New welfare clampdown could axe housing benefit from under-25s

Hundreds of thousands of young people could be stripped of housing benefit and forced to live with their parents as part of a new welfare crackdown signalled by David Cameron.

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

The measures said to be under consideration include scrapping most of the £1.8 billion in housing benefits paid to 380,000 under 25s, worth an average £90 a week, forcing them to support themselves or live with mum and dad instead.

It could also mean 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.

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?' 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."

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Critics warn right-to-buy scheme may reduce affordable housing available

Critics of the Government's planned re-launch of the right-to-buy scheme, say it could cause a reduction in the number of affordable homes to rent.

But the Prime Minister hopes giving up to £75,000 off will reinvigorate the right-to-buy scheme introduced by Margaret Thatcher in the 1980s and encourage the creation of "stable mixed communities".

Sales have tailed off significantly after discounts were cut in the 1990s and not adjusted to properly reflect fast-rising house prices with only 3,690 completed in 2010/11.

Under the revised allowances, those who have five years' residency could receive a 35% discount, with an extra 1% for each added year up to a maximum of £75,000.

Tenants in flats will get 50% off after five years, with 2% added yearly.

Ministers say there will be no reduction in social housing as the money raised from sales will go towards building more - but town hall chiefs have warned the centrally-set discounts may adversely affect some areas.

Mr Cameron said: "I want many more people to achieve the dream of home ownership. In the 80s, Right to Buy helped millions of people living in council housing achieve their aspiration of owning their own home.

Critics warn right-to-buy scheme may reduce
affordable housing available. Credit: Reuters 

"It gave something back to families who worked hard, paid their rent and played by the rules. It allowed them to do up their home, change their front door, improve their garden - without getting permission from the council.

"It gave people a sense of pride and ownership not just in their home, but in their street and neighbourhood, helping to build strong families and stable mixed communities. But over time the discounts were cut, they didn't keep pace with rises in property prices, and this vital rung on the property ladder was all but removed.

"This Government is now putting it back by dramatically increasing the discount rates so that we support the dreams of those council tenants who to want to own the roof over their head."