I'm probably horribly naïve, and quite possibly stupid, but I think the solution is actually pretty simple. Welfare, and all other aid programs, should be available to absolutely anyone, regardless of income. But none of these aid programs should result in the aid-ee receiving any form of currency.
For example, welfare should provide spartan clothing, housing, nutritious food, and that's it. No food stamps, no cash disbursal, but a safe and humane environment that can help people to get back on their feet. For those who don't want to get up and work, that's fine too, but comforts like being able to get coffee at Starbucks, or a big-screen TV, or a nice bottle of wine, aren't going to be provided by the government. If you want luxury, work for it.
If you do the maths using the UK government's own figures, it's actually cheaper to scrap the entire welfare system and just give every man, woman and child in the UK #3000/year, no questions asked, no strings attached. A family of 4, outside London, could live reasonably on 12k (untaxed, remember) a year, and anything you earned above that would be counted as regular income and taxed accordingly.
There has been a discussion about this in Germany, too. One of the most prominent supporters of it is the boss of Germanys biggest drugstore/pharmacy chain. You'd normally expect such things to come from "leftists".
It should include sufficient resources to raise children effectively. Underinvestment in poor children, especially at a very young age, is probably the biggest opportunity cost in almost all countries in the world.
For example, welfare should provide spartan clothing, housing, nutritious food, and that's it. No food stamps, no cash disbursal, but a safe and humane environment that can help people to get back on their feet. For those who don't want to get up and work, that's fine too, but comforts like being able to get coffee at Starbucks, or a big-screen TV, or a nice bottle of wine, aren't going to be provided by the government. If you want luxury, work for it.