Jill Kirby: Why on earth does Grant Shapps want to give the state a bigger role in housing the elderly?

Why would old people voluntarily put their own houses at the disposal of their local authority? I find it extraordinary that a Conservative Housing Minister is recommending the Free Space housing scheme, being piloted by Redbridge Council and reported here yesterday.

Grant Shapps is a bright and articulate young minister who has risen to power swiftly since coming to Westminster in 2005. Having set up and run a successful business, he seems like a natural Conservative who should be averse to state intervention and big government. So it's baffling that he is now recommending that the state – in the form of local government – should take a larger responsibility for housing the elderly. It's equally baffling that Mr Shapps is prepared to recommend to old people a deal that will provide them with lower returns than they would receive on the open market. What is going on here?

Redbridge Council appears to have been inspired by its success in moving some of its elderly council house tenants into smaller accommodation, thus freeing up larger council homes for bigger families. That is obviously a sensible reallocation of social housing in this crowded London borough. But it should not be used to justify a scheme which intervenes in the private housing market. Free Space is uncomfortably reminiscent of the policy proposed last year by the Intergenerational Foundation think tank, which said that over-60s with spare bedrooms should move out of the homes they own to make way for young families.

According to the Free Space information sheet supplied by the council, Redbridge has recently helped a home-owning widow in neighbouring Basildon to move into sheltered accommodation in Redbridge. In return, Redbridge has taken over the management of her Basildon bungalow, which it is letting to council tenants. There is no suggestion that the widow was coerced into the scheme. It seems that she wanted to live in Redbridge because she and her husband used to live there, and she particularly wanted a sheltered unit provided by the council. Thus the deal was attractive to her, despite the likelihood that she would receive a lower than market rent for her bungalow.

No doubt Redbridge is glad to get its hands on roomier social housing to ease its own housing shortage. Maybe it has a surplus of single unit sheltered accommodation and not enough family sized houses; this scheme saves the expense of buying or building new social housing, so the trade-off seems attractive. Certainly it has beguiled Mr Shapps.

We should, however, be suspicious of the false alternative laid out by the Housing Minister, and the language in which he expresses that alternative. He asserts that older people, instead of enjoying their homes, "have watched helplessly as their properties have become prisons, and many have been forced to sell their homes and move into residential care". In truth, many elderly people regard residential care as akin to imprisonment; their dearest wish is to remain in their own homes, where they have freedom. Where illness or impaired mobility restrict that freedom to the point where their home becomes a burden, they are under no obligation to sell it. In the current housing market, their best option is to rent out the property and use the rental income to pay for residential care. Elderly people up and down the country are doing just that. Why involve the local council in this private transaction?

For older folk who don't have any family members to help them with renting out or managing their homes, a reputable letting agent will no doubt be glad of the business and will ensure that a tenancy agreement is signed, deposits held and suitable tenants found. It is hard to see why any Conservative politician should believe that a local authority should take over this work from the private sector.

Conservatives should as a matter of principle object to the idea that local authorities extend their housing remit to include owner occupiers. At a time when the government is elsewhere seeking to reinvigorate council tenants' “right to buy”, this new scheme is a seriously retrograde step. And as the debate about funding elder care continues to rage, the government should be urging elderly home owners towards greater independence, rather than luring them into the embrace of the state.

I'd have no problem with Grant Shapps urging people to rent out their homes instead of selling up; in a falling market this seems eminently sensible. Indeed, a tax break on such rental income, for example, would help the process along and encourage people of all ages to become more mobile, whether downsizing in old age or in pursuit of scarce jobs.

But to take advantage of older people's anxieties about moving home, by getting them to hand their properties over to the council to look after, is quite wrong. It's no wonder Labour has indicated its support for the Free Space scheme – it is a socialist measure which should have no place in a Conservative-led government.