Councils Allowed To Discriminate On Their Housing Lists?

Conservative Home reports:

"Councils are to be given more power to decide their own waiting list criteria for social housing. Instead of it being entirely "needs based" they would be allowed to take into account those with "local connections" and to reward those who had got off welfare and into work.............So another day and another piece of radical localism from the DCLG"

Article 3 of the Treaty on European Union (TEU) states:

"It shall combat social exclusion and discrimination............"

Bearing in mind that Member States share competence with the European Union, under Article 4 of the Treaty on the Functioning of the European Union (TFEU), in the areas of social policy for the aspects defined in this treaty; that under Article 6 the European Union shall have competence to carry out actions to support, co-ordinate or supplement the actions of Member States in the protection and improvement of human health and culture; bearing in mind also Article 8 which aims to eliminate inequalities; Article 10 in which the European Union aims to combat discrimination based on sex, racial or ethnic origin, etc etc ...

It would seem rather unlikely that this idea will come to fruition as it seems it will flounder on the same rock as did Gordon Brown's 'British Jobs for British Workers' - and, pound to a euro, surely an email will land in Shapps inbox along the lines of 'Err, excuse us but ...'

Have the Coalition got themselves into a bit of an 'Eric' here?