Paid board members set to cost sector £20m

The bill for paying association board members could hit £20m a year if all eligible associations take up the practice – approved by the Housing Corporation on Wednesday.

The £20m figure is based on payment guidelines to be published in two weeks by the National Housing Federation.

The NHF guide, which will be sent to all registered social landlords, will recommend that associations do not spend more than 0.5% of their turnover on paying boards.

To Pay or Not to Pay: Guidance on the Principles and Practicalities of Paying Board Members gives a sliding pay scale for board members and chairs, based on the association's turnover.

Chairs of associations that make more than £100m would get a maximum of £15,000 a year rather than the £20,000 that the corporation has suggested.

The guide also recommends that associations with turnovers below £250,000 should not pay their boards (table, left).

Precise figures for the number of associations that would be eligible to pay board members were unavailable from the NHF and the Housing Corporation, but are believed to be 600-700.

Associations that want to pay – understood to be more than half the eligible number – will be required to set out a "robust business case" to the Housing Corporation.

They can pay boards without corporation permission but could end up under supervision if the case for payment was not good enough, for instance if payments were excessive relative to the size of the organisation.

James Tickell, deputy chief executive of the National Housing Federation and editor of the guide, said: "This is about good governance and making sure boards are as focused in their approach to it as possible. The NHF is not convinced that the case for payment has been made but if it is going to happen, we want it to have as good an effect as possible. That's why we have commissioned the book."

The issue of paying board members has split the sector right down the middle, with some associations arguing that it will allow them to access a greater pool of talent. Others feel that paying board members in a traditionally voluntary sector is unethical.

Ian Perry, chief executive of Harvest Housing Group said: "We are absolutely against paying board members and we don't think the Housing Corporation has explained what the benefits of payment would be. We think there needs to be a major overhaul of governance rather than just paying board members." Payment would cost Harvest about £333,000.

However, Simon Randall, chair of Broomleigh Housing Association, said: "Broomleigh doesn't have problems recruiting but, in my experience, other associations sometimes have difficulties getting people with the skills the Housing Corporation wants and I think payment could assist."

Broomleigh's bill would be up to £200,000.

There have also been questions about whether charitable associations can pay their boards – which have since been resolved. However, payment of welfare benefits to board members remain an issue.

Board members will have welfare benefits docked if their association offers them payment, despite Housing Corporation chair Baroness Dean's attempts to persuade the Department for Work and Pensions to change the rules (HT 27 June, page 8).

Phil Morgan, chief executive of the Tenant Participation Advisory Service said TPAS would continue to press for the change even though Dean's attempt had been rebuffed.

"We will increasingly find that some board members get the full rewards of being paid while residents on benefit will be getting diddly squat and being hassled by benefit officer," Morgan said.