Logical Gavin, but consider this.
If converting building subsidy into benefit subsidy is a solution why is the cost of benefit increasing so far higher than the cost of subsidising the build?
When, in the bad old days, the government granted part cost and underwrote other cost of the actual build, an immediate cost to the taxpayer of around £30,000 per unit could be drawn. Even if that had been £300,000 per unit grant the point is that it is spent once and the property exists. When sold the granted fund is reclaimed by government where it can be reused to build another home, or refund the taxpayer. When rented, at current rent values, the capital can be part recovered from the rent, and part recovered by the reduced requirement of housing benefit. In total it is arguable that subsidising the property offers value for money to the taxpayer, and potential nil cost over the lifetime of that property.
Now look at the government's preferred position, where housing benefit is the method of subsidy. The amount of subsidy paid is a product of the value of the rent. To take the extreme example of the Westminster house charged at £1,000 per week that is £52,000 of subsidy that has to be paid every year. Even under capping, that is still £26,000 subsidy, per property per year, every year, for ever. No recovery for the taxpayer. No recycling of the funding. Where is the value for money?
When this way of doing things was sponsored by Thatcher the idea was to avoid longterm government borrowing to fund asset and replace it with the short term borrowing to fund benefit. The theory was that increasing levels of economic growth would lead to employment, lower benefit costs, and so lower total government borrowing. What the short-sighted Tories forgot was that their economic policy was based on maintaining a high level of unemployment and enabling 'job flexibility' and 'low wage cost'. This all combines to a perpetual and growing call on benefit support such as to render the cost far in excess of anything that was spent on subsidising building homes. Worst of all this is now a recurring and increasing cost each year, which offers no return.
To use the government apologist favoured argument of the credit card. Rather than buying a product and then clearing the debt this government has moved us to paying an increasing fee for a service, and there is no break clause. There is no end to the payment, no asset to offset the cost against, no control over the service nor of the cost.
Which is why the government is now capping the support to the service user, yet has taken no action to remove the free reign to endlessly increase the charge for the service.
I would compare this to paying Tesco my weekly grocery costs to be allowed to look at their products, but never be allowed to take any of them home - of course I'm free to pay extra and eat in their cafe!