative that they are honest - something it is impossible to find out except from experience.

The worker you really want on a long-term basis is probably approaching middle age, settled, with a family to go home to at the end of the day. Someone who wants to work to keep his family, and whose social life is easily restricted to non-working hours.

Brilliant, you think - there are so many people in that age bracket who have been made redundant during the recession and who are desperate to work again. But there is a problem: they are caught in a benefits trap.

We interviewed a skilled labourer the other week who seemed to be just what we needed - but he simply could not afford to take the pounds 300 a week that we could afford to pay him.

He had moved down from the North with his family to find work - just as Lord Tebbit would prescribe - and was renting a house in London for pounds 200 a week - which the benefits agencies are paying. If he starts working, he will have to pay that sum himself, in addition to losing his income support - leaving him nothing at all, after tax, to feed his family.

While I sincerely hope that the person in question does find an employer able to pay the salary he needs, it seems unlikely. In order to continue paying that massive rent and keep his family in a modest fashion, he would need to earn pounds 500 a week - which is pounds 26,000 a year. Not many firms can afford to spend that much on a skilled labourer.

Another good worker, an office administrater and saleswoman, was a single parent on income support. Housing benefit paid pounds 700 a month for the nice two-bedroom house she shared with her little boy. She would have liked a 'proper' part-time job with us - and we were keen to have her - but any earnings she made over five pounds per week would have been deducted from her income support. Yet she could not have afforded the rent on even a scruffy bedsit on what she would have earned part-time. She lost the chance to ease herself back into the workforce and regain confidence; we lost another good worker to the benefits trap.

Good workers are few and far between. You don't get them from newspaper advertisements, experience has taught us, nor from the Job Centre, nor yet from training schemes. All the people we currently employ have either been personally recommended or come knocking on the door. So it is heartbreaking that there should be good people out there who want to work but whom the housing benefit system prevents small businesses like ourselves from employing.

In effect, we have no chance of taking on anyone with a family to support who is living in privately rented property. So the man from the North of England remains unemployed in a strange city, having uprooted his entire family to no end.

The single mum sees no hope of life outside the home until her son has grown up and she can work full-time - just another 10 years to go]

The only people profiting from the benefits trap in this case would appear to be London landlords, whose sky- high rents are being guaranteed out of our pockets. Two hundred pounds a week would pay off a mortgage of pounds 100,000 over 25 years.

By paying these inflated rents out of the public purse, and maintaining their 'all or nothing' approach to income support and housing benefit, the benefits agencies are keeping London rents artificially high and forcing people who really want to work to stay on benefits.