Cameron unveils plans for new welfare crackdown

In an interview with a Sunday newspaper, the prime minister insisted the system was giving the wrong incentives as he urged more action to prevent feckless families relying on state handouts.

Measures said to be under consideration by the government include scrapping most of the £1.8bn in housing benefits paid to 380,000 under 25s, stopping the £70-a-week dole payment for individuals who do not try hard enough to get work and forcing a hard core of unemployed to do community work after two years – or lose all their benefits.

The comments, in an interview with the Mail on Sunday, come ahead of a keynote speech on welfare Mr Cameron is due to deliver next week.

According to the newspaper, ministers are also looking again at plans to limit child benefit to a couple’s first three children – although Mr Cameron will stop short of raising the idea.

Mr Cameron said the existing benefits system was “sending out strange signals on working, housing and families”.

He went on: “A couple will say, ‘We are engaged, we are both living with our parents, we are trying to save before we get married and have children and be good parents.’

“‘But how does it make us feel, Mr Cameron, when we see someone who goes ahead, has the child, gets the council home, gets the help that isn’t available to us?’

‘Trapped’

“One is trapped in a welfare system that discourages them from working, the other is doing the right thing and getting no help.”

Asked if he would take action against large families who were paid large sums in benefits, the premier replied: “This is a difficult area but it is right to pose questions about it.

“At the moment the system encourages people not to work and have children, but we should help people to work and have children.”

Mr Cameron’s proposal to axe housing benefit for the under-25s, which is worth an average £90 a week, would include exemptions for special cases, such as domestic violence.

But he insisted: “We are spending nearly £2bn on housing benefit for under-25s – a fortune. We need a bigger debate about welfare and what we expect of people. The system currently sends the signal you are better off not working, or working less.”

The prime minister’s hard line on benefits could exacerbate strains with Liberal Democrat coalition partner Nick Clegg, after a damaging split over proposals for scrapping GCSEs this week.

But Mr Cameron said: “As leader of a political party as well as running a coalition it’s right sometimes to make a more broad-ranging speech.”

Shadow work and pensions secretary Liam Byrne said: “This is a hazy and half-baked plan when we need a serious back to work programme for young families.

“Many young families with their first foot on the career ladder will be knocked off if help with their rent is taken away. And young families that want to work won’t be able to move where the jobs are.”