It's an age old problem and as such I don't have great hopes that this Government will solve it.
From the very earliest days when the young state started to decide it had a responsibility for the welfare of citizens fallen on hard times (the Elizabethan Poor Law of 1601, via the Victorian poor law of 1834 to the reforms of the 1940s to the modern day, we have faced the conundrum of how both to provide a safety net and support vulnerable citizens in a civilised manner and at the same time not encourage people to be feckless.
The Victorians thought they had it cracked in 1834. The only people who could carry on receiving payments in their own homes were those who were unable to work. If you were poor but were able-bodied, then it was the workhouse for you, where the test was "less eligibility" - i.e. the standard of living inside the workhouse should be lower than that available to an able -bodied worker outside the workhouse who was working. The idea of course was to make it always more attractive to work. Those inside were "less eligible" due to the fact that they were workless.
It looks like it might work on paper, and indeed many people suggest the same thing on this thread - "simple! Make being in work always the more attractive option!"
But the problem is twofold (1) duty to the way our economy works and the competitiveness of the market place, the standard of living of the lowest paid workers is already obscenely low. Many of them have to do two crap jobs and still have a poor living standard. We can't make life on benefits "less eligible" than that without offending against our principles of what it means to be a civilised society in the third millenium.
(2) Availability of jobs. The "less eligibility" test does assume that there are the jobs out there, if people were only prepared to do them. There aren't always.
FWIW my suggestions are
(1) Some disincentive for having loads more children if you are already on benefit. There is no excuse in this day and age.
(2) Research whether the Daily Mail hype about young girls deliberately getting pregnant get a flat really is true in a significant way. If it is, then I think the idea of removing the entitlement but building warm-hearted mother and baby centres, where each mum and baby has an apartment and there is a warden who works with them, particularly to help them get qualfications once their baby is old enough, is not a bad idea. Each unit could have a creche, the kids would grow up together which would be nice. (Though just reading about it, I think it would be incentivising in just the same way as the way the council house list works !)
(2) Proper apprenticeships to decent trades for young people who are not academic.
(3) A proper minimum wage
(4) Financial support to make the transition to work from benefits easier
(5) Generous relocation allowances for those prepared to move to a new job.
(6) Teaching in schools which bigs up the virtues of work and supporting your family if you can. And which expresses the fact that unlimited sexual promsicuity and babies outside of committed relationships are not things that society in general thinks is desirable. It must be possible to teach to these sorts of values while at the same time being supportive to those who do not live up to them. Does the choice have to be so starkly between "1970s non-judgmental woolly liberal" and "Victorian stigma and "on yer bike" attitudes ??
And schools should teach that it is wrong to be posting on mumsent while you are supposed to be working!