Supported housing provider warned about high salaries by regulator paid bosses £215,000 each last year

News05.02.207.10 AM by Jack Simpson

A supported housing provider that was deemed non-compliant by the Regulator of Social Housing (RSH) and warned about the high salaries of its management, paid its most senior directors £215,000 each last year, Inside Housing can reveal.

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Sustain UK, which received a warning from the regulator about its high salaries, paid its bosses £215,000 each last year, @insidehousing can reveal #ukhousing

The chief executive and inspections director of Sustian UK a supported housing provider received £215,000 in 2018/19 #ukhousing

The RSH also found that inherent “conflicts of interest” had arisen as a result of payments to companies connected to Sustain’s directors. accounts from the company indicate these topped £1.3m #ukhousing

Annual accounts released in December last year for Birmingham-based association Sustain UK revealed that its chief executive Pauline Hughes and inspections director Adam Barwell were both paid £215,000 in the year up to 31 March 2019.

The accounts also showed that “related party transactions” totalling more than £1.3m had been made to companies that were linked to directors of the organisation.

In a statement to Inside Housing, Sustain said that its directors had taken voluntary reductions in their salaries of more than a third in 2019/20 and that it was working to ensure full compliance with all the points raised by the regulator, including all conflicts of interest.

Based in the West Midlands, Sustain is a not-for-profit landlord that provides accommodation for individuals experiencing mental health problems, learning difficulties and those recovering from alcohol and drug dependency. It currently manages 2,675 bed spaces in the West Midlands.

The association was identified as an exempt accommodation provider by Birmingham City Council in a report published in 2018.

Exempt accommodation is a category of supported housing in which the rules that limit the amount of rent covered by housing benefit do not apply, and landlords are required to provide only loosely defined “care, support or supervision” at significantly higher rents than mainstream social housing.

Exempt accommodation is often used to put a roof over the heads of people who would otherwise have no option other than sleeping rough, but unlike most temporary accommodation for homeless people is not usually commissioned by local authorities.

Registered providers of social housing may enter short-term lease agreements with private landlords or property owners, either directly or through a third party, to provide exempt accommodation.

The RSH found that inherent “conflicts of interest” had arisen as a result of payments to companies connected to Sustain’s directors and highlighted a lack of assurance that “relatively high levels” of executive remuneration were being addressed appropriately.

Ms Hughes founded Sustain as a not-for-profit in 2009 and she has led the association ever since. Mr Barwell is the inspections director at the company, a job that the association says “encompasses inspection compliance and operations and is the central core of Sustain’s business model”.

Ms Hughes’ salary of £215,000 would put her as the 29th best-paid chief executive on Inside Housing’s annual chief executive salary survey for 2018/19. Her salary is the equivalent to being paid £80.37 per bed space.

Commenting on the salary, Sustain said that Ms Hughes had taken a 30% voluntary reduction in her salary in 2019/20, while Mr Barwell has taken a 35% voluntary reduction.

Sustain also provided Inside Housing with a breakdown of Ms Hughes’ and Mr Barwell’s salaries since they became directors. It shows that both had £0 income between 2007/08 and 2013/14 and had only been paid a yearly salary of £215,000 since 2016/17.

The association also said that both Mr Barwell and Ms Hughes had invested more than £1m in the organisation pre-2015.

The accounts for the year up to 31 March 2019 listed four related party transactions that had taken place with payments to companies linked to directors at Sustain. In one payment, Topcare (West Midlands), a company that lists Ms Hughes as a director, was paid £765,149, while £231,576 was paid to Yorklease – a company where Mr Barwell is a director. West Midlands Support Homes, where Mr Barwell and Ms Hughes are both directors, was paid £240,175.

The accounts also highlighted other issues identified with the association by the regulator, such as having more executive directors at board meeting than non-executive directors and issues around probity.

The accounts said the first issue was dealt with by appointing a number of new non-executive directors to the board, while the association had also put in place policies and actions to ensure full probity of the board, including conflicts of interest.

In its response to Inside Housing, Sustain UK pointed to the regulator’s report from January 2019, which said: “Sustain has a co-regulatory approach and is engaging proactively with the regulator. With external advice and support the provider’s board has considered the options available to it to address its remaining significant governance issues.

“Sustain’s board will need to continue its work to address and manage conflicts of interest and to put in place appropriate executive remuneration arrangements.

“A review will be undertaken to gain assurance on the appropriateness of the services delivered to and charges received by Sustain’s tenants. There is an appropriate plan in place to agree and implement the necessary actions.”