Shapps demands wage cuts for top housing bosses

Senior pay levels for housing association chiefs are in the firing line after Housing Minister Grant Shapps questioned whether they represent appropriate use of public money, but the NHF has defended the sector’s high earners. Claire Stapleton reports

Bosses in the housing sector are earning too much and should see their pay scales slashed, says Housing Minister Grant Shapps.

With several reported as earning more than the Prime Minister, he wants to ‘shine a light’ on housing association pay scales in an effort to ‘name and shame’ organisations that cannot justify such ‘top dollar’ pay packets for senior executives. The average pay of the top 100 housing association chief executives is £150,000 but some are taking home much more.

Shapps realises that he can’t control how charitable housing associations spend their money, but he thinks that the public has a right to pass judgement on pay levels because housing associations receive a substantial chunk of public money.

Speaking on BBC Radio 4 he said: “When everybody is being asked to cut back, is it right that charitable housing association bosses are walking away with salaries that in many cases are £200,000 and in some cases £300,000?

“The public will have something to say about charities whose bosses are earning £243,000, £207,000, £321,000. Is that really appropriate for a charity that is taking taxpayer’s money? Or is it something that you should be doing because you’re in public service?”

The new Housing Minister’s comments came after David Cameron announced plans to allow taxpayers to see exactly where public money is being spent – via a Public Sector Transparency Board – that will be established in the Cabinet Office. Government contracts over £10,000 will be published on a single website from September – with all items of central government spending over £25,000 and local government spending over £500 being documented shortly afterwards.

The names, grades, job titles and annual pay rates for most senior civil servants with salaries above £150,000 were also published earlier this month and Shapps seems determined that the housing sector should be held accountable in a similar way.

In 2009 trades union Unite slammed what it saw as “City pay culture” salaries paid to some chief executives in the social housing sector, calling for a ‘High Pay Commission’ to curb such “excessive” sums.

It highlighted Anchor Trust, for the sum of £391,000 that it paid to former chief executive John Belcher in 2008/09 and singled out the Riverside Group for the salary of £231,000 paid to its group chief executive Deborah Shackleton.

However David Orr, chief executive of the National Housing Federation (NHF), defended these pay levels. He said: “Housing associations provide a key frontline public service to millions of tenants – but are not public bodies. They are independent not-for-profit organisations, which match every £1 of public investment with £2 from their own resources – allowing them to build new social homes at the lowest cost to the taxpayer.

“Chief executives’ salaries are set by independent boards following a rigorous assessment of their value to the organisation. We think it is right and proper that this decision should be made by independent boards – the overwhelming majority of which will have tenant representatives sitting on them.

“Housing associations have been trailblazers in terms of accountability. They have published what they pay their chief executives for the past 15 years and this information is transparent and freely available.

“Housing associations delivered 50,000 desperately needed affordable homes last year – the highest level for a decade, as well as providing a huge range of services and facilities for their tenants. “This is a high performing sector, delivering significant numbers of new homes at the best value to the taxpayer. Attracting and retaining talented and committed chief executives is vital to maintaining this success.”

Although Shapps agrees that housing associations are generally doing a good job, he also believes that it is important that pay levels are monitored, because housing associations receive public funding. He said: “I think it’s only right to make sure that we’re checking what’s being paid and how the money is being spent. I think people on taxpayer’s money of £200,000 / £300,000 need to seriously look at their decision.”