In one example, Birmingham City Council gave more than £161m to Reliance Social Housing in just four years.
The provider, which is chaired by former headteacher Mohammed Sajjid Sarwar, was slapped with a regulatory notice by the Regulator of Social Housing watchdog in October. It accused the company of transferring “a very significant amount of the rent and service charge income it receives to third party managing agents on an ongoing basis”.
The watchdog added that Reliance had “failed to ensure that it has effective governance arrangements in place”.
“There is a risk of third party managing agents not providing the services being claimed… The regulator has not received sufficient assurance that the arrangements entered into by Reliance are not inappropriately advancing the interests of third parties or that taxpayers’ interests and the reputation of the sector are being safeguarded.”
Earlier this year, it was reported that Reliance now houses a third of all exempt accommodation claimants in Birmingham, despite being rapped for being "non-compliant".
Reliance Social Housing told openDemocracy and The Independent that it had “implemented a robust action plan to ensure it is fulfilling strategic objectives and regulatory compliance to the satisfaction of the Regulator for Social Housing”. It added that it had an “open and transparent” dialogue with the regulator and Birmingham City Council to ensure standards are met.
Another provider, Sustain (UK) Ltd, has received £87.5m in housing benefit from Birmingham City Council since 2018/19, which includes money for exempt accommodation.
On Wednesday, we revealed how the watchdog had issued a regulatory judgement against Sustain in 2019, saying the provider “does not meet our governance requirements”.
The regulator said: “Inherent conflicts of interest had arisen as a result of related party transactions to companies owned by Sustain’s executives,” adding that there was a “lack of assurance” that the issue was being addressed properly.
Despite this, Sustain went on to pay £2.3m to private firms linked to two directors – Adam Barwell and founder and ex-CEO Pauline Hughes – in 2020 and 2021.
Their high salaries were highlighted by Inside Housing in 2020, with the pair banking £215,000 in the year ending March 2019. They have both since resigned and did not respond to requests for comment. Sustain also did not respond to a request for comment.
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