Council housing for life and 'fairness'

It is being reported this morning (e.g. on Today) that security of tenure for council tenants will be reduced to two and a half years. In what is a fairly typical pattern for DCLG these days, there is nothing in the way of more information or a press release on the website.
It seems that after 2 years or so all tenants will be assessed for whether they ‘need’ council housing anymore; perhaps their income has risen or their household has become smaller. If they don’t ‘need’ it, they’ll have six months to move out. Again, the government will wheel-out a ‘fairness’ argument: why should people receive a subsidised property when they have the means to afford one in the market (probably private rented market) while there are others in need on the waiting list? So far so good?
But this surely is a bit of a disaster for making work pay and providing incentives to get into work; the major problem which IDS and George Osbourne are trying to solve? The government’s basic criticism against social housing is that is underpins dependency, poverty and worklessness: people get a cheap social home for life, with no conditions and no incentive to improve their circumstances.
But surely this reform runs completely counter to this? If you are on a low-income or without a job and you get a social tenancy from next summer onwards, why on earth would you strive to get a job or increase your income? You’d know that it meant, in a couple of years’ time, you’d lose your home because of it. 
If you did get a job, most likely not a well paid one, isn’t there quite a big incentive to ‘lose’ it just before you get assessed by the tenancy police?
People’s homes are pretty important to them, especially if they’ve been on a waiting list for years to get one. The unstable and poorly paid jobs that people often get as they first move into work, may well be sacrificed so they can keep their home.
This is such an obvious counter argument that I’m sure there is a government fudge on the issue on the way.