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Opinion: The fall and rise of Metropolitan Housing Group

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Opinion: The fall and rise of Metropolitan Housing Group

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Published by Jon Land for 24dash.com in Housing

Opinion: The fall and rise of Metropolitan Housing Group Opinion: The fall and rise of Metropolitan Housing Group

Two years ago, Metropolitan Housing Group was in financial difficulty with the regulator breathing down its neck. Today it reported a net surplus of £40.2 million (a 97% increase on the previous year). Here, chief executive Brian Johnson reveals how the organisation turned itself around and started the process by confronting some uncomfortable truths.

When I joined Metropolitan in October 2012, I was very excited and motivated about leading such a large organisation with great future potential. But there were fundamental, structural issues to address – and quickly.

The regulator was in the process of downgrading our governance rating; we were having to sell properties to meet the interest payments on the loans that we had with the banks; and if you compared our performance against our g15 peers, we were pretty much bottom of the pack.

It wasn’t just the financial performance that was challenging, there were aspects of service performance that were poor too.

I had a clear remit from the board: turn the business around in two years. Did I think it was possible? Absolutely. Did I underestimate the scale of what needed to be done? The honest answer is yes and the team has had to work at an incredible pace to deliver the change in the time frame. We are 18 months into the turnaround and I am now confident that we will be in absolutely the right place at the end of the two years.

The first thing that I had to do was establish a high quality team – this, together with a supportive board, has been critical. I’ve got a great senior team in place, with diverse backgrounds and experience, and a fantastic chair in Paula Kahn.

My background is manufacturing and I know if you do things right from a quality perspective, the costs come right as well. Driving up the service standards generally means cutting waste out which ultimately means saving money. This is just as important for a private business as it is for a charitable one and I’m really keen that this is at the heart of our culture at Metropolitan.

From the outset, it was clear that a much closer focus on our financial performance was imperative. Our key priorities were to increase our surplus - it nearly doubled to £40.2m in this financial year - and to improve our operating margin – which now stands at 32% compared with 15% two years ago. We are unusual in that our surplus is largely the result of cost savings, and not sales activity – which makes our financial position sustainable and means we wouldn’t be vulnerable in the event of a future downturn. We’ve taken £33.5m of costs out of the business in the last two years; which demonstrates the extent of the inefficiencies built in to our cost base and why we had to deal with this quickly.

Our financial strength gives us the platform to deal with our service performance (which is improving in areas such as complaints and rent collection, but is still not good enough in some areas); and to deal with a backlog of planned maintenance. It also, of course, puts us in a much stronger position in terms of our development activities – we now plan to deliver 3,300 affordable homes in the next five years, investing around £730m.

I am proud of what we have achieved over the past year. We still have work to do and in the year ahead I’m looking forward to us continuing to strengthen our dynamic team with high calibre people to ensure we can achieve our ambitions. I believe that the best is yet to come.

• Brian Johnson came to Metropolitan in 2012 from Moat where he was CEO for four years. Prior to this, he was Chief Executive of CityWest Homes, managing 22,000 homes for Westminster City Council and Executive Director of Operations for Remploy, which employs 6,000 people with disabilities. His previous career includes managerial positions at Tate & Lyle and at ICI.

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