This letter is so emotive that it loses credibility.
It's not a tax, it's a reduction in credits.
How do you think the government should deal with people who get council houses, and then their circumstances change - people die, grow up, move out - and their houses are now bigger than what they would qualify for?
Sure it's sad when people die, but the government doesn't insulate anyone from the financial impact of losing a husband or wife (that's actually the role of insurance - and family). I'm not really sure why this lady should be any different. I'm not being callous, it's just not reasonable to suggest that we can afford to be really nice with the public housing stock in this country.
Really, what would you do differently?