Housing benefit should be converted into a £17,000 ($28,000) lump sum grant to enable the working poor to put down a deposit on a home, the think-tank Demos proposed on Thursday in a report endorsed by David Cameron, the Conservative leader.

Part of the income tax paid by low earners should also be ringfenced and put in to private pension saving to remove them from the system of means-tested pension credit by the time they retire, the report says.