Inside Housing salary survey 2016

£528,870

Places for People CEO David Cowans’ total salary - the highest in the sector

£32.1%

Pay rise given to L&Q’s David Montague in 2015/16

£150,131

Average basic pay for chief executives

3.3%

Increase in CEO basic pay since 2014/15

7.2%

Difference between average male and female pay among CEOs

£140,350

Bonus paid to Places for People’s David Cowans

18

Number of chief executives taking pay cuts in 2015/16

The rise in salaries

Chief executives saw their salaries rise again this year, with an average increase in total remuneration of 4%. Average basic pay also climbed by 3.3%.

The increase in total salary, including bonuses, is lower than in 2014/15 when it rose by an average of 4.5%. But basic pay climbed faster in 2015/16 compared to the previous year when it was up 2.9%.

The highest paid chief executives also increased their basic salary more between 2014/15 and 2015/16. There was a 3.7% increase for those housing associations who pay their chief executives more than the median salary, and a 3% increase for the lower half.

The biggest increases were not reserved for the larger housing associations. Wellingborough Homes, with stock of 4,625 homes, handed its chief executive Jo Savage a 15.6% increase in total salary. A spokesperson for the organisation said Ms Savage did not receive a bonus in 2014/15 because it was her first year in the role whereas she received an £11,618 bonus in her second year which largely explains the increase in total salary. Her basic salary increased by 6.5%.

10,534-home Aldwyck gave its chief executive, Harj Singh, a 14.1% increase. Paul Dolan, chief executive of 5,038-home Johnnie Johnson Housing Trust, was given a 9.5% increase in salary. A spokesperson for the housing association says this included a £5,000 bonus, while his salary was increased by 4.5% following an independent report commissioned to benchmark chief executives’ pay. It concluded Mr Dolan’s previous salary of £105,000 was “considerably below the median” for an organisation of its size and complexity.

Rises at the top

The highest paid chief executives this year saw their basic pay soar compared to 2014/15.

The top 10 highest paid CEOs had on average nearly 10% higher salaries compared to the 10 highest paid in the previous year’s survey.

David Cowans - at £528,870 - is the only chief executive whose salary tops the £500,000 mark. The figure marks a 9.8% increase on 2014/15 when he earned £481,507.

Mr Cowans’ pay hike has put more distance between himself and the rest. Last year he earned just under £125,000 more in total pay than the next highest paid chief executive, Jane Ashcroft, chief executive of 35,103-home Anchor. This year his salary is £128,860 higher than Ms Ashcroft’s who is again in second place.

Housing associations paying the highest salaries in the sector often argue they need to pay competitive rates in order to retain the best people. A former chair of a housing association is sceptical about this claim.

He says: “There’s always this idea we have to pay the best people top dollar otherwise they might get a job somewhere else.

“The fact is if you’re running a housing association as a chief executive it’s not as though a commercial company is going to bite your hand off to go and run it. Boards can often overstate the risk of losing key staff if they’re not paid enough.”

But housing associations with ambitious development plans say these salaries are justified.

Jonathan Lander, chair of Sanctuary, which paid chief executive David Bennett £340,000 - a 6.6% increase on last year - says he has led the organisation in reducing operating costs and rent arrears and oversaw a restructure and new business plan in response to the government’s call for housing associations to build more homes.

Sanctuary will build 24,000 new homes over 10 years as a result of this work, Mr Lander adds.

L&Q’s chief executive, David Montague, had a 32.1% increase in total pay, from £268,800 last year to £355,105. This included a £47,105 bonus.

Aubrey Adams, chair of L&Q, says in previous years the organisation was “very restrained” in its approach to pay and as a consequence a number of the executive team “fell behind” when compared with peers. He adds it was “imperative” that L&Q “redressed the impact of this historic restraint”.

He says the increased pay reflects the “significant successes” achieved last year, which include delivering a “record” surplus of £270m and the completion of 2,510 new homes.

L&Q is in the process of merging with East Thames to create a 90,000-home housing association with an ambition to build 100,000 new homes. Mr Adams says Mr Montague’s pay increase reflects the “unprecedented scale” of these plans.

Anchor chair Pamela Chesters points out the organisation has one foot in the care sector and the other in housing. In 2015/16 it paid Ms Ashcroft the second-highest salary in the sector - £400,010.

Ms Chesters points out that in the last 12 months Anchor increased its number of care homes by almost 2,000 units and built 230 retirement properties. The majority of Anchor’s turnover now comes from care home fees and leasehold sales - £214.9m - with £152.4m from social housing rent.

A2 Dominion, which has 36,130 homes, paid its chief executive Darrell Mercer £261,873 last year, one of the highest salaries. A spokesperson for the housing association says the salary “varies depending on market conditions and business needs”.

The spokesperson points out the group increased its turnover by 21% last year and completed 1,127 homes across a range of tenures.

Trend spotting

Although the average total salary has gone up since last year, when measured against turnover, it appears housing associations are getting more bang for their buck.

On average, chief executives received £2,438 in total remuneration per million pounds of turnover, less than the £2,624 received last year.

Seventeen chief executives received a pay rise of more than 10%, three fewer than last year. This pattern is not in line with other jobs in the sector, according to one recruitment consultant, who wishes to remain anonymous. The recruiter top-level pay “seems to be rising more than the overall organisational pay increases and that’s a trend that’s been around for a long time”.

Chief executives at housing associations that went through mergers during 2015/16 saw their pay increase by 5.6% on average, compared to the 4.6% overall average.

Six of the chief executives in the 10 lowest paid list are from Scottish housing associations. The Scottish Housing Regulator has provided detailed guidance on setting senior officer pay, whereas England’s Homes and Communities Agency has only recently started to advise against excessive pay.

It is not yet clear whether the expected decision from the Office for National Statistics on reclassifying housing associations in Scotland, Northern Ireland and Wales as public sector organisations will have an impact on senior pay.

Any steps to move housing associations off the government’s books is expected by some to result in a more relaxed approach to regulation.

For the second year, Julia Molloy, chief executive of Scottish Borders Housing Association was the lowest paid chief executive on £88,657 followed by Shona Stephen of 4,333-home Queens Cross Housing Association.

At least 13 housing associations made redundancies in 2015/16, or have recently told staff they are at risk of redundancy because of the impact of the 1% rent cut.

Despite these job losses, chief executive salaries across the 13 affected housing associations increased by 1.8%. Two chief executives in that group, however, took pay cuts.

Eighteen chief executives have taken pay cuts averaging 3.3%. In 2014/15, 12 chief executives took an average pay cut of 5.3%.