“Housing chiefs enjoy bumper pay hikes”

Soon after I posted last month on the 32% pay increase (to £327,000pa) of the Housing Association boss of Anchor Trust, the UNISON office rang to warn me that someone who was “very angry” had rang them and was trying to contact me.

Now professionally and politically, it is not exactly unknown for “angry” people to want to contact me for various reasons. But when I actually spoke to this elderly person after she emailed me via this blog (who I have never met and whose voice was literally shaking with anger as she spoke) her fury was about this pay rise and ‘... how on earth was it allowed to happen...’ A good question.

Yesterday, Inside Housing reports that the average pay rise of Housing Association Chiefs 2007/2008 was an inflation busting 7.3%. While the top 10 highest paid enjoyed an average 15% increase. Number one of course was John Belcher, chief executive of said Anchor Trust.

Now, I will try and be objective over this news. I will say from the onset that I personally have no objection to hard working, talented, successful people earning significant financial rewards from leading large, complex and, of course, flourishing organisations.

There is of course the inevitable “but”. My “but” is that these salaries should also be reasonable in all the circumstances and not excessive. While one part of me might just simply despair at the numbers, I think also that there are sound, reasoned and persuasive arguments that paying senior management such huge amounts of money is also wrong for good business reasons.

I simply do not believe that you can have a successful organisation with a positive and inclusive company culture, where the senior management are paid vastly more than the mass of employees. Surely there is no justification for paying say more than 10 times the salary of the lowest paid? I include contracted out workers such as cleaners and security staff in this calculation. I suspect that Anchor Trust have such staff on minimum wage. That means that John Belcher earns over 28 times the earnings of such employees (£327,000 divided by £11,481). This just encourages a “them” and “us” attitude.

What is potentially even more destructive to the morale of housing association staff is if their wages are increased by less than inflation while their senior executives enjoy above inflation large pay rises. In many Supporting People contracts staff are being offered no pay rise, skill levels are being reduced and working hours increased for no extra pay. UNISON national housing officer Mike Short argues that this may be discriminative since many of these already low paid workers are female.

Never mind what hard pressed residents think of their Chief Executive’s salary as they struggle to pay their rent or service charges.

Such pay rises are also extremely damaging to the social housing movement as a whole. There have been a number of very negative comments about housing associations made recently by MPs. I have myself met a number of MPs, Assembly members and senior local councillors who despair of housing associations. They are not the “usual suspects”.

Housing associations enjoy large public subsidies in development aid and many residents receive housing benefit to help pay their rent. This is huge amounts of public money that we are talking about. How do we ensure that the salaries paid to senior staff have been properly arrived at and accounted for?

Following the governance failures that led to the demise of Ujima Housing Association, how confident are we that boards are able to challenge excessive pay?

Ironically, while there are justifiable complaints about the level of executive pay in the private sector, at least (in theory anyway) all shareholders have a vote at the company AGM on executive pay. However imperfect this mechanism is it means that the private sector is more accountable than the public sector in this field.

The regulator seems toothless over this issue and more concerned with justifying their own large pay rises.

Clearly the “market” has failed the housing association movement over pay. Bearing in mind recent economic events where we find a ring wing US Republican government nationalising banks, we should now all know beyond doubt that it is right for the state to intervene when the “market” fails in such ways. Better still; intervene now before things get worse.

Last year at the UNISON Housing fringe at the Labour Party conference I questioned the then Housing minister, Yvette Cooper, about excessive pay for association chiefs. She said that she would consider sending a message on this issue. Since it now seems that many executives now get more than twice as much as Local Government & Communities boss Hazel Blears (£138k per year), it appears that the message has been lost in the post?

I expect this year at the conference this issue will not go away. Now is time to act and intervene?

(BTW what did Boston Mayflower have to hide, since they were the only HA to refuse to take part in the Inside Housing Survey?)

Anchor Trust pays CEO £327,000- 32% increase

(The first of two things taken from “Inside housing” email bulletins).

£327,000 per year - what on earth is going on here? No wonder the sector has such a bad reputation for this sort of thing. Anchor is supposed to be a “not for profit” organisation, it employs 10,000 workers and has 50,000 clients.

What is the average salary of a worker compared to the CEO?

In the words of the former head of M&S, Paul Myner, do we have the same problem in the social housing sector with “the self appointed managerial elite are raping the resources of companies”. So called “independent” external advisers on executive pay are called “Ratchet, Ratchet and Ratchet”.

It just makes you despair. It is also a pity we have a new housing minister or I would have reminded her about this pledge.

“The chief executive of one of the UK’s largest housing associations raked in nearly a third of a million pounds last year following a huge pay hike.

John Belcher of Anchor Trust was paid £327,000 – up 32 per cent on the previous year. He is the first housing association boss to pocket more than £300,000 on salary and bonus alone.
Mr Belcher’s salary has more than doubled in seven years, from a more modest £162,000 in Inside Housing’s 2001 salary survey.

Last year’s pay packet included a car allowance of £15,000 and a massive £72,000 bonus.
Including £32,880 in pension contributions and £1,000 in medical insurance, his entire package is worth £360,880.

In 2005 Places for People boss David Cowans picked up £314,000, but this was partly due to an historic pensions underpayment.

Clare Miller, director of regulation at the Housing Corporation, said salary increases ‘should be proportionate and linked to organisational performance’.

Ms Miller, who received a 15 per cent salary increase herself in 2007/08, added that salary rates were a decision for each housing association. ‘We accept that leaders of large organisations need to be remunerated appropriately to reflect the nature of the challenges they face and their success in meeting these challenges,’ she said.

Michael Gelling, chair of Tenants’ and Residents’ Organisations of England, said Mr Belcher’s wage was ‘unjustifiable’. ‘The people they are serving are on the breadline – how can you justify being paid that much?’ he asked.

Anchor Trust said Mr Belcher’s compensation was high because half the association’s work was in care services instead of housing provision, a sector where the main competitors are private sector companies such as BUPA.