Never mind the kids the dh needs to grow the fuck up!
Part of being a parent is ensuring your children become decent, thoughtful, kind considerate adults
Not entitled, selfish bullying lazy little shits!
My dd is 17 working full time pays rent, her own phone and driving lessons. Wasn't even a case of me having to tell her, when she knew how much she'd get in take home we sat down and worked out a fair arrangement. She's no angel don't get me wrong but she would not DARE behave like this.
You say your dh is trying to be "cool dad" does he not get at all that actually they're taking him for a complete mug?
They're playing you off against each other you BOTH need to go on a parenting course.
Maybe one run by mil? She sounds excellent (although that begs the question how did your dh turn out so useless?)
Personally in your position I would boot dh and the eldest 2 right out! Dh thinks ds at 18 and working wouldn't cope living alone? Oh please! If he can cope with work and driving lessons he can bloody learn!
I'm repeatedly shocked how many kids on mn are expected to do very little in the way of chores ESPECIALLY boys. Operating kettles, cookers, washing machines, irons etc
1 don't require a vagina
2 are perfectly possible from around the age of 11! Sometimes earlier
3 make them bloody appreciate how good they have it!
With 5 kids between 7 of you if you each pulled your weight nobody would need to do too much per person. Even very little ones can lay tables, clear dirty dishes, put toys away, even dust!
I'm honestly thinking family counselling might be necessary too.
You say it's a divided family and it really sounds it with your dh assigning golden child status to your eldest 2 - how does he treat the younger ones especially the girls?