Sector backs plan to pay board members £20k

But the corporation admitted that the plans could cause difficulties for tenant board members who claim benefits.

A corporation consultation paper, published today, outlined proposals for RSLs to pay their board members if they choose to and can make a strong business case for it.

The paper ended more than a decade of heated debate about whether board members should – or could – be paid.

A limit of £20,000 a year has been set, which is likely to be the maximum chairs can be paid. Other board members are expected to net around £5000 along similar lines to the payment of NHS trust board members.

Charitable registered social landlords must still apply to the Charities Commission if they want to pay trustees, but they would not be bound by the corporation's limits. Around two-thirds of RSLs have charitable status.

Housing associations that wish to pay their boards will have to prove to the Housing Corporation that their payment regimes reflect its criteria. This could include publishing payment plans and consulting with tenants but they will not have to present business plans.

RSLs will be expected to have considered whether they have robust appraisal systems for boards and chairs and whether the board can be reduced in size, and to have procedures for board members who do not make the grade.

Mike Morris, chief executive of William Sutton Trust, said: "This is a step in the right direction. The Housing Corporation has been sitting on the fence for six years on the matter.

We are aware [benefits] could cause difficulties; boards need to take this into consideration

Housing Corporation spokesperson

"Payments should be structured in a sensitive enough way to be compatible with the receipt of benefit. Each board member should be of equal importance, but it is a question of individual choice if they decide not to receive full payments."

But Paul Kingsley, chief executive of London & Quadrant Bexley Housing Association, said: "We do not have to offer financial inducements to recruit good committee members."

National Housing Federation chief executive Jim Coulter said: "The jury must be out on whether payment or nonpayment develops governance. It is up to the corporation to decide this incredibly subjective area of decision-making." Competition for people's time meant RSLs needed to be able to offer inducements to attract competent boards, he explained.

The Chartered Institute of Housing welcomed the recognition that RSL governance had become more and more businesslike, but that was strictly confined to paying their boards, said policy analyst Mark Lupton. But he said payments to tenants on benefits would be an issue that needed to be "sorted out".

Council of Mortgage Lenders deputy director general Peter Williams said funders had always supported the idea of paid boards, but the issue of benefits was "serious".

A Housing Corporation spokeswoman said: "We are aware that [benefits] could cause difficulties, which is one thing boards need to take into consideration. Also, individuals would have to take their personal circumstances into account. We are very keen to hear what the sector has to say about this and how they propose to deal with it."

John Belcher, chief executive of charitable RSL Anchor Trust, said he was "seriously considering" approaching the commission for permission to pay board members in the light of the proposals.