“Two housing associations are likely go bust in the next 12 months”

The CEO of the multi-billion pound Housing Finance Corporation (not the Housing Corporation as I first misread the piece) Piers Williamson, predicts that two housing association will completely fold “Ujima style” . While there will be a number of “failing associations” which will be merged into larger groups.

“Most of the recent failures have been about daft development – over development in a good market. Here we have an abysmal market ......,’

So, if he is right, the current market failure will be to blame, unlike Ujima which was down to good old fashioned senior management megalomania.

Associations who have gambled on rising property prices to fund mixed developments are going to find themselves in trouble. Others (hopefully the vast majority) should be OK if they scale back development. Not good news for the Labour Government housing targets.

Nor is it good news if you rent from or work at one of these failing associations. Neither for local communities who depend upon associations not only for social housing but also providing other services.

The government is going to have to think again about its housing policy and its dependency upon cross subsidy from private development. As well as the emphasis on shared ownership rather than homes for rent. This is the time for those who have been concerned that in housing, the tail has been wagging the dog.

We need some more of that “clear red water” that UNISON General Secretary Dave Prentis, mentioned today at conference.

Tomorrow is my UNISON Housing Association branch executive meeting. I’ll see what people think.Check out Inside Housing who are having a run of scoops recently. May we live in interesting times?

“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?)