Some private companies are making huge profits and exploiting the welfare system by receiving housing benefits on behalf of residents but failing to give them the support they are required to, BBC Panorama has found.
Property agents are drawing people into the taxpayer-funded system using social media videos that offer free rooms, PlayStation consoles and even holidays.
The system – called supported exempt accommodation (SEA) – is designed for people in the UK with additional needs, including former prisoners, people recovering from addiction and women fleeing domestic abuse. It provides housing along with care, support and supervision.
For many residents it works well to help them get back on their feet, but charities, politicians and residents tell us parts of the system are being exploited.
There are often complicated, multi-layered financial and management arrangements in place.
Rather than going to residents, most welfare payments are made to non-profit registered providers. In many cases these providers then hire profit-making private companies to manage properties and deliver support.
Many vulnerable people are being used as “cash cows to generate income” that goes from the Department for Work and Pensions (DWP) into “the back pocket of the landlords”, said Patricia Coleman-Taylor, who runs Birmingham anti-poverty charity Narthex.
Panorama has learned the DWP paid out £410m for SEA in Birmingham alone in the last financial year.
The city is the epicentre of the sector, with more than 34,000 people living in SEA. For context, in London about 22,000 live in supported housing despite its population being more than seven times larger.
Labour MP Jess Phillips, whose Birmingham constituency contains large numbers of these properties, said companies spending taxpayers’ money while providing a poor standard of support was “an absolute catastrophe” and bad landlords “can make loads of money”.
But she added that there are some housing providers who “get this money who are absolutely providing supported accommodation”.
The leader of the city council, Liberal Democrat Councillor Roger Harmer, told us that “taxpayers’ money is being wasted. It’s a scandal.”
In Birmingham, BBC Panorama’s investigation found:
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Vulnerable people are being left with little to no support in often unsuitable accommodation
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One big housing provider wrote off £1.8m because of payments to some former directors and companies they ran
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Evidence that some are willing to make benefit claims for people who do not live in their properties
Supported accommodation was set up for people like Alysha.
When she escaped a violent relationship, she returned to Birmingham seeking shelter. But her family did not have room so she had to look elsewhere.
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