Companies exploiting welfare system by using residents as cash cows, BBC finds

Nxtgen Housing told Panorama it had “discussed different support plan options with Brian”.

It said “he selected the support areas he considered relevant”, and the support worker “subsequently worked with him on those plans”.

Nxtgen said it did not discourage Brian from finding employment and improving his financial circumstances.

The government recently changed the rules to allow SEA residents to earn more without affecting their benefits.

Panorama has discovered that the provider of Brian’s house, Windrush Alliance, had to write off £1.8m due to the actions of previous directors.

In 2024, a new board of directors at Windrush found “the company’s current financial position has been compromised through an outflow of funds to former directors and companies under their control”.

The “recoverability” of the payments was deemed by the directors to be “questionable,” so the fees were written off.

Windrush Alliance did not respond to a request for comment by the BBC.

Five of the six largest SEA providers in Birmingham, including Windrush, have been deemed to be non-compliant with the standards set by the Regulator of Social Housing.

All five are still operating and receiving hundreds of millions of pounds in housing benefit payments. But the regulator announced last week that it was launching action to close one provider, Concept Housing Association, as it had “failed to address serious failings in the way it is run”.

There is no single reason why Birmingham has become the centre of this issue. The availability of relatively cheap three-bedroom family homes – which can quickly be turned into five or six individual rooms with shared facilities – does attract landlords. But many also blame poor oversight from Birmingham City Council for allowing so many conversions to take place.

Another reason, said councillors and charities we spoke to, was that it is not actually council money that Birmingham is signing off but central government funding. The council simply approves the application – it does not have to pay for it.

Councillor Roger Harmer, a Liberal Democrat who became leader of Birmingham City Council after Labour lost power in May’s elections, denied that, and told Panorama his officers were working to eradicate fraud and poor provision.

“There is a huge incentive for us to crack down on the bad providers,” he said.

“But the problem is you shut down one property, they can just go next door and open up in the next house,” he added, pointing out that housing benefit rules were set by the DWP.