In answer to this question
I am pretty sure its acceptable for a co sponsor to be involved, even though the co sponsor is in recept of public funds, however the main sponsor cannot be in receipt of public funds, as this would then involve the sponsor maintaining the applicant via public funds, clearly a situation not allowable under the current rules.
Its a good point though, I think there are certain circumstances where the sponsor can have some assisted public funds, but not through his or her main income, it has to be in addition to a main income, I think.