Prisoners at the Middlesex House Of Correction were required to pick apart old ropes to make oakum, which was used to seal ships and piping.
Artist: Henry Mayhew (1812-1887)
 Spike was the colloquial name for the Workhouse, a place where destitute London dwellers were, in fact, enslaved.
The origins of this practice can be traced as far back as to the Poor Law Act of 1388, which aimed at restraining free migration of people.
In the aftermath of the Black Death, which killed nine-tenths of England’s population, whole villages and fields were abandoned. People were fleeing their homesteads, hoping that elsewhere conditions would be better. Work forces on the fields were dwindling, and those who fled were looking for higher wages.
In between jobs, they were simply begging.
To curb this, new laws (which, by the way, had their revival in the 21st Century, with the establishment of the European Union) prohibited migration, and prohibited giving money to able-bodied beggars.
Unsurprisingly, consequent parliamentary Acts, which obliged people to donate to the poor (but only via tax-collectors,) didn't diminish the number of the poor and surely, didn't alleviate their suffering. And so, to keep the problem tacked away, and in the process get cheap labor, Workhouses were erected all over England, offering roof and food in return for hard labour.
The term 'Spike' refers to the tool used in the laborious task of picking oakum.