Cameron may force youngsters to live with parents

The Prime Minister insisted the system was giving the wrong incentives as he urged more action to prevent feckless families relying on state handouts.

The comments come ahead of a keynote speech on welfare Mr Cameron is due to deliver.

The measures said to be under consideration include:

Scrapping most of the £1.8bn in housing benefits paid to 380,000 under 25s, worth an average £90 a week, forcing them to support themselves or live with parents instead;

Stopping the £70-a-week dole payment for individuals who do not try hard enough to get work;

Forcing a hard core of unemployed to do community work after two years or lose all their benefits.

Ministers are said to be 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?’

“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 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.”

Mr Cameron indicated that he favours new curbs on Jobseeker’s Allowance, demanding the unemployed do more to find work.

A hard core of 5,000 to 10,000 regarded as workshy could be forced to take part in community work if they do not find employment or training after two years.