A new report by the think tank Policy Exchange says council and housing association homes should be allocated to people in employment or training, those who care for others, and people who volunteer to help their community. The study also calls for social housing to be restricted to British citizens.
Homes will still be provided to people at risk of going homeless if they do not meet any of the criteria, but they would be expected to move out once their circumstances change, rather than enjoying a home for life. The changes could save taxpayers £14.3 billion over five years and provide a million extra homes for eligible households.
Safety net and opportunity routes
The report, titled Fairer Housing Support: Rewiring our social housing and housing benefit system to restore fairness, contribution and mobility, argues for a fundamental re-evaluation of housing support, with a system that is far more responsive to changing need, contribution and circumstances. It recommends an end to lifelong social tenancies as the default, with councils instead operating a Safety Net Route for households facing acute or enduring need and an Opportunity Route using time-limited tenancies to support work, training, caring responsibilities and mobility.
The Opportunity Route is modelled to create 793,000 additional letting opportunities over a decade. New social housing allocations should be reserved for British citizens, but citizenship alone should not determine who gets a home, the report says. Councils should also take account of contribution, giving greater weight to people who work, train, undertake apprenticeships, care for others, volunteer or make moves that free up scarce social housing. This would replace narrow local connection rules and is modelled to redirect an additional 220,000 social housing lettings to British citizens.
Financial impact and political reaction
Expenditure on Housing Benefit and the Housing Element of Universal Credit is estimated at £37.2 billion in 2025/26 and forecast to reach £43.5 billion by 2030/31. Councils in England spent £2.84 billion on temporary accommodation in 2024/25, with net costs of £1.43 billion after subsidies and household contribution. There are 1.34 million households on social housing waiting lists, but only 263,000 households received a new social letting in 2024/25. A further 134,000 households were in temporary accommodation at the end of December 2025, including 176,000 dependent children.
Helen Whately, Conservative shadow work and pensions secretary, said: "Social housing should be a safety net for families in difficult times and a springboard to help them get back on their feet. But our social housing provision is failing on both counts." She added: "There’s a shortage for families who desperately need it and no incentive for people to move on from state-subsidised accommodation. The potential for social housing to help people who need to move for work is totally overlooked."
Whately continued: "This timely report by Policy Exchange adeptly analyses the failings of our current social housing system. The solutions it proposes are bold, and its ambition is spot on - to free up homes for those who desperately need them and deploy valuable state-funded housing to help people get on." She also said: "At a time when taxpayers are being made to stump up for ever more welfare spending, a substantial policy paper which shows a different way to support people is welcome."
Higher-income tenants and pay to stay
Jean-André Prager, Senior Fellow at Policy Exchange, author of the report and former Special Adviser on welfare to three Prime Ministers, said: "Our welfare state should be able to distinguish between temporary hardship, enduring need and changing circumstances. Too often our systems treat circumstances at one point in someone’s life as though they will never change."
He added: "For social housing, that means providing security for those who need it, while recognising that for others it should be a route towards work, mobility and greater independence rather than a home for life. For help with housing costs, it means support when it is needed, but greater responsibility over time for working-age claimants who can work."
The report also recommends that higher-income social tenants should pay more towards the cost of their home through a new Graduated Pay to Stay system. Additional rent would begin once household income exceeds the national gross mean household income (£49,000) and rise progressively until households earning £88,000 pay the full market rent. The reform is modelled to generate £1.1 billion in additional local authority rental income over five years.
