Recommendations that teenage mothers should no longer automatically be entitled to council housing or housing benefit, as part of a new drive to reduce teen pregnancy, have been welcomed by David Cameron in a report by Conservative MPs.

The 40 proposals, to be published later this week, come from the 40 Group – the Tories who hold the 40 most marginal seats in Parliament. Several of their controversial ideas have been blocked by the Liberal Democrats inside the Coalition, but could be revived in the Tory manifesto for the 2015 election. The 40 Tory backbenchers also call for:

* Greater use of contraception to reduce “repeat abortions” and propose diluting the rights of workers in small businesses;

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* Deducting from child benefit payments any fines imposed on the parents of truants;

* Ending 40 per cent tax relief on pensions for higher-rate taxpayers;

* Cutting the number of non-EU foreign students at English universities outside the top 20 or 30;

* More rapid moves to exploit the UK’s shale gas reserves and phasing out renewable energy incentives.

During the 2015 campaign, the Liberal Democrats will highlight what they call a “right-wing agenda” they have stopped the Tories from implementing since 2010 – including housing benefit curbs for under-25s – and will warn that such measures could be revived if Mr Cameron wins an overall majority next time.

The Tory MPs admit their proposal for young mothers will be controversial but argue that, despite a 20 per cent drop in the conception rate among under-18s during the previous Labour government, the UK still has the highest teenage birth and abortion rates in Western Europe. In a foreword to the report, Mr Cameron describes it as “a compilation of interesting ideas that will make a valuable contribution to policy debate within the Conservative Party”.

According to the report, some teenagers may view the right of 16 and 17-year-olds to claim housing benefit as “an automatic right to free housing, encouraging them to have a child.

“All benefits to teenage mothers should be made on the condition of them living with their parents or in supervised hostel accommodation,” said the Tory MPs. “Teenagers will be left in no doubt that teenage motherhood will not lead to an automatic right to subsidised housing and other benefits, while the public can be assured that a teenager’s motivations for having a child are not related to housing access.”

The MPs propose a drive to cut the number of “repeat abortions”, which rose from 31 to 36 per cent of all terminations in the 10 years to 2011. They suggest that health staff encourage the use of long-active reversible contraception – such as injections every 12 weeks or implants and devices fitted inside the womb – and are more pro-active in giving birth control advice after abortions.

Fiona Weir, chief executive of Gingerbread, which campaigns for single parent families, said last night: “It is hugely disappointing to see politicians yet again hit out at teenage parents with punitive policy ideas based on the same old stereotypes, which fly in the face of the facts. We know that, however untrue these stereotypes are, the stigma facing teenage parents can still be hugely damaging to the young women and men taking their first steps into parenthood. Teenage pregnancy rates have been declining for a decade and are the lowest on record. Just 2 per cent of single parents are teenagers. Young single parents are already set to lose out under universal credit, purely on the basis of their age.”

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James Morris, the Conservative MP for Halesowen and Rowley Regis, and David Mowat, the Tory MP for Warrington South, said the 40 Group did not have “a single ideologically driven view of the world” but that its ideas stemmed from “listening to key swing voters on the doorstep”. They added: “They are practical ideas which could make a difference to the lives of ordinary people living in Britain today.”

In his foreword, Mr Cameron admits Tory Party members will have “different views” about the individual policies, but says they show the party is “brimming with ideas”.

To relieve regulatory burdens on business, the 40 Group also says small firms should be exempt from automatically enrolling workers in to pension schemes, and people taking cases to employment tribunals should have to “lay down a deposit based on their financial circumstances”.

It proposes that the definition of a “micro-business” be changed from one with fewer than 10 workers to fewer than five, because the current definition covers about 95 per cent of all companies.

These ideas echo the proposals by Adrian Beecroft, a venture capitalist and Tory donor, who recommended to No 10 that workers could be “fired at will” without resort to a tribunal – but saw his plan blocked by the Liberal Democrats.

Case study: I would have had to bunk on friends’ sofas

Leah Moyse, a 24-year-old charity worker from Surbiton in Surrey, was 17 when she had her daughter

I was claiming housing benefit and first they put me in a hostel for six months, which was pretty disgusting, then I was put in temporary housing for three years. They’re private rentals which go through the council, so they’re really expensive.

I was in a one-bed flat, with no double-glazing and storage heaters. I don’t know what I would have done if this proposal had come in then: I would have had to bunk on friends’ sofas. Maybe I could have managed in the short term, but not for any real amount of time.

I now work with teenage mothers through the Straight Talking charity. Not one of them has said she did it for a council place. Some of them were in domestic violence relationships or coerced by older men, but none of them thought ‘what I really want in life is a council house and benefits’.

Teenage mothers are made out to be scheming, but a lot are in a bad place and need support rather than being condemned.”