A HOUSING association boss was given an ‘outrageous’ £27,000 pay hike last year, it has emerged.

Phil Richards, chief executive of Prospect Homes, saw his total pay and bonuses rise from £167,000 to £194,000 last year - a 16 per cent increase.

Prospect Homes has 550 staff and manages 12,000 former council homes in Blackburn, Darwen and Pendle.

Bosses insisted the extra payment was a bonus, not a ‘pay rise’. The not-for-profit group confirmed the extra money would contribute to Mr Richards’ final salary pension scheme when he retires in April.

Rossendale and Darwen MP Jake Berry said: “It’s not right that the chief executive of a relatively small housing association should be paid more than the Prime Minister.

“The time for these ridiculous pay increases is over.”

Pendle’s Conservative MP Andrew Stephenson said housing associations did a ‘fantastic job’ in many parts of East Lancashire.

But he added: “Such a pay package sounds absolutely outrageous. I am urging everyone in the public and third sector to show pay restraint in the current climate when many people are facing redundancies.”

Research by Inside Housing magazine uncovered the extra payments made to Mr Richards, which represented the largest pay increase in the social housing sector last year.

Along with three other directors, Mr Richards is entitled to an annual bonus of up to £10,000 if targets are met.

Prospect Homes said these were paid in 2006/07 and 2007/08, but withheld in 2008/09 because of ‘negative headlines’ about bonuses for housing association bosses in the national press.

In March 2010 it was decided to give the directors two years’ worth of bonuses and an extra ‘bonus buyout’ payment.

This was in exchange for no longer being entitled to a bonus in future years. Mr Richards’ salary for the current financial year is back to £167,000.

Mr Richards, a former council housing director, admitted it ‘look like’ a pay hike on the group’s accounts.

But he insisted the triple payment was a ‘one-off’ to phase out the bonuses, adding: “When I look at other salaries within the sector mine is comparable.

“It is just that this year it stands out in the crowd because of the bonus situation.”

The extra payments were agreed by the four directors, and approved by the independent Group Remuneration Committee, the Prospect Homes and the Tenant Services Authority, which regulates the sector, it said.

Housing associations are funded by the rents they receive for properties, which largely comes from people’s housing benefit, as well as bank loans.

On April 1 Prospect Homes is to merge with Yorkshire’s TransPennine Housing and the Chevin Housing Group in a move aimed at saving £5million.

Lancashire’s highest-paid public servant is the county council’s chief executive, Phil Halsall, who is on £195,000.