The scheme was always, shall we say, ill advised ? The aim of fitting properties to the size of families is not a bad aim, it makes for efficient use of publicly owned property; but the way it is being implemented is terrible.
Property rental should already be related to the property itself not the number of folk living there. Thus the idea of an extra room would not really be applicable. If they are paying for x rooms then they have x rooms.
When allocating property to offer potential tenants; for each property, it is reasonable to define a range of 'number of occupiers' that can rent it. It's important also for this to be flexible enough to cover issues such as needing someone to stay, perhaps an occasional carer. In fact it is perfectly reasonable to allow anyone a guest room anyway.
Most of this should be covered when first allocating a property. When circumstances change and fewer folk are suddenly at a property the idea of demanding they move elsewhere needs much thought. Folk are likely to be stressed by it, and one must balance that against the savings made.
I accept, since the property is rented, not owned, it isn't unreasonable to be asked to vacate, but the council has the responsibility to ensure folk would be treated well, and if that is so, they must be rehoused in an equally decent place/local area immediately.
When considering whether to demand someone moves, the costs of uninstalling and reinstalling necessary living aids should also be taken into account. Any such cost should be covered by the council who are the party wanting the move.
In addition, folk who have lived at a place a long time ought to have that fact taken into consideration when working out if moving is appropriate; just out of common decency and concern. Elderly folk (however that is defined) are likely to be particularly effected.
At present it there is simply a case of, noting there isn't the defined ideal number of permanent residents at a place and demanding a move, which is not the sort of caring society we ought to want.
By the way, it's been said before that although strictly speaking this is not a tax, a reduction of money coming in is indistinguishable from a tax on the money before you get it, so it's hardly a big issue that it is called a tax.