HA CEO pay is so much more than money

• Sixty per cent of housing association chief executives are paid more than the Prime Minister’s salary of £142,500 per year according to latest figures
• One of these charitable HA CEOs was paid £528,000 last year.
• Another was paid £88,000 more last year a 32% pay increase.

When government refuse money to HA’s those statements will be used against HA’s as justification for that refusal: When unions say you are making 15% or even 25% redundancies and your CEO gets a pay increase and earns more than the Prime Minister they will be used: When every tenant does not get a repair done or receives poor service in any way or a housing association chooses to implement the discretionary pay MORE to stay policy they will be used then.

Any lingering hope or faith that HA’s seek to claim they are charitable, which is the basis of how they self promote is gone and even if they double the amount of public good they often deliver.

I have worked alongside and advised some of the HA CEOs on the list and I could offer valid arguments that some deserve what they are paid.  Yet that is not the point and of no consequence as even if all HA CEOs engage the most persuasive spinmeisters to attempt to justify their salaries, their reputation and goodwill is shot to pieces with very significant consequences for all HAs.

I could give reason after reason why the comparison to the PM’s salary is a false one not least that no HA CEO I know can get £20 million per year on the speaker circuit after they retire; or that everything is comparative with for example the likes of footballer Yaya Toure and others seemingly happy to sit on their backsides, not do their job yet pick up £250k per week or £13 million per year … Yet context is far more important than comparisons.

Housing Associations profess to be charitable organisations with a social ethos and social purpose which drives them in all they do.  The salaries and other income they give to their chief executives has to be seen in that context and the housing association sector is facing a reputational disaster and for which it only has itself to blame with these salary levels and increases.

• Every time a housing association says they were founded on philanthropic good that fact becomes meaningless and irrelevant.
• Every time one says we need more money or ‘subsidy’ from government they will be told to get their own house in order first and stop crying poverty.
• Every statement David Orr claims for the ability of housing associations to help solve the ‘housing crisis’ will be perceived in this context and easily batted away.
• Every claim made about the public good that housing associations deliver will be seen in the context of 60% of CEOs being paid more than the Prime Minister and their pay is wholly out of any proportion.

Last year, 2015, the Daily Telegraph ran a vitriolic story saying 32 charity bosses are paid more than £200,000 per year and a year later we now have 27 charitable HA CEOs paid more than £200,000 per year alone.

NB – The Inside Housing article which produces these HA CEO salaries only gives salary details for 175 housing associations and that is just 12% of all HA’s yet this tiny percentage alone gives 27 HA CEOs who were paid more than £200,000.

If the Daily Telegraph (Torygraph?) thinks £200,000 is a significant price point what will they make over £500,000+?  

[The same Daily Telegraph who said the bedroom tax should be levied on the pensioner]

Anyone in housing who thinks a similar article will not be run by the Telegraph or any of the mainstream media is naive.  It’s a given.

For context and background over 50% of all housing associations by tenant numbers used to be council tenants and LSVT has seen the former directors of council housing become HA chief executives.  A quick comparison reveals that current housing directors in councils are paid around £85,000 to £90,000 per year and the average HA CEO in today’s figures receives £164,908 per year for largely the same job.  That £164,908 average salary figure is also often much higher than many local council chief executives get for running every aspect of local government not just the housing department.

This is NOT about whether such CEO salaries are deserved, this is all about perception and reputation and I cannot stress that point enough.

Housing Associations are reliant on public money and significantly so despite their diversification and risk reductions of recent years with more new(ish) products and services such as greater shared ownership, increasing private rented and private outright sales. The NHF figures for last year of over 40,000 new builds including just 5,454 new builds for social rent epitomises that diversification and lack of public need starkly.

In short houses are built for HA bottom lines and not on public need – and that simple yet valid critique will be tame compared to the scrutiny that ALL housing associations will receive due to these CEO figures.

Every time anyone from a housing association says that ubiquitous term ‘social purpose’ everyone who hears it will think social purpose my arse!

The National Housing Federation has been strongly promoting a much more private path for its member housing associations and asserting they are private organisations not public ones, yet both the ONS and the public see them as public not private organisations and that perception of tenants, that will be used by government to deny funding, is hugely significant.

I have strongly criticised housing associations and the NHF in particular that has lead to comments from within housing that I despise them and other nonsensical responses to my criticisms of them.  Besides that being the attack the messenger ploy and wrong, the issue of CEO pay is much more significant.

Many HAs of today were a convenient construct to get around public borrowing requirements, the 1.4 million or so properties now in HA stock that were formerly council managed and that is why the earlier comparison of HA chief executives now being paid almost double the pay of a director of council housing is significant. What goes with that is councils built and still build based on local public need, HA’s by contrast build for their self interest and bottom line yet use public money to do so and constantly state they need more public money to continue that self interest which is not the public interest.

When HA’s choose to implement pay MORE to stay – and note well the NHF have set up a crowd funder for HAs to purchase IT software for that reason – that will see them correctly being perceived as money grabbing bar stewards out to screw every last penny out of their ‘customers’ – the tenants – and screwing the public purse.

Perception and reputation are huge issues for any organisation and in this context when we have HA’s trading on their claimed social ethos and social purpose and philanthropic roots then all of that goes out of the window and HA’s face a public relations disaster if they choose to implement pay MORE to stay, as just one example.

Pay MORE to Stay so we can pay our CEO more … you can see the headlines now!

What I suspect will be of greater significance is how housing association tenants will respond to these salary levels and with social media providing the means to communicate every last fault or bad service of every housing association and increasing by the day that should be a huge concern for housing associations.

The old adage of it takes 20 years to build a good reputation yet 5 minutes to lose it all is very much at play.

Imagine for arguments sake that Peabody with their 150 year plus philanthropic roots and all that means to their business model and reputation and perception and goodwill decide to adopt pay MORE to stay and someone pipes up that its CEO is paid 50% more than Theresa May.  Here is what Peabody’s website says about their roots and the point becomes very clear:

George Peabody was a social visionary, with views far ahead of his time. He was one of a circle of reformers; his contemporaries included Lord Shaftesbury, William Cobbett, Angela Burdett-Coutts and Charles Dickens.

He was inspired by what he saw around him and his own life experiences. For example, horrified by the devastation caused by the American Civil War, he set up a fund to establish a public education system in the Southern states. Then, living in his adopted home of London, he wanted to tackle the poverty he saw around him. 

That vision and sense of social justice has shaped us. We pioneered social housing with such unheard-of luxuries as separate laundry rooms and space for children to play at a time when the capital had some of the most horrific slums in Europe.

All that goodwill from a contemporary of Dickens built up over a century and a half would be gone. That is what the CEO salary figures mean for reputation and perception and note well the CEO of Places for People is paid £300k per year more than the CEO of Peabody too!  

Any union official whose members are in housing and a current or future dispute arises will use these CEO salary details to the many HA’s who are seeking to shed 15% to 25% of housing staff. Many HAs have shed such staff and any sharp-eyed union official will note how much more the CEO has received for that action in the tables below.

All HA tenants will use the same tables that give details of the excellent Inside Housing survey and I reproduce those from behind the paywall below.  This issue is going to run and run and the proverbial has hit the fan for housing associations and even those not mentioned in the salary tables will be adversely affected.

Many of the salaries are indefensible per se yet it is the impacts those salary levels will have on reputation, perception and goodwill that is the real issue that I barely touch on above.

HA CEO salaries (alphabetic)

Notes:

There a few clearly wrong percentage figures in the above IH tables (East Midlands, Family Mosaic etc) yet they are of no significance as the columns detail the actual salaries paid.

Will HA board members respond to the scrutiny they will receive for permitting these salaries or will they quietly resign?  Can tenant boards members ever have any credibility in the eyes of the tenants they claim to represent any longer? Just two of dozens of questions these figures raise

I could pick out dozens more arguments from the tables yet the three simple points I began with state the way these figures will be received.

• Sixty per cent of housing association chief executives are paid more than the Prime Minister’s salary of £142,500 per year.
• One of these charitable HA CEOs was paid £528,000 last year
• Another was paid £88,000 more last year a 32% pay increase.

Be under no illusions this is a PR disaster with significant ongoing adverse consequences for the HA sector and however closely the NHF cosy up to government rest assured some Tory backbenchers as well as Labour frontbenchers will jump on these figures and social tenants will be all over them like a rash!

That’s a good word to finish on reader … rash!