Cameron reveals sliding scale for benefits

Proposals under consideration within government could change the welfare system, allowing claimants to receive different levels of benefits depending on where they live.

Downing Street revealed that regional benefits were one of the options for shaking up the welfare system, which Prime Minister David Cameron has been looking at.

And employment minister Chris Grayling told the House of Commons that it was “entirely sensible” to have a debate about whether regionalisation of welfare levels was “the right approach for the future”.

But the idea was dropped from a speech in which Mr Cameron floated cash-saving measures such as ending housing benefit for under-25s, limiting the welfare paid to families with three or more children, cutting the link between benefits and inflation and taking away council homes from high earners.

Claimants could be required to learn how to read and write, draw up a CV or to take action to improve their health, in order to carry on receiving benefits. Single parents could be told to take steps to prepare for a return to work as early as three years after their child’s birth.

Mr Cameron stressed that he was not setting out policy plans but trying to start a national debate on how to make savings in the £84 billion bill for working-age welfare.

Some elements would be discussed with Liberal Democrat coalition partners with a view to implementation before the next general election, while others might feature in the Conservative manifesto for the 2015 poll.

The prime minister’s ideas sparked concern among charities working with young people and the poor, who warned that they would hit vulnerable people.

Campbell Robb of housing charity Shelter said an increase in homelessness was “inevitable” if under-25s lost housing benefit, while Fiona Weir of single parent charity Gingerbread said the “half-baked” changes would “stoke up financial hardship, relationship strain and stigma for hundreds of thousands of families”.

And TUC general secretary Brendan Barber accused Mr Cameron of “attempting to undermine the whole basis of social security and national insurance by pretending that our welfare state only serves the very few who abuse the system – while instead it provides vital support to millions of families across the country”.

Shortly before Mr Cameron spoke in Kent yesterday, his official spokesman told reporters that Mr Cameron would say: “We are looking at whether public sector pay should be more responsive to local pay rates and that is something we should look at for benefits too.”

The spokesman explained: “Clearly, wage rates vary around the country and what someone receives in benefits compared to what they could potentially get by going into a job has an impact on the incentives they face. That is the logic for looking at this question.”

Aides confirmed that the question had been discussed within government and featured in early drafts of the prime minister’s speech, but stressed that it was not included in the final text.

And the spokesman later said: “Speeches go through a number of drafts. The point is that he set out the questions that he thinks should be addressed in the speech that he gave.”