How some of Britain's poorest women are being cheated out of the minimum wage

Every cracker that bangs on your Christmas table will have been assembled by a British homeworker

Ah, the joys of a minimum wage. It's the one unequivocally left-wing achievement of the Blair years. No more women forced to skivvy for £1 an hour. No more men forced to work four hours just to earn enough for a Travelcard to get to work. Whenever I slump into the they're-all-the-same blues, the figure of £4.85 floats towards me on a cloud of Blairite hope.

Ah, the joys of a minimum wage. It's the one unequivocally left-wing achievement of the Blair years. No more women forced to skivvy for £1 an hour. No more men forced to work four hours just to earn enough for a Travelcard to get to work. Whenever I slump into the they're-all-the-same blues, the figure of £4.85 floats towards me on a cloud of Blairite hope.

Then I heard about Manveen Patel. She earns 90p an hour. She works with no health and safety protections. She has no right to sick pay. She can be sacked at any moment. She is too scared of being fired to complain or join a union. She isn't part of the sweatshop story from Bangladesh, Brazil or Burma. Manveen lives and works in Bradford; she is a British citizen.

Welcome to the world of British homeworkers. Manveen is not alone. The Annual Survey of Hours and Earnings this year found that 272,000 British workers - equivalent to the entire population of Hull - are illegally being paid less than the national minimum wage. Most of them are women working out of their own homes, and they are never busier than in December. Every cracker that snaps and bangs on your Christmas table this year will have been assembled by a British homeworker. Ho ho ho.

So who are these women working in Britain's own sweatshops? I decided to track some down - and I found Bridget Phillips, a smart, tough 42-year-old woman from Derbyshire. Bridget stumbled this March into the story of how the supply chains for our major supermarkets (combined annual profits: £4bn) are cheating the country's poorest women out of the minimum wage, while the Government does nothing. "I was running really low on money and needed some cash quick," she explains. "So I was looking through the local papers, and I saw an advert for a company that said they needed homeworkers to pack tights. I phoned up and a few days later they delivered 20 boxes of tights."

At first it sounded like a good deal. Bridget was told she would be paid 7p for every dozen pairs of tights she packed into a major supermarket's own-brand packaging, and she got to spend time with her family - or in front of the TV - at the same time. But then she started doing the job. It's surprisingly complicated, involving 10 different packing steps; if any of the fragile materials are damaged, the worker herself is then made to pay for them. "After a few days, I realised it was physically impossible to pack enough tights in an hour to make the minimum wage," she explains. "I've done tough cleaning jobs in my time. I'm used to earning my money. But even if you were superwoman, you just couldn't do it."

But here's where Bridget's story diverges from Manveen's and from most homeworkers'. She knew about the national minimum wage. She refused to sweat in silence; she confronted her new employer. She explained that they had set her an impossible task - nobody could fill 69 packs an hour - and so they were breaking the law.

Bridget had broken the rules of a "flexible" workforce: she spoke back. The intermediary company supplying the supermarket quickly became abusive and demanded the return of their tights. When they turned up to collect the goods, they shouted at Bridget's daughter-in-law. They explained that Bridget would not be paid because she had "failed and complained". Nine months later, Bridget has still not been paid a penny for her work; the company won't take her calls. She tried phoning the supermarket itself, but she was told it was none of their business and was cut off.

The National Group of Homeworkers is regularly contacted by working-class women who are being abused in this way. "This is the worst time of year because of the crackers industry," explains Jill Hall, the group's campaign co-ordinator, "but the one million homeworkers in Britain also do sewing, soldering and packaging all year round. Many of the people we represent are operating complicated machinery in their homes with no safety advice at all. It's a complex industry and it's happening almost entirely in the shadows, with no regulation or government monitoring."

When I first heard about this, I assumed that these companies were taking a huge risk. Surely any firm caught cheating its workers out of the minimum wage would be subject to massive fines or the jailing of its directors - wouldn't it? In fact, in the unlikely event that you are caught breaking this law, there is no punishment. That's right: none. The company is simply required to pay the accumulated backlog to the workers they have cheated. As Bas Morris of the Community Trade Union says: "If you are caught making counterfeit Armani or Calvin Klein clothes, you can face 10 years in prison or an unlimited fine. If you are caught not paying the minimum wage, you get a slap on the wrist. You can't steal from big brand-name companies without being hammered, but if you steal from hard-up workers, that's just fine."

The Government promised over six years ago to sign the International Labour Organisation's convention on homeworkers' rights. This only requires the Government to create a national strategy to make sure basic employment rights are actually being enforced. Yet every year the signing gets booted out to more "consultations". Patricia Hewitt - the Trade and Industry Secretary - has a good record when it comes to women's rights in the workplace, particularly on childcare and flexible working hours. But on this issue, she is appeasing the worst employers in the country.

Why? Part of the answer lies in sordid power politics. Homeworkers are scattered across the country, barely know about each other's existence, and they are broke. While the supermarkets can employ armies of Gucci-clad lobbyists - and Lord Sainsbury is a minister in the Department for Trade and Industry - homeworkers can barely afford to write a letter to their MP. We can sneer at the influence of Big Money in US politics - and we're right to - but we are going the same way.

Only one group can stand up for homeworkers. All through the Eighties - and especially in the market boom of the 1990s - we were lectured about how trade unions were "unnecessary" and "outdated". Trade unions belonged to the world of the factory and the coal mine, the story went; who needed unions in the shiny world of the New Economy? But now the dust is settling on the post-Thatcher economy, and it is clear that unions have never been needed more. Homeworkers are the least unionised workers in Britain. It's no coincidence that they are also the most underpaid and unprotected.

Manveen and Bridget's stories are painful little parables about what happens when markets break free from trade unions and government regulation. Any "drag" on the market - like a Bridget asking for her basic rights - is viewed by these companies as unacceptable. The basic conditions of life - a living wage, or health and safety regulations - are whittled away. The minimum wage legislation was supposed to be a move away from this philosophy - but if it is not properly enforced, what's the point?

Abuse of workers isn't only happening in Singapore or Bangladesh. After seven years of a Labour government, it is still happening in a street near you.

j.hari@independent.co.uk