24 June 2012 Last updated at 08:25 ET

Cameron suggests cutting housing benefit for under-25s

 

David Cameron said the existing welfare system was sending out "strange signals"

The prime minister has suggested that people under the age of 25 could lose the right to housing benefit, as part of moves to cut the welfare bill.

Scrapping the benefit for that age group would save almost £2bn a year.

In an interview in the Mail on Sunday, David Cameron said he wanted to stop workers resenting people on benefits.

But a senior Lib Dem warned that the priority was to get young people into work, training or education to avoid "repeating the mistakes of the 1980s".

In his newspaper article, which comes ahead of an expected speech on the subject this week, Mr Cameron said the existing system was sending out "strange signals" on working, housing and families.

He called for a wider debate on issues including the cost of benefits.

BBC political correspondent Vicki Young said the article was a clear appeal to core Tory voters and MPs who have criticised Mr Cameron for failing to promote Conservative values while in coalition with the Liberal Democrats.

'Trapped in welfare'

For the Lib Dems, Chief Secretary to the Treasury Danny Alexander told BBC One's Sunday Politics he was "very relaxed" about the prime minister "setting out his own thinking".

But the coalition government had already brought in radical welfare reform and "the right thing to do" was to let them "bed in before we take further decisions".

Analysis

Adam Fleming Political Correspondent

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Number 10 admits that David Cameron's proposal to remove housing benefit from young people may have to wait until the Conservatives' next manifesto.

That is because it is deeply unpalatable to many Liberal Democrats and is unlikely to become coalition policy.

Instead the prime minister "wants to begin a debate".

He asks: Why is it right that some youngsters cannot afford to move out of the family home while others are paid benefits to rent a room in the private sector?

Lib Dems ask: But what about those who are leaving care, or have no family, or don't earn enough to pay their rent?

Labour says it's the wrong solution when the young simply need work.

Looming over them all is the prediction made by the chancellor in the last Budget that a further £10bn will have to be saved from the benefits bill in the next parliament.

It feels like the 2015 general election campaign has already started.

He added that the immediate priority with young people was stopping them being "blighted by long periods of unemployment" as they had in the 1980s - a reference to the decade when there was a Conservative government.

The Mail quoted Mr Cameron contrasting a couple living with their parents and saving before getting married and having children, with a couple who have a child and get a council home.

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

Mr Cameron said the welfare system sent out the signal that people were "better off not working, or working less".

"It encourages people not to work and have children, but we should help people to work and have children," he said.

He said that he also favoured new curbs on the Jobseeker's Allowance.

Later this week, Mr Cameron will set out more proposals aimed at cutting the UK's welfare bill, which could include forcing some unemployed to do community work after two years on benefits.

'Not palatable'

In March, the government's Welfare Reform Act received Royal Assent. That act - which applies to England, Scotland and Wales - introduces an annual cap on benefits and overhauls many welfare payments.

Danny Alexander: "The prime minister is free to set out his own thinking"

A Downing Street source said on Sunday that Mr Cameron was "starting a debate and setting out some ideas. We are realistic that some of them might not be achievable politically because they're not palatable to our coalition partners.

"We would like to get moving on these as soon as possible but we might not be able to get it done until after 2015."

In recent weeks the numbers of people claiming housing benefit reached five million for the first time.

Chancellor George Osborne indicated in his March Budget that the welfare bill should be cut by another £10bn between 2015 - the expected year of the next election - and 2017. That is on top of the £18bn of cuts during the current parliament.

For Labour, shadow work and pensions secretary Liam Byrne called it a "very hazy and half-baked plan from the prime minister, when what we really need is a serious back-to-work programme".

"You have to remember that housing benefit is available to a lot of people who are in work and perhaps on low incomes, so for a lot of young families with their first feet on the career ladder this plan could actually knock them off the career ladder," he told the BBC.