Dean acts over chiefs’ pay

Housing Corporation chair Baroness Dean has controversially warned housing association chairs that she is determined to rein in excessive pay and severance packages for chief executives.

The move has been interpreted as the quango trying to strengthen its regulatory grip over RSLs following recent criticisms of its performance.

The sector gave a mixed reaction this week to Dean’s view, set out in a letter sent last week to the chair of every RSL that owns more than 250 homes, that it “only takes a few questionable decisions to tarnish” what she calls the “excellent” reputation of the sector.

She added: “Some recent cases have brought understandable public comment, and proposed severance payments gave rise to the statutory inquiry into Liver Housing Association.”

Sources pointed to recent record pay-offs – not just the £1.7m severance package proposed for a trio of directors at Liver Housing Association. These have damaged the status of RSLs in the eyes of the government as well as the public, some warned.

Others added that the quango is aiming to emphasise its control over housing associations.

An influential parliamentary committee recommended last year that the National Audit Office should be given greater access to associations’ accounts (Housing Today, 3 May).

Its final report last week said that the corporation should hone its regulatory skills in keeping with an increasingly diverse sector (Housing Today, 10 January).

Dean said the corporation wanted to see evidence that boards are addressing all pay issues and showing “justification for any discretionary elements” in severance packages.

She added that the regulator will expect to be notified in advance of issues concerning benefits in the case of an early departure.

Where approval is needed, all the professional advice taken should be shown.

Lead regulators will be asked to follow up on these issues.

But speaking to Housing Today, one chief executive who wished to remain anonymous called the letter “completely outrageous”.

“Our salaries are already published publicly and it is not rocket science to realise that if a chief executive parts company with a housing association there will be a severance payment that is a multiple of the salary,” he said.

The sector had known about the situation at Liver and it was “ a little bit late to be making a fuss,” he said.

The corporation had to “make its mind up” as to whether it wanted RSLs to be independent or subservient, the chief fumed.

Horizon Housing Association chair Trevor Baker said however that it was “possible” that notorious pay-off cases could have been avoided if the new guidance had been in place.

“In the private sector, shareholders curb excess pay. In the same way the regulator has to play a shareholder’s role. But it’s how dogmatic the corporation will be in looking at the details which is important,” he said.

Chartered Institute of Housing policy analyst Mark Lupton said: “This seems a sensible move, given the undoubted negative impact stories like Liver have on the image of housing associations.”