For an issue that rarely features among the top priorities of the electorate, housing dramatises a big political division. On the one side, a house in Britain is not just a home, it is a declaration of independence. On the other side, social housing is an exemplar of collective provision.

Another way of saying this is that there is still something irretrievably 1940s about the housing debate in this country: the “property-owning democracy” first articulated by Neville Chamberlain; Aneuran Bevan's building programme in social housing after the Second World War. Housing was only brought off a war footing by a policy that turned the latter into the former: the sale of council houses.

In that context it is brave and welcome that the Government is considering a scheme (see page 1) whereby new applicants for one of Britain's four million council houses will no longer be able to expect a tenancy for life. At the moment, a tenancy decision made at the beginning of a working life is never reviewed. The proposals that are now being considered would establish a fixed-term tenancy, subject to regular review by the landlord. In addition, the right to a council flat would be linked to proof that an individual was either in work or actively seeking work.

When the former Housing Minister, Caroline Flint, first floated this idea, she encountered the full opprobrium of the homeless lobby. Her successor, Margaret Beckett, should hold the line. The proposed reform would mean that anyone whose financial circumstances have improved appreciably would be offered help to move into the private sector - to rent or to take up an equity share scheme - or be asked to accept that their subsidised rent is no longer appropriate.

The proposals embody three important principles: independence, need and responsibility. By helping people to move out of social housing if they can, it assists them towards greater financial independence. The social housing space that is freed up as a result will allow a greater concentration of scare resources on those in real need. And anyone who is drawing on the collective pool of subsidies from the taxpayer should be subject to minimal requirements of good behaviour.

So these proposals are welcome, as far as they go. But housing provision for low-income households will require greater reform than this. There is no particular need for direct state provision of housing at all. As homes become vacant they could be transferred over to registered social landlords on condition that none of these landlords enjoys a local monopoly. Housing benefit remains the largest unreformed part of the welfare system. It should be replaced by a generous income subsidy, related to household size and variable local costs but not intended as a direct replica of housing costs. In time, this could be folded into income support to give people genuine independence.

We also need more houses but the demise of the so-called “eco-towns” has shown how much harder that is to do than say. More than four million people in two million households are waiting to be housed in England and Wales. Too few houses are getting built, in both the public and the private sectors. Building levels remained stubbornly low even during the long boom of house-price inflation, mostly as a consequence of an illiberal and burdensome planning system.

A recession that began with sub-prime housing assets will deprive many unfortunate people of their homes. The pressure on social housing is, therefore, set to grow.

The Green Paper, which is already late, will now appear in January of next year. It is to be hoped that, when the new minister has read into the brief, she sees the merit in these proposals that was evident to her predecessor.