25/06/2012 02:59 BST | Updated 25/06/2012 17:17 BST

David Cameron: Slash Housing Benefit For Under 25s And Cut Child Benefit

David Cameron will moot slashing benefits for feckless families and young people as he warns the welfare system is causing deep social divisions.

In a major speech on a core Tory issue, the Prime Minister is to suggest stripping housing benefit from the under-25s and forcing them to live with their parents.

He will also float time-limited unemployment benefit, and hint at restricting handouts for those who have large numbers of children.

david cameron welfare

Cameron will say it is time to ask "searching questions about working-age welfare"

Cameron will tell an audience in Kent: "We have, in some ways, created a welfare gap in this country - between those living long-term in the welfare system and those outside it.

"Those within it grow up with a series of expectations - you can have a home of your own, the state will support you whatever decisions you make, you will always be able to take out no matter what you put in.

"This has sent out some incredibly damaging signals. That it pays not to work. That you are owed something for nothing. It gave us millions of working-age people sitting at home on benefits even before the recession hit. It created a culture of entitlement.

Photo gallery See Gallery

"And it has led to huge resentment amongst those who pay into the system, because they feel that what they're having to work hard for, others are getting without having to put in the effort."

Cameron will say it is time to ask "searching questions about working-age welfare - what it is actually for; who should receive it; what the limits of state provision should be; and what kind of contribution we should expect from those receiving benefits".

The premier will say the coalition's reforms are based on getting people into work, insisting that "compassion isn't measured out in benefit cheques - it's in the chances you give people".

Cameron will indicate that he wants to adjust the benefits system so it does not encourage people to have large numbers of children.

"If you are a single parent living outside London, if you have four children and you're renting a house on housing benefit, then you can claim almost £25,000 a year," he is to say.

"That is more than the average take-home pay of a farm worker and nursery nurse put together. That is a fundamental difference."

The premier will admit that he is straying into "difficult territory".

"But at a time when so many people are struggling, isn't it right that we ask whether those in the welfare system are faced with the same kinds of decisions that working people have to wrestle with when they have a child?" he will add.

But he will risk fuelling friction with the Liberal Democrats by signalling that the Tories want a much more radical programme than has currently been agreed.

The Lib Dems have insisted they are "very relaxed" about the speech, stressing that both party leaders will need to address comments at their political base from time to time. But sources also made clear that the junior coalition partner did not support much of what Cameron was proposing.

On Sunday shadow work and pensions secretary Liam Byrne said the plans were "hazy and half baked."

"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."

David Orr, chief executive of the National Housing Federation said Cameron's plans could increase homelessness. "Preventing those under-25 from getting help for housing costs may increase homelessness and make it harder for young people to move to where they can find work. There could also be a huge impact on young working families relying on housing benefit to help pay their rent, or disabled people unable to work."