436,000 reasons why we need employee reps on Housing Association Boards

Last Friday Inside Housing magazine disclosed that the former CEO of the so called "not for profit" Housing Association "Places for People" received a total pay off of £436,000 when he recently retired (voluntary).

Because of this the Housing Regulator has downgraded the Association due to "governance concerns" and 3 board members have resigned.

Frankly, this response is grossly inadequate and appears to be mere hand wringing. This is not just an isolated cock up but indicative of a wider malaise. The impression given is that some large Housing Associations are run by some unaccountable, self perpetuating mates club. Solely concerned with enriching themselves from their residents, clients and of course, the public purse.

So what can be done to reverse this? There are vague calls for "restraint" but come on - do turkey's votes for Christmas? Will Hutton in his 2011 report on Fair Pay recommended there should be employee reps on public sector boards especially the remuneration committees (who decide pay). Such organisations should also publish the multiples between the lowest paid and the highest paid. Personally I believe we also need far more independent resident and client reps on all boards.

I had a quick look at the "Places for Executive Profit" website tonight and noticed an advert for an estate cleaner in Sleaford, Lincolnshire for £6.33 per hour (for a whole one hour per week!). This is  poverty pay and only 2p per hour above the uprated national minimum wage. I work it out that the CEO got pro rota 35 times as much as the cleaner that year. I suspect that office cleaning is outsourced. I wonder how much the worker who cleans the CEO office receives?

Why can't employee reps sit on all Boards? They sit with management on joint safety committees where they take decisions on the lives of workers and residents? They have employee reps on  pension committees where they decide on investing millions of pounds.  So why not on Boards and especially remuneration committees? In other arguably more successful countries than the UK this is just considered the norm? Employee representatives will be a brake on greed and corruption.

Unless Housing Associations clean up their act then I don't think there is a long term future for the sector. There has been a lot of genuine fuss and bother today about 30 staff at 14 foreign aid voluntary organisations being paid more than £100k per year. While I share this concern this is just small beer compared to the huge amounts paid in executive pay in most Housing Associations.

Robert Shiller: The only one who saw it coming

Better late than never, but a couple of weeks ago I went to a lunchtime seminar at the “Work Foundation” to see a presentation by the Robert Shiller. In his book “Irrational Exuberance” published 8 years ago he predicated the current financial crisis. The book was an international best seller but was of course largely ignored and he got a lot of stick at the time as being some sort of doom and gloom merchant. Now he is the hero of the hour.

There were a number of heavy duty hitters at the seminar from the City and even Downing Street. The seminar was hosted by Will Hutton who has written about Shiller here. Tom at Labour & Capital has also an excellent report here on the seminar. So I’d just mention some things that particularly struck me.

The first thing is that Shiller’s presentation on why the bubble was predicable was so absolutely convincing that even with the benefit of hindsight you wondered why he was ignored? I asked my usual question about the role that poor governance of companies played in the crisis but he responded by saying that it was not an area he had looked into.

At the end I bought a copy of his new book “The Sub-Prime Solution - How Today’s Global Crisis Happened and What to Do about it”. I asked him to sign it which he did, reassuringly putting down the wrong month which he apologised for while quizzing me on the origin and pronunciation of my surname. After all no-body gets everything right.

Brothers “grow up” & “chop the greedy global financiers”

The State We’re In: Will Hutton bashes “greedy” trade union leaders and global financiers - I must admit to being a bit peeved with Will after reading his article on trade unions militancy the other week (Hat tip to Tom). Yes, I agree with many of his points about the odd “Life on Mars” Don Quixote Union baron (mention no names). However, Will spoils his case by suggesting that all is needed is for Unions to be some sort of proactive “Stakeholders”. The balance of power in such a partnership is still usually weighted decisively in favour of the employer.

A progressive trade union still needs “teeth” otherwise workers will not be convinced that they have to join (and pay subs). Strikes should always be the weapons of the last resort (and if properly called – fought ruthlessly to win) but being “stakeholders” is just not enough. Maybe worker representatives should be elected on large company boards? Should the vast amounts of workers’ capital invested in pension and insurance funds be used more appropriately in line with their owner’s wishes and beliefs? And so on….

Will is far more convincing on his analysis over the current financial “crisis” in the UK (and world). He has been to a certain extent proved right by his predictions of “at least a couple of household British financial names have to be offered a lifeline”. - Northern Rock?

I am personally pretty sure that this will only have a short term effect on the market (this is just “what happens” in a capitalist society). However, what is not right, is that we fail to regulate financial markets properly. For example, large financial institutions make eye watering large amounts of money by encouraging loans to people when there is a real likelihood of them being unable to repay those loans. At the same time “neutral” credit rating agencies make their big bucks by recommending these “no hoper” borrowers as secure credit risks!

Some may just laugh and say “serve them all right”. Yes, but in my experience, in each financial disaster (let’s make a list of those in my lifetime - Maxwell, Lloyds Insurance, Mortgage Endowments, Personal Pension Schemes, Equitable Life, Encom, Split Investment trusts, Farepak, Northern Rock etc) lots of ordinary people suffer – big time.

My point Will, is perhaps that the same degree of radical measures that you want trade unions to adopt also need to taken up by the financial markets. Just think, maybe most modern day British trade unions are probably more innovative and responsive than the reactionary and old fashioned City interests? Just a thought….

Compass Conference – Workshops, Global Question time and Close

This report follows my first post “Navigating the Compass Conference”. After the morning keynote speeches there was a choice of 16 workshops. I decided on the “An Irresistible Force? Managing globalisation” by Unions 21. Just beforehand I sneaked into the debate on Trident and took this quick picture (left) of Labour blogger, Luke Akehurst, who was speaking in favour of Trident(on left with Jon Trickett standing).

Will Hutton, of the Work Foundation was guest speaker at the unions 21 workshop. A lot of international trade unions were represented. This is now the third trade union meeting on globalisation that I have attended in recent weeks. Things are starting to happen. Will made an interesting remark about the Chinese being concerned about goods “being made in china but not made by Chinese” referring to the level of foreign ownership of companies, China retains little “added value”. However, it’s the Asian saving culture and the huge amount of petrol dollars which have fuelled the Private Equity boom in the West. I asked my usual question on the role of workers capital. Which the panel broadly agreed should be important.

After lunch I went to the New Local Government Network workshop on Globalisation and local government. The panel of speakers (see top right photo: left to right) Stella Creasy (former mayor of Waltham Forest), Chair (rudely I have forgotten his name), Lyn Brown MP (West Ham), Cllr Steve Reed (Lambeth Council Leader) and Jane Roberts (former Leader of Camden). It seems that the new bill currently making its way on local government is finally going to decentralise decision making back to local authorities. This went down very well with the audience. Lyn, in her probably unique experience as a local government researcher, senior councillor and now PPS to the Minister for Local government felt that these were an opportunity for a Renaissance in Councils. In the meeting was another blogger, my favourite GMB Councillor from the London Borough of Waltham Forest, Miranda Grell (see pic below). In my response to my question to the panel on the role of unions in this Lyn suggested that we ought to have representation on local strategic partnership boards. While Stella quoted Ed Miliban (I think it was Ed not David) that Council workers should stop being “experts” and start being “navigators” for their communities. A very suitable thing to say at a compass conference!

Global question time in the great hall followed. Poor old Garth Thomas MP, under secretary of state for international development had a hard time from his fellow panellists (Martin Bright “New Statesman”, Shami Chakrabarti “Liberty”, Martin Sedden “Al jazeera” and Sukvinder Stubbs “Barrow Cadbury Group”). However, thought that he stood his ground well and gave as good as he got especially over the debate about a “British Day”. Heather Wakefield, from UNISON asked a question about how the panel would tackle the continued discrimination in public services regarding equal pay for women. This had Shami unusually, she admitted for a Liberty spokesperson, calling for greater regulations and legal enforcement.

Antonio Miranda a Brazilian campaigner spoke about the successful battle in Brazil against water privatisation.

Jon Tickett MP was the final speaker. Jon Cruddas was in Cardiff with the rest of the deputy leadership candidates. He was billed to give a video message, but it never happened for some reason. I thought that Jon T speech was quite negative and even a little grumpy. Nothing to write home about.

It is interesting that I don’t think any of main Compass speakers mentioned Tony Blair by name even once. Despite this I am not wholly convinced that Compass is really that different from “New Labour”. Compass is certainly associated with distinctive polices such as opposition to Iraq and Trident at which they are at odds with the Labour Government. However, on the basis of what I heard at this conference about Compass supporters “positions” on privatisation, economic policy, globalisation etc then I think there is in reality no fundamental schism. I think that Compass is a “traditional” Labour movement which has ditched Marxism and state socialism for civil liberties and equal opportunities.