Poor people should be prepared to take more risks because they have the least to lose, according to the minister for welfare reform.
Lord Freud said the benefits system was "dreadful" and allowed lone parents and sickness claimants to "have a lifestyle" on the state.
The Tory peer, who is helping to push through a radical overhaul of the welfare state, insisted he understood the reality of living on benefits, arguing "you don't have to be the corpse to go to a funeral".
In an interview with The House magazine, he said: "We've got the circumstances now where... people who are poorer should be prepared to take the biggest risks - they've got least to lose.
"We have, through our welfare system, created a system which has made them reluctant to take risks so we need to turn that on its head and make the system predictable so that people will take those risks. I think we have a dreadful welfare system."
Lord Freud dismissed the possibility of taking part in a television documentary which filmed him living on benefits for a week, something a number of politicians have done in the past.
"I have thought of the issue," he said. "The trouble is, it's a stunt when someone like me does it because you do it for a week. That's not the point."
He added: "I think you don't have to be the corpse to go to a funeral, which is the implied criticism there."
Lord Freud advised the Labour government on welfare after publishing an independent report in March 2007 on the Welfare to Work system. He said former prime minister Gordon Brown "thought he could soften me up and then dump me in with his officials and I would just capitulate" in talks they had on reforms.
He added: "Which I thought was a pretty demeaning thing for a chancellor and prime minister-to-be, to think that was his role. And in practice a pretty foolish strategy when you're up against someone who's an investment banker, who gets yelled at every day of his life, if not three times, by chief executives, finance directors and chairmen for one thing or another. So, if he was wanting to get an outcome, it was a pretty poor strategy."