Cats and cream

Originally published on September 9 on Inside Edge 2, my blog for Inside Housing

It’s Groundhog Day. Inside Housing publishes its housing association chief executive salary survey. People get outraged. Nothing changes.

The average boss in the 177 largest associations saw their total pay rise by 4% in 2015/16. That’s eight times the rate of CPI inflation and double the increase in average weekly earnings. And it also conceals a huge variation: by my reckoning 10 chief executives saw their pay frozen and 21 took a pay cut but 16 had an increase of more than 10%.

The numbers may change (and it’s always worth reading the footnotes for the explanations of the changes in individual salaries) but the arguments are essentially the same every year.

Yes, these are senior people who need a mix of skills to do a job that becomes ever more complicated and more commercial. Yes, you can argue it’s value for money. Yes, there are people who get paid many times more for kicking a ball. Yes, there are many who took little or no pay rise despite taking on extra work or overseeing a merger.

And yes, there are comparisons that put even that top salary of £529,000 and average of £150,000 into perspective. Take another sector regularly lambasted for its ‘fat cat’ bosses: the top salary for a university vice-chancellor is almost £600,000 and the average is £250,000. Or take the big housebuilders: some of the biggest associations are now major private developers in their own right but their pay packages do not remotely compare to the £52m shared by the six directors of Berkeley Homes in 2014/15.

But no, these salaries and pay rises for the bosses do not remotely reflect the financial squeeze being felt by their staff. Inside Housing reported last week that a third of associations will freeze the pay of their staff in 2016/17. Will the same apply to chief executives? Do they pay at least the Living Wage to staff? If not, why not?

And what about tenants struggling on zero hours contracts or on benefits that are frozen until 2020? Earlier this week the Joseph Rowntree Foundation published its strategy to solve poverty in the UK. Many of the recommendations are for central government and involve policy changes that seem unlikely at least in the short term but housing providers are challenged to pay a pivotal role?

How many associations make tackling poverty an explicit aim in their business plans and strategies? How many prioritise the delivery of low-rent housing rather than maximise their income from higher rents? How many aspire to link their rents to local earnings? How many will choose to impose higher rents on [sic] ‘high income’ tenants?

However, it’s not just tenants and staff who will be reading this survey with interest. Politicians once expressed impotent rage at chief executives earning more than the prime ministers but this was the year they forced associations to cut their rents. Ahead of the last Budget there were even rumours circulating of a 2% cut. It’s only a year since that politically-inspired Channel 4 News report and – unfair though that was – there are bound to be more. This is almost an application for another cut.

The regulator is watching value for money like a hawk. Thanks to their private status, associations are convenient delivery partners for government but it would be dangerous to take that for granted. In the Netherlands, the government imposed a cap on the pay of chief executives in the semi-public sector following the housing association scandal.

Local authorities will wonder yet again why they should be forced to sell their best stock and hand over the proceeds to compensate associations for the right to buy.

As last year, as every year, chief executive pay is the issue that crystallises all these others. Yet we are talking about what is pretty much a closed shop: few housing association bosses are recruited from outside housing; even fewer leave for jobs in other sectors.

I’m not pretending that associations on their own can tackle a problem of top pay that has infected the whole of society. The influence of the market will only grow stronger as they expand and become more commercial. But some boards and individual chief executives already show self-restraint and the sector as a whole could act collectively if it wished.

Groundhog Day finally ends when Bill Murray’s weatherman stops watching the same events happening over and over again and instead decides to change them for the better.


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