A place in the sun

See the full findings of the survey

Not everyone seems to have heard that times are tough. Despite the recession, some housing association chief executives continue to enjoy bumper pay rises. In fact, Inside Housing’s exclusive annual salary survey reveals a 7 per cent pay rise across the sector, with the highest paid boss pushing the £400,000 mark. At this rate of inflation, the sector will get its first million-pound pay packet in 2020.

The average pay package in 2001/02, when our records begin, was £91,655. That figure is 63 per cent greater this year, at £149,541. Incredibly, the top 10 earners’ salaries have soared by an average of 91 per cent since 2001.

Taking a close look at the figures behind our annual salary survey of 100 housing associations reveals a mix of rewards for those leading the sector, with everything from pay freezes to bumper rises (see table). However, it is the big earners that will inevitably attract attention - and criticism.

First in line to take a pop is Grant Shapps, Conservative shadow housing minister, who says that he’ll be taking a long hard look at the sector’s pay packages if the Tories win the next election. ‘Boards of housing associations need to remember their semi-public status. I’m tempted to use the word outrageous - I would say it is deeply inappropriate in difficult times,’ says Mr Shapps. ‘It is against the spirit of the affordable housing sector. I can’t think of any good reason why they should be getting paid more than the prime minister. It is impossible to understand.’

Michael Gelling, chair of the Tenants’ and Residents’ Organisations of England, is also scathing about the increases. ‘This situation completely bucks the trend,’ he says. ‘It is totally outrageous that tenants’ money is being used to make the fat cats grow fatter while some of the most marginalised people in society who these landlords are supposed to be serving are struggling to keep their heads above water.’

Mr Gelling wants housing associations to benchmark against arm’s-length management organisations and councils, rather than the private sector, which would mean that salaries would fall considerably - the chief executive of the largest ALMO, Sheffield Homes, gets paid £130,000. But according to Colin Evans, head of reward at human resources consultancy Hay Group, even private sector pay has slowed down. ‘In some parts of the private sector, you aren’t seeing any pay rises at all,’ he says.

The Tenant Services Authority and the Homes and Communities Agency were not willing to discuss the details of the salary survey, both preferring to respond in written statements.

In his statement Peter Marsh, chief executive of the TSA, asserts that it is up to individual housing associations to decide what was reasonable. ‘Executive pay and bonus arrangements can be emotive issues - even more so in the current economic circumstances. It’s the responsibility of the board to explain its approach on these matters and not the role of the TSA to dictate how independent bodies pay their staff.’

However, Mr Marsh added: ‘Where we have a concern is particularly on performance bonuses. If they weren’t being paid on achieving corporate targets that were stretching and were signed off by boards, that would give us concerns about governance.’

The TSA says Mr Marsh gets a package of £165,000 with a 10 per cent performance bonus.

Sir Bob Kerslake, chief executive of the HCA, earns £220,000 a year. He is also reluctant to get embroiled in a debate about chief executive pay. ‘It would not be appropriate for the HCA to comment directly on salaries for specific housing association executives. Any decision on that is clearly a matter of judgement for each individual housing association and their board, who are well placed to address this.’

Competitive rates

Sir Bob does defend the pay levels as appropriate because of the need to retain good people in top jobs. ‘Housing associations are complex multi-million pound organisations and, as such, competitive salaries need to be offered to attract and retain the right people for the job. This is particularly compounded by the challenges of the current economic climate.’

But Mr Evans argues that large pay rises shouldn’t become a habit, unless backed by specific reasons. ‘You wouldn’t expect double-digit [pay rises] unless there has been a change of role or the chief executive has got things through a particularly tight spot,’ he says.

He also warns that a board should make sure it knows what additional value it is getting in return for a pay hike. Mr Evans says he prefers performance-related pay to ensure that extra mile is clear. ‘[A board] needs to know what it expects for that money apart from just the person,’ he says.

Mr Evans also warns that a chief executive’s salary must not be viewed in isolation from what everyone else is getting paid. ‘Large pay rises and bonuses while the rest of the organisation isn’t getting anything - there are issues of engagement there and people need to think beyond the boardroom.’

The pay of more junior staff is in a very different state from that of chief executives. Our annual salary survey of frontline staff, published in April, found that 55 per cent of housing association workers questioned had seen a pay freeze, while housing officers saw their pay rise by 0.36 per cent.

With more pressure on public services, no doubt their jobs have also become tougher - but the difference is that their pay packets are feeling the freeze.

The contrast means that, while there are chief executives who have not had a pay rise, it is the highest earners and risers who attract attention.

The largest salary on the list belongs to John Belcher, chief executive of Anchor Trust, whose 20 per cent pay rise takes him up to a total package of £391,000. His basic salary is £280,000, with the rest as a bonus and benefits. Mr Belcher has been chief executive at Anchor for 15 years and has seen his salary soar by 85 per cent in the past five years.

Anchor Trust specialises in looking after older people, with about half of its income coming from rented properties. Although Mr Belcher would not comment on his salary, he does say that Anchor has a very different model from the rest of the sector. ‘We are very different from traditional [social landlords]. We don’t want to rely on public funding. For the last four years, we had no money from the Housing Corporation or the Homes and Communities Agency.’

Places for People chief executive David Cowans tops the table for basic salary, just above Mr Belcher at £282,623. His total package trails the frontrunner by £70,000 because his bonus is much smaller. Again, the chief executive didn’t want to discuss his pay on the grounds that he doesn’t set it - Places for People chair Zenna Atkins says that his package was deserved because, not in spite, of the recession. ‘David has successfully steered the organisation through an unprecedented economic downturn,’ she explains.

Bonus time

Mr Belcher also topped the bonus table, with a £111,000 pay-out, 54 per cent up on last year’s £72,000 top-up. Anchor Trust chair Aman Dalvi says that performance-related pay is especially important in a tough climate. ‘Bonuses are a proven method of recognising exceptional performance, especially in tough economic conditions,’ he adds.

However, there are chief executives who felt that it was inappropriate to take a bonus this year. Tom Manion, chief executive of Irwell Valley Housing, waived his performance-related pay - as did all his senior management team. ‘We have forgone the bonuses this year,’ he says. ‘We sacrificed it. With the economic climate we are living in we decided in our remuneration committee that we would withhold bonuses.
‘We just felt it was important to make some sort of contribution, however minor.’

John Cross of BPHA also gave up his £20,000 bonus, as did his executive team, because they felt it was ‘inappropriate’.

At the other end of the table were those who did not get a rise or whose pay went down: 11 in total. Failing landlord Presentation Housing Association is the most obvious example, as it was taken over by Notting Hill Trust last year and chief executive Mohni Gujral has been replaced by interim head Greg Lomax. Last year, Mr Gujral’s package included a £46,168 bonus, the second highest of 2007/08, which calls into question just how rigorous checks on performance-related pay are.

The new chief executive of L&Q Group, David Montague, has seen his total salary package fall by 11 per cent in comparison with his predecessor Don Wood: he didn’t get a bonus because he is new to the post. Despite being one of the top 10 earners, Mr Montague also provides the best value for money, when his salary is measured against the number of homes owned and managed: he gets paid £3.15 per house.

New responsibility

The subsidiaries of Affinity Sutton are behind some of the largest rises in salary, with the heads of Downland, William Sutton, and Broomleigh all getting into the top 10 for salary increases (see table below: up, up and away). According to a spokesperson for the association, this is because the group executive team has been restructured and the three managing directors have taken on new group-wide roles.

With rises across the sector, Mr Marsh is right when he says that these are emotive times to be talking about pay. And huge pay rises could well attract the government’s attention. All three parties have talked about the need to cut public sector spending and cap bonuses. A new government in May could make the sector take another look at their pay packets.

View the full results here or extracts in the tables below

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