By Charlotte Hall, Neil Keeling & Declan Carey
Salford council is investigating its own housing company after ‘concerns’ were raised during financial checks.
Dérive, a development firm wholly owned by the council, was set up in 2017 and has handled more than £10m of public money since then.
The Local Democracy Reporting Service understands Salford council’s investigation is looking into whether any financial mismanagement or misconduct has taken place.
The probe comes after council officers reportedly spotted irregularities in the accounts after requesting information from the firm. This included concerns about accuracy and completeness of record keeping.
Multiple senior figures have resigned from leadership roles at Dérive since February, with five directors and one secretary stepping down according to public records on Companies House.
A row has broken out at the town hall over the situation, with one senior councillor calling it ‘disgraceful’ that elected members in the city ‘haven’t been updated’ on the matter.
They added: “What is being hidden? Dérive is a very important arm of the council delivering much-needed affordable housing, if something untoward has happened councillors should know.”
Other councillors contacted by the MEN also confirmed they had not been informed about what was happening at Dérive.
Dérive is a month overdue in submitting its annual accounts.
Among those who have recently stepped down from leadership roles at Dérive include several elected councillors serving in the Labour-led council’s cabinet team.
The changes are all listed in public records on Companies House, the government’s business portal.
Councillor Tracy Kelly, who holds the housing portfolio in the council’s cabinet team and serves as deputy mayor, resigned as director at Dérive in February.
It is understood councillor Kelly’s resignation was unrelated to the ongoing investigation.
Former council leader John Merry also stepped down as director at Dérive in March along with Phil Cusack, who is chair of Salford council’s planning committee.
The three have been approached for comment, Councillor Merry declined to give a statement and there was no comment from either of the other representatives.
A Salford council spokesperson commented in March on Councillor Kelly’s resignation at the firm saying: “Members come on and off outside bodies frequently for various reasons.”
The three councillors are not under investigation and are not suspected of any wrongdoing.
When probed on the situation at Dérive, a Salford council spokesperson said: “We can confirm that we are looking into concerns surrounding Dérive RP – a registered provider of social housing. Dérive RP is independently regulated to provide and manage affordable housing.
“It is inappropriate to discuss more fully the nature of the concerns at this stage while we review what has happened, other than to confirm that concerns came to light during routine audit and financial checks by the council.”
The council said it has taken ‘immediate steps’ in response to the situation, including ‘reviewing the governance and operational arrangements’ of the company.
It has also notified the Regulator of Social Housing, a government body.
The Salford council spokesperson added: “A number of changes have already taken place to strengthen and improve governance arrangements.
“It is important that the review continues and conclusions are allowed to be reached on this matter. We are committed to ensuring the review is conducted both thoroughly and quickly.
“We want to reassure residents that the Dérive Group, Dérive RP and the council remain focused on supporting tenants and providing high quality affordable housing in the city.
“Services to residents are not affected and continue to remain unchanged. We are committed to continuing to do all we can to help to tackle the acute need for genuinely affordable housing in Salford.”
A spokesperson for the Regulator of Social Housing said: “We confirm that we have been notified by Derive RP and Salford City Council and are engaging with Derive on this matter. We cannot comment further on our ongoing engagement with individual landlords.
“We set standards that all social landlords need to meet, including governance requirements. If we find material failures to meet our standards, we publish a regulatory judgement that sets out our conclusions.”
Greater Manchester Police confirmed they are not involved in the investigation.
Dérive, an ‘arms-length company’, was established in 2017 with £2m of Section 106 money – cash contributions made to the council by developers – with the aim of tackling the city’s more than 5,000-long housing waiting list.
It delivered 119 social rent homes last year, with a further 177 planned on the site of the former Harrop Fold High School off Longshaw Drive in Little Hulton.
Projects by Dérive include more than 100 social rent homes on Clifton Green, Ryall Avenue and Brassington Avenue, 43 new-build family homes on Jane Street, in Ordsall, and 25 homes transferred into their ownership on Kara Street, Langworthy.
