Is this the worst thing this government has done? That’s a tough choice for those low-earning households written off as unlikely to vote Tory. Governments come and go, attempting to reverse each other’s actions – Labour spends more, then Tories cut back, but the housing and planning bill now in the Lords will do virtually irreparable damage.

The bill takes away properties from those who can never afford to buy, to give a large subsidy to better-off aspiring under-40s to buy starter homes. Council and housing association homes will be sold off, deliberately transferring housing provision from the worst-off to those above them – another trickle up.

This bill forces housing associations to sell homes to tenants (probably only the better-off ones) at a discount. To compensate housing associations, councils will be obliged to sell their most valuable properties – so two social homes are lost for each one sold. The money raised by the local authority sales will also pay for 20% discounts to first-time buyers of starter homes at prices of up to £450,000.

All parties want more home ownership, falling fast because of high prices. Generation rent is paying more to landlords than a mortgage costs. The injustice is in making councils pay for this subsidy from resources earmarked for families on waiting lists, instead of meeting it from general taxation.

Once sold, these homes can never be brought back into the social sector. Of the 2m council properties sold so far, over a third have ended up with private landlords who charge high rents. For every nine council homes sold, only one replacement has been built.

That’s why this is an un-housing bill. It will lose 180,000 social homes in the next five years, with 88,000 council homes gone, according to the local government association. George Osborne’s eye-catching 1% cut to social rents has already stopped dead plans to build 14,000 social homes, says the Institute for Fiscal Studies. Nor does the rent cut help most tenants, who just get it clawed back from housing benefit.

Worse is to come. As more people have moved on to universal credit, with their rent no longer automatically paid, 89% have fallen into arrears so far, further depleting money for new social housing. A third of housing associations are building no new affordable homes.

The bill is punitive towards tenants, making any council-house family who together earn more than £30,000 (£40,000 in London) pay a market rent, often so steep they will have to leave. The Treasury will snatch this pay-to-stay extra rent – so it can’t be used for local housing. New tenants only get short tenancies of two to five years so they risk joining the insecure multitude of families in the private sector with six-month rental agreements.

Security was the great gift of social housing. A family knew they would stay near their jobs and schools, make local bonds and join lasting communities. Good estates have stable populations, which include some people with average incomes. How do you educate children who keep moving schools, never settling? Already there are 1.5 million children growing up in private rented homes, without security of tenure.

A family support worker I spoke to last week was struggling to help a family who had moved four times in just over two years – because of temporary housing and short tenancies – with the children moving schools each time. One mother, sent to a distant town, had been leaving home for a bus at 6am every morning to try to keep her children in their old school two hours away, in the hope she would find a home in their old neighbourhood; but she had to give up.

A few weeks ago I spent time in court watching eviction cases, talking to tenants whose lives had become rootless through insecure jobs causing arrears. Landlords are eager to re-let flats at higher rents as prices soar. Most of those families will never reach the safe haven of a council home.

Ending social housing is part of the great escape from the welfare state planned by David Cameron and Osborne. But they may yet again be tripped up by their failure to think beyond ideology. Are they really willing to abandon the third of citizens who can never join their homeowning democracy? Tipping them on to the street is embarrassing, which is why the rising number of street homeless were given a small bung in the budget.

If not abandonment, then there are only two options: build social housing at a cheap rent; or leave people to private landlords where housing benefit picks up the bill. Even capped, housing benefit is extravagantly wasteful when – as Labour’s housing spokesman, John Healey, points out – building social housing makes a profit from rent after 20 years, by far the cheaper option. The government hasn’t dared abolish councils’ duty to house the vulnerable or homeless families with children, but how can they do that with ferocious budget cuts and this bill stripping away existing properties?

No wonder Tory as well as Labour council leaders are up in arms. Surrey’s leader wrote to the Guardian to protest at being forced to sell his council houses. Good for the Lords, who tonight followed up last week’s rebellions with more amendments to pay-to-stay plans. Valiant objections from trusted crossbenchers, such as Bob Kerslake, former head of the civil service, may force the government to soften some terms.

But nothing will prevent the main provisions passing: this is the first bill under English votes for English laws, stopping Scottish MPs voting – so despite some Tory rebels, it will pass in the Commons easily.

Eventually only real-world consequences can force the government to reconsider. Though housing is a fast-rising public concern, this bill has had too little attention. Though 74% worry about housing themselves or for their children or grandchildren, this demolition of social housing is still below the political radar. Ownership is political dynamite, but social housing gets less traction.

Ask how this government plans to house the many who could never afford full-cost rents and it has no answer. In their magical thinking, if council estates are sold off, the troublesome poorer denizens will melt into thin air.

This bill takes a wrecking ball to the great social housing ideals founded by Octavia Hill and other philanthropists who understood that decent housing is the bedrock of a decent society.”