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Merger maestro: an interview with Ian McDermott

Catalyst’s Ian McDermott is a dab hand at leading a company through changing times. Jack Simpson learns about his approach.  Photography by Tim Foster

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Merger maestro: an interview with Ian McDermott #ukhousing

New Catalyst boss Ian McDermott talks Grenfell, Cosmopolitan and mergers with @JSimpsonjourno #ukhousing

“You have a different toolbox to everybody else, and while some tools might be missing, there are other tools that I have,” Ian McDermott, chief executive of Catalyst, says when explaining what working at the top of a housing association is like while contending with severe dyslexia.

The new Catalyst boss, who took over in December, recounts how when he was younger, he would get nervous reading aloud in front of classmates, or filling in forms, in case someone noticed his mistakes.

But while he admits that dyslexia was “terribly debilitating” when he was young, now it is not an issue, and he believes it has allowed him to hone other skills. “I see patterns in things, and complexity and uncertainty don’t phase me at all. I think I have the ability to see ways through situations that look entirely chaotic from the outside,” he says.

And this ability to see through complex situations has served Mr McDermott well throughout his career in housing – from his first role as chief executive of Stonebridge Housing Action Trust (where he led the regeneration of the notorious Stonebridge Estate in north-west London – a place he says “not even the Royal Mail would go to” at one time), to being involved in one of the most high-profile mergers in housing association history, when he led Sanctuary’s takeover of the nearly insolvent Cosmopolitan in 2013.

Inside Housing meets him just six months into his latest challenge: bringing together 21,000-home Catalyst and 9,000-home Aldwyck.


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Mr McDermott grew up in Northwich, a small town 25 miles east of Liverpool. One of six children, he was the only sibling not to be accepted by the local grammar school as a result of his dyslexia.

Despite early academic struggles, Mr McDermott, who went on to graduate as a surveyor, has held senior roles across the sector at Shaftesbury, Sanctuary and Aldwyck. In December he joined Catalyst, replacing Rod Cahill, who stepped down after 27 years leading the business.

Mr McDermott likens taking over from such an established figure to refurbishing a new house. “You have to live in it for a bit before you start smashing walls down, because you want to know how it functions.”

Mr McDermott was originally appointed chief executive of Catalyst in July. By September, with Mr McDermott still at Aldwyck, the two organisations started merger discussions. He is keen to stress that the appointment came well before any thought of a merger.

“I was then in the slightly odd position of negotiating on behalf of my old employer with my future employer,” he says.

However, Mr McDermott points out that he took no part in “deliberative discussions” about the merger, and says that careful legal advice was taken with “very clear rules on what he could do”.

He moved to Catalyst in December, and on 1 May this year the merger was formalised.

But despite Aldwyck initially becoming a subsidiary of Catalyst, and the fact that the Aldwyck name will be dropped next April, Mr McDermott says this is a merger, and not an acquisition. “It is not a merger out of a reductive strategy – it is an ambition-led, developmental, aspirational merger,” he says.

In March, L&Q and Trafford Housing Trust formed a partnership with similar aspirational aims, and L&Q called it an acquisition.

“This is a new organisation with a new set of values. That is why I call it a merger,” Mr McDermott says.

He says the two organisations are a natural match, particularly in terms of geography, with stock in similar locations. After April the association will be split between Catalyst London, operating out of Catalyst’s office in Ealing, and Catalyst Counties, operating out of Aldwyck’s office in Houghton Regis.

“There is nothing that focuses the mind more than the prospect of jail”

Mr McDermott says he intends to carry out the merger without any compulsory redundancies.

He will have to draw on all his experience from the previous high-profile mergers he has been involved in. He was boss of Shaftesbury when it joined Sanctuary in 2007, and then went on to become Sanctuary’s chief operating officer for five years.

In this role he was a key player in the company’s high-profile takeover of Cosmopolitan. In 2013, Cosmopolitan was saved by Sanctuary as it teetered on the brink of insolvency, after its student accommodation business found itself in trouble.

“The business was split into three: the student business and two social housing businesses. One was very solvent, one was neutral and one had challenges. If you managed it out rather than crystallising all of the risk, the underlying operation was perfectly viable,” he explains.

He admits that some of the decisions at Cosmopolitan, before Sanctuary revived it, were “absolutely shocking”, but he says that Sanctuary had to play the long game and manage out the difficult leases.

“That student business has probably made Sanctuary money over time,” he adds.

Mr McDermott believes that the ability of the sector to allow more stable organisations to take over struggling associations is a good one, but that this is only possible because of the assets associations hold. He points to housing associations using lease-based models that have found themselves in difficulties in recent times, and that own none or very few assets. He questions whether these could be saved in the same way.

“Because they don’t have an underlying asset value it will be more challenging. It will be interesting to see if they do get in trouble if there is the same safety net [that was there for Cosmopolitan].”

The merger between Catalyst and Aldwyck will see development grow from a combined total of 737 handovers in 2018/19 to 1,300 in 2021.

But these are testing times for housing associations, with Brexit and a housing downturn impacting development plans and hitting surpluses. Last week L&Q revealed that it had seen its surplus halve to £191m.

Mr McDermott admits that Catalyst will also see a drop in surplus this year, but he cannot yet put a number on this. But he says this will not affect Catalyst’s development plans.

In the shorter term, Mr McDermott has some legacy issues to contend with that came to light before he started. Last month, residents living at Catalyst’s Merle Court in Kilburn were told that they would have to leave their homes after a series of fire safety issues were discovered at their block. Aluminium composite material (ACM) cladding was discovered on the block in the months after the Grenfell Tower fire, and interim safety measures have been put in place since then.

In December, government changes to building regulations, which saw combustible insulation banned, significantly increased the amount of work on the block – leaving the association with no choice but to move residents out.

Residents are now in the process of being moved out, but the association has said there is no guarantee that they will be able to come back. As part of the outline agreement, Catalyst will have to pay compensation to residents and buy back the properties from shared owners – something Mr McDermott says will cost the business “a lot of money”.

“We were where we were when I joined, and we have worked really hard to get the issue resolved as quickly as we can and be responsible to make it safe, make sure disruption is minimised, and people are appropriately compensated”

Merle Court is one of two Catalyst blocks with ACM still present on the building, with its Dan Court block in Brent also found to have the Grenfell-style cladding. Work to remove the ACM from Dan Court began recently.

So why, nearly two years after Grenfell, has it taken so long to start the removal of ACM? Mr McDermott admits that the organisation should have acted quicker to fix the issues.

“We were where we were when I joined, and we have worked really hard to get the issue resolved as quickly as we can and be responsible to make it safe, make sure disruption is minimised, and people are appropriately compensated,” he says.

Reflecting on the current building regulation system, he says he supports the changes being put forward in the Hackitt Review, including around the guardianship of a building. Under the review’s proposals, buildings will be legally required to have a dutyholder responsible for the building’s safety, and will be culpable if anything goes wrong.

In some cases, this could be a chief executive. “There is nothing that quite focuses the mind more than the prospect of jail,” Mr McDermott says. “But that is fundamentally right, isn’t it? As chief executive, I and the board set the tone and set the priorities. The hunger with which we seek out failure will influence what the organisation does, and ultimately how safe it is for our residents.”

And this is surely a philosophy that Mr McDermott will want to be living by – not just when it comes to fire safety, but across the new business as the merger takes shape over the coming years.

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