Landlords 'slow' to embrace board payment

Only 25 housing associations have so far taken up new rules that allow them to pay their board members, but some are already paying over the recommended rates, a new report revealed today.

The report, by the Housing Corporation, will go some way to reassure those who feared that the new rules would mean the end of the voluntary nature of England's 2,000 housing associations.

But the corporation said that some associations were already paying over the odds for board members, and it warned that it did not want this to become a trend.

Under new rules introduced in July 2003, housing associations have been allowed to pay board members up to ?20,000 a year.

The exact amounts involved are not prescribed, but a scale is recommended which sets out pay bands depending on the size of the organisation.

So far only 25 have taken up the opportunity to pay with a further 25 likely to follow, today's report said.

It also said that in the first year of the rule's introduction only one housing association paid the maximum level of ?20,000 a year to its chairman. The report did not identify the association, but Anchor Trust, one of Britain's biggest housing associations with a turnover of more than ?200m, has since confirmed that it paid its chairwoman, Dianne Jeffrey, ?20,000.

Since June this year, Places for People Group, which also has a turnover of more than ?200m, has also started paying its new chairman ?20,000.

The report revealed that the majority of chairs are paid between ?7,000 and ?10,000.

Angela Ayton, the head of governance at the corporation and the author of the report, said that a "handful" of associations were paying board members too much, although she made it clear that these were not Anchor or Places for People.

In the report she wrote: "We think there are dangers here of creating an inflationary spiral. Where an association pushes the boundary to attract new members, others may feel constrained to follow. We will be monitoring this trend."

Speaking today, she added: "It's a warning shot, it is not something we are deeply worried about. But we don't want it to become a trend."

Ms Ayton also said she was "surprised" that so few organisations had taken up the option of board payments.

"There was a strong lobby in favour of this as well as strong views against, so we expected more of them to come forward. Perhaps they were arguing for the principle rather than the practice," she said.

It had been argued that board payments would help associations with poor governance to improve their performance. So far there is little evidence that payments are being used for this purpose. The report points out that governance standards among those with paid board members is "more or less the same" as the rest.

The report concluded: "We need strong boards to steer associations through the challenges that lie ahead. But whether or not payment will turn out to be a key factor in high-performing boards remains to be seen."