Asylum accommodation

Instead of acting as a short-term contingency measure, the use of hotels has become a widespread and embedded part of the asylum accommodation system, increasing the cost of the asylum accommodation contracts by billions of pounds beyond the original forecast. This is the result of a series of failures by the Home Office in the design of the original contracts, and a manifest failure by the Home Office to grip the contracts and respond to increasing demand. The evidence we have examined leads us to conclude that providers can reap greater profits by prioritising the use of hotels over procuring other, more suitable forms of accommodation. Going forward, the Government will need to design a system that can flexibly respond to fluctuating demand while setting appropriate incentives for providers to maintain value for money. (Conclusion, Paragraph 31)

We recommend that the Home Office sets out plans for an asylum accommodation system that can flexibly respond to changing demand, whilst minimising potential costs to the taxpayer. In the short term, the Home Office should identify and implement any possible action it can take to direct and incentivise providers to identify alternative accommodation and exit hotels. The Home Office should also give urgent consideration to the practical implications of exercising the contractual break clauses, that become exercisable from March 2026. The Home Office should ensure that the design of future contracts from 2029 onwards is sufficiently flexible to respond to changing demand, while protecting value for money, and provides the necessary levers to ensure providers deliver appropriate accommodation. (Recommendation, Paragraph 32) 95 Contract management

We are persuaded by the evidence we have heard that, in the last Parliament, the Home Office focused on pursuing high-risk, poorly planned policy solutions and lost sight of the day-to-day work of effectively managing the asylum accommodation contracts. Failures of leadership at a senior level, shifting priorities, and political and operational pressure for quick results meant that the department was incapable of getting a grip of the situation, and allowed costs to spiral. The Home Office failed to undertake basic due diligence as it tried to respond to increased demand, most notably in the delivery of large sites, and has deprioritised the fundamentals of contract management. The Home Office was undoubtedly operating in an extremely challenging environment, but its chaotic response demonstrated that it was not up to this challenge. (Conclusion, Paragraph 42)

The Home Office was warned repeatedly that it needed to ensure it had adequate commercial and contract management capacity, but did not learn this lesson. Failure to do so left it unprepared to respond to the surge in demand for asylum accommodation. The department’s failure to recognise early on that the rapidly expanding value and complexity of the contracts would require additional resource and active management is unacceptable. We welcome the Home Office’s more recent capacity building and improvements to contract management, but this has come much too late. Given the department’s propensity for reprioritising staff and resources, we are also concerned that effective contract management may be deprioritised over time, risking similar failings as and when the next crisis arises. (Conclusion, Paragraph 43)

The Home Office should set out plans for enhancing and maintaining its commercial and contract management capability, to ensure that it has the skills and resources necessary to effectively manage the delivery of the contracts and control the costs of asylum accommodation. This essential capability should be embedded as a core function of the department’s operations, with clear accountability to prevent a decline in operational effectiveness over time. The Home Office should institute a consistent and systematic approach to the performance management of its officials and internal capabilities. Given these contracts will continue to cost vast sums of taxpayer money, the Home Office must ensure it acquires the capacity to manage them in a competent way. (Recommendation, Paragraph 44) 96 Oversight of provider performance

The Home Office has neglected the oversight and assurance of performance of providers delivering multi-billion pound contracts. The department has been over-reliant on self-reporting of performance by providers and failed to invest in the assurance capacity necessary to properly monitor performance. As a result, the Home Office has not been able to monitor effectively whether providers are delivering the standards required by the contracts. The department has strengthened its capacity more recently, and this increased resource is welcome, but we are still not convinced that the Home Office has sufficient oversight of the performance of contract providers to effectively hold them to account. (Conclusion, Paragraph 52)

The Home Office has not taken a sufficiently robust approach to applying financial penalties for poor performance by providers. These have been applied late, if at all, with no explanation of why maximum penalties haven’t been applied. The Home Office does not financially penalise providers for performance failures at hotels, Napier Barracks and Wethersfield. This is an inexplicable and unacceptable failure of accountability. The department’s independent audit of data on performance against KPIs in the asylum accommodation contracts is welcome but long overdue. (Conclusion, Paragraph 53)

The Home Office should establish a clear process for routinely assuring KPI data submitted by asylum accommodation providers and applying service credits where providers fail to meet the terms of the contract. There should be a clear and transparent framework for decisions about when service credits are applied in full, in part, or waived. Service credits for performance failures should be applied across all types of accommodation. The Home Office should ensure that the inspection and assurance regime is proportionate to the value of the contracts. (Recommendation, Paragraph 54)

The work of the Independent Chief Inspector of Borders and Immigration (ICIBI) provides essential scrutiny of the delivery of asylum accommodation. The work of the ICIBI does not reduce the need for systematic assurance, but in the absence of adequate oversight by the Home Office, the role of the ICIBI is crucial. The ICIBI does not have access to commercial contracts, which undermines transparency and the ability of the inspectorate to scrutinise the Home Office’s approach. (Conclusion, Paragraph 55)

The Independent Chief Inspector of Borders and Immigration should be given access to commercial contracts so they can be properly scrutinised. The legislation underpinning the Inspector’s role should be amended if necessary to achieve this. (Recommendation, Paragraph 56) 97

The failings in the current performance management regime mean that the Home Office is not able to properly hold its providers to account. The Home Office has had more than enough time to identify and address the deficiencies in the current Key Performance Indicator framework. Given the increased public prominence and growth in the cost of asylum accommodation, it is unacceptable that the performance management regime remains under review, with no substantive changes, more than two years after the Independent Commission for Aid Impact identified shortcomings in the regime. (Conclusion, Paragraph 57)

The Home Office should, as a matter of urgency, agree new KPIs with contract providers. In future the KPI regime should be reviewed regularly to ensure that it remains appropriate and relevant. (Recommendation, Paragraph 58) Oversight of subcontractors

Stay Belvedere Hotels Ltd was operating as a major subcontractor from 2019 onwards, but the Home Office only became aware of issues with the company within the last year. It was only after these issues came to light that the Home Office identified that Clearsprings had not been providing an appropriate level of information about their major subcontractors. We have seen no evidence that the Home Office has maintained adequate oversight of subcontracting arrangements. (Conclusion, Paragraph 64)

We recommend that the Home Office reports back to us in its response to this report on the outcome of its audit of asylum accommodation subcontractors and implements a clear process for how it will regularly review significant subcontractors. It should also increase transparency about which companies are responsible for delivering asylum accommodation. In the interests of transparency, the Home Office should write to the Committee as soon as it is able, to provide a full account of the circumstances of the termination of Stay Belvedere Hotels Ltd as a subcontractor. (Recommendation, Paragraph 65) 98 Provider profits

It is extremely disappointing that the Home Office only appears to have started the process for recouping excess profits from accommodation providers in 2024. Accommodation providers told us they had tens of millions waiting to be returned to the Home Office. This money should be supporting the delivery of public services, not sitting in the bank accounts of private businesses. (Conclusion, Paragraph 70)

The Home Office should conclude the process of recouping excess profits for past years as quickly as possible and set out the amounts that have been returned to the department by contract providers. The Home Office should put in place an annual process for auditing profit share data submitted by contract providers and recouping any excess profits due. The department should report to Parliament on the outcome of this annual process. (Recommendation, Paragraph 71)

Despite provider profit margins being at the lower end of the Home Office’s original estimate, the way the profit share clause was designed means that as the value of the contracts has increased, providers have been able to make significantly higher cash profits than was anticipated when the contracts were set up. We are frustrated that the Home Office has left itself without a mechanism to prevent providers making excessive profits as the contract value has increased, largely due to the ongoing use of hotels. (Conclusion, Paragraph 72)

The Home Office should ensure that profit share clauses in future contracts take account of not just profit margins but also the cash value of profits, so that contract providers cannot benefit so substantially from increased demand for and changes to the type and/or base costs of asylum accommodation. (Recommendation, Paragraph 73) Standards of accommodation and support Adequacy of accommodation

The quality of accommodation is highly variable across the country. While there is clearly accommodation of an acceptable standard, too many asylum seekers continue to be placed in accommodation that is inadequate or deeply unsuitable. The accommodation asylum seekers are housed in should be adequate, and it is unacceptable that significant amounts of taxpayers’ money is being used to house often vulnerable people in sub-standard accommodation. The Home Office is ultimately responsible for ensuring asylum seekers are accommodated appropriately, and to fulfil this responsibility the department must hold providers to account 99 where they fail to deliver the service they are being paid for. We have recommended earlier in this report that the Home Office strengthen its approach to performance management and oversight of these contracts. This is essential to ensure that vulnerable people are housed in adequate conditions. (Conclusion, Paragraph 80) Large sites and former military barracks

Long stays in inappropriate hotels are often deeply harmful to the people accommodated there. Local services are left to respond to these impacts and fill the gaps where the basic needs of asylum seekers are not being met. The use of hotels has at times had a significant impact on community cohesion, which cannot be underestimated. The closure of hotels should therefore help reduce the number of cases where asylum seekers are placed in inappropriate accommodation, and ease local tensions. (Conclusion, Paragraph 88)

When planning the closure of the hotels, the Home Office should prioritise the closure of manifestly unsuitable hotels—such as those in remote areas and near limited infrastructure—that cause the most harm to their residents and place the most pressure on local services, and also the closure of hotels in areas that have experienced significant community cohesion issues. The Home Office should work with local partners to develop a prioritisation process to support the early closure of the least suitable hotels. (Recommendation, Paragraph 89) Communication with asylum seekers

Communication with asylum seekers is inconsistent and often inadequate. Communication can be particularly poor when asylum seekers are moved between accommodation sites, which can happen with practically no notice. (Conclusion, Paragraph 93)

We recommend that the Home Office sets clear standards for providers to communicate with asylum seekers about their accommodation and support, including minimum notice periods for moving asylum seekers to new accommodation. The department should regularly monitor provider practices to ensure these standards are being met and take corrective action where necessary. (Recommendation, Paragraph 94) 100 The Advice, Issue Reporting and Eligibility (AIRE) service

The Advice, Issue Reporting and Eligibility Contract (AIRE) service delivered by Migrant Help has not been able to meet demand, and the Home Office has failed to effectively manage the performance of the service. We recognise that Migrant Help has delivered the service in a very difficult operating environment. However, given the critical nature of this service, in both ensuring asylum seekers are able to raise issues and secure advice through the asylum process, and in enabling the Home Office to have oversight of its accommodation providers, it is essential that the Home Office ensures an adequate service is delivered. (Conclusion, Paragraph 107)

The Home Office should take urgent action to address the performance of Migrant Help. If Migrant Help is unable to fulfil the Advice, Issue Reporting, and Eligibility (AIRE) contract to an acceptable standard, the Home Office should find an alternative provider or consider alternative ways of delivering the essential services provided under this contract. (Recommendation, Paragraph 108)

Migrant Help is not contracted to follow up on or monitor issues and does not have sight of the response from providers and the Home Office. This creates a significant gap in accountability. We recognise the value of enabling asylum seekers to raise concerns separately from accommodation providers and the Home Office itself. However, to ensure that concerns are addressed appropriately this system must have appropriate mechanisms for follow up and end-to-end oversight of issues and complaints. These do not currently exist. (Conclusion, Paragraph 109)

While we recognise the value of having an independent, national reporting mechanism for issues with asylum accommodation, we are not convinced that all elements of this service should be delivered through a centralised system. It was therefore encouraging to hear that the Home Office is considering more localised models for the delivery of support. (Conclusion, Paragraph 110)

We recommend that the Home Office reviews the structure and remit of the AIRE service, to identify changes that could be made to ensure the service delivers what is required. The Home Office should report back to us on the outcome of its consideration of how the advice and issue reporting system can best be delivered in the future. This should include an assessment of opportunities for delivering elements of this service at a local level, and possible mechanisms for follow up and end-to-end oversight of issues and complaints raised by asylum seekers. (Recommendation, Paragraph 111) 101 Safeguarding

We are deeply concerned by the volume of evidence indicating significant safeguarding failings in asylum accommodation. While there are evidently pockets of localised good practice, the response to safeguarding concerns is inconsistent and often inadequate, leaving vulnerable people at risk of harm. We are particularly concerned that the Home Office does not currently have adequate understanding and oversight of vulnerabilities and potential safeguarding issues among asylum seekers it accommodates. While accommodation providers have safeguarding requirements, performance on safeguarding is not measured and failure to meet these requirements does not lead to financial penalties for providers. It is essential that the Home Office works to ensure that vulnerable people in its accommodation are safeguarded and that providers are upholding safeguarding standards. (Conclusion, Paragraph 120)

We recommend that the Home Office strengthens its approach to safeguarding by: a. Ensuring that there is a robust framework for overseeing and auditing how safeguarding policies and processes are applied on the ground by contractors and subcontractors; b. Ensuring that staff working directly with asylum seekers receive adequate safeguarding training; c. Setting performance measures for safeguarding in the contracts, which allow the department to penalise providers who fail to meet safeguarding standards; d. Urgently reviewing its processes for identifying risks and vulnerabilities and sharing these with accommodation providers and statutory partners; and e. Using the data it receives through the Safeguarding Hub to more proactively monitor safeguarding concerns, including outcomes of incidents and referrals. (Recommendation, Paragraph 121) 102 Unaccompanied Asylum-Seeking Children

There are significant failings in the current processes for making initial decisions about age and unreliable decisions are still leading to children being incorrectly placed in adult accommodation. We do not have confidence that the arrangements for accommodation providers to identify and refer age dispute cases to the relevant local authority are consistently working as they should. This risks children being incorrectly accommodated in the adult asylum system, often in a shared room. This is a serious safeguarding issue. We welcome the department’s acceptance of the Independent Chief Inspector of Borders and Immigration’s recommendations to improve its age assessment processes. (Conclusion, Paragraph 128)

The Home Office should review and make improvements to arrangements for identifying and responding to age dispute cases in adult asylum accommodation and ensure that there is clear guidance for accommodation providers. To protect the welfare of children in the asylum system the department must ensure that provider staff have adequate training to respond appropriately to such cases, and that information is consistently shared with local authorities. The Home Office should also establish a mechanism to monitor provider compliance with guidance and training requirements, ensuring that safeguarding responsibilities are being met in practice. (Recommendation, Paragraph 129) Impacts on local areas The distribution of accommodation

The use of hotels for asylum accommodation was intended to be a short- term, contingency measure and consequently people in Contingency Accommodation do not “count” towards the Home Office’s plans for the distribution of asylum seekers across the country. In practice, there are Contingency hotels that have been open in some areas for years and may not close for some time, including hotels that were opened without even informing the local authority. Given the long-term use of many hotels, and the high proportion of asylum seekers currently accommodated in these hotels, the failure to join up the procurement of Dispersal and Contingency Accommodation is unfair on local authorities and unacceptable. The factors considered when setting targets for Dispersal Accommodation—such as homelessness pressures and arrivals on humanitarian schemes—should also be considered when deciding to open, or close, Contingency hotels. (Conclusion, Paragraph 140) 103

We recommend that the Home Office amends the indexing tool used to develop targets for the distribution of asylum seekers across the country so that it accounts for use of Contingency Accommodation. We also recommend that the Home Office ensures that accommodation providers take account of existing Contingency and Dispersal Accommodation— and other factors included in the indexing tool—when identifying any new Contingency Accommodation sites. (Recommendation, Paragraph 141)

The Home Office has failed to achieve its targets for an equitable distribution of asylum seekers. Asylum accommodation is still heavily concentrated in particular areas, often areas of high deprivation. Many local authorities do not have faith that the department will achieve a fair and equitable distribution of accommodation. The Home Office has failed to ensure providers deliver in line with its plans—something that should have been considered when the contracts were set up—and has not succeeded in allaying concerns that providers are procuring on the basis of cost, rather than equity. We recognise that there are substantial barriers to achieving the plans in some areas, due to the broader failure of house building rates and access to services to keep pace with population growth, but we have seen no evidence that the Home Office has a credible plan for meeting its targets to make the distribution of asylum accommodation more equitable. (Conclusion, Paragraph 154)

We recommend that the Home Office set out the steps it will take to overcome barriers to the delivery of a fairer distribution of accommodation and improve engagement with local authorities on how best to address barriers to procurement. Local authorities are the experts on their areas, and the Home Office should consult them on price caps for procuring accommodation. The Home Office should work with local authorities and Strategic Migration Partnerships to understand where spending on asylum accommodation can be invested in local housing and bring benefits to local communities, such as through renovating existing housing, repurposing appropriate buildings, fixing void accommodation, or building new housing. The Home Office should ensure that the future contracts provide them with stronger levers to direct providers to procure accommodation in line with Home Office requirements. (Recommendation, Paragraph 155) 104 Pressure on local services

The Home Office has failed to properly consider the impacts of its approach to the delivery of asylum accommodation on local areas and to engage early with local partners to understand what these impacts might be. It is inexplicable that the Home Office has placed no obligation on providers to assess impacts on local areas. Failures to identify and mitigate impacts, compounded by the disproportionate distribution of accommodation, has led to some local services experiencing unsustainable pressures. This failure to recognise broader impacts can be seen in the pressures experienced by local authorities in areas where significant numbers of asylum seekers have received positive decisions and subsequently become homeless. These pressures have been exacerbated by inconsistent communication and inadequate data sharing, which has undermined the ability of local partners to respond effectively to the placement of asylum seekers in their area. (Conclusion, Paragraph 165)

We recommend that the Home Office implements a package of reforms to ensure that the impact of asylum accommodation on local areas is accounted for, including by: a. Ensuring that impacts on local services are adequately assessed by providers prior to accommodation being procured; b. Providing local authorities with at least 28 days’ notice of the use of new Contingency Accommodation; c. Reinstating the 56 day notice period for asylum seekers who have received a positive decision; and d. Collaborating with local authorities to develop a clear data- sharing standard which sets out what information should be shared with partners, and when. The Home Office should also ensure that data is shared consistently across different providers and the different regions. This could be reflected in a new KPI regime. (Recommendation, Paragraph 166) 105 Community cohesion

For too long, the Home Office has not prioritised community cohesion in its approach to asylum accommodation, no doubt at least partly because that is the responsibility of another department. The Home Office has failed to properly engage with local communities, and as a result has missed opportunities to proactively communicate its approach to asylum accommodation and address local concerns. The lack of engagement and transparency has left space for misinformation and mistrust to grow, which in too many areas has led to tensions and undermined the ability of local partners to promote social cohesion. (Conclusion, Paragraph 172)

The Home Office should work with other government departments, local authorities, devolved administrations and community groups to improve communication with local communities about the use of asylum accommodation in their areas. This should include communicating how legitimate concerns are being addressed and ensuring that misinformation is challenged. (Recommendation, Paragraph 173) The Home Office’s strategy

The Home Office has not demonstrated that it has had a strategy for the delivery of asylum accommodation. The department’s approach has instead been a series of hasty, short-term responses, damaging relationships with partners and confidence in the ability of government to deliver, as well as wasting taxpayers’ money. In the face of current pressures for swift action on asylum accommodation, the Home Office must learn the lessons from its previous mistakes and avoid cutting corners in a rush to deliver short-term solutions without a clear strategy. (Conclusion, Paragraph 177) The Home Office’s future strategy

The 2026 break clause and the end of the contracts in 2029 represent an opportunity to draw a line under the current failed, chaotic and expensive system and move to a model that is more effective and offers value for money. While the Home Office is considering options, it has not yet shared a clear strategy for the delivery of a sustainable accommodation system. Moreover, there has been little clarity from ministers even regarding the basis on which they will make a decision on using the break clause. There is a serious risk that if the Home Office does not expedite the development of a long-term strategy for the future delivery of asylum accommodation, when it is time to replace the current contracts the department will find itself in a similar position to that of 2019, with limited choices as to how it secures accommodation. (Conclusion, Paragraph 186) 106

The Government has committed to ending the use of hotels to house asylum seekers by the end of this Parliament. Ministers have yet to set out a fully articulated plan with clear milestones for how the Government will deliver a significant reduction in the use of hotels while maintaining flexible capacity in the system. We recognise that the Home Office faces an extremely difficult task, and there are no quick or easy solutions to ending the use of hotels. Due to the inherent unpredictability of the need for asylum accommodation, use of hotels as Contingency Accommodation has proved an essential backstop in the system for years. This experience suggests that it is unwise for the Government to box itself in by ruling out options. The Government must be honest about the challenges it faces if it is to avoid undermining public confidence still further by making commitments that it cannot expect to keep. (Conclusion, Paragraph 187)

We recommend that the Government set out a clear, credible strategy for how it will reduce the use of asylum hotels and deliver a sustainable system of asylum accommodation. This strategy should include a realistic timeframe and achievable milestones to ensure that the Home Office has enough time to implement its strategy, in anticipation of the 2026 break clause and the end of the contracts in 2029. The outcome of the pilots being conducted to inform the strategy should be shared with the Committee. The Government should publish details of its overarching strategy for delivering asylum accommodation—in the interests of transparency and accountability—and share detailed plans with key partners, whose engagement will be crucial to its successful implementation. (Recommendation, Paragraph 188)

There is no one solution that will solve the fundamental challenges of delivering asylum accommodation on the required scale, and the Home Office cannot simply sub-contract responsibility to local government or private companies—ministers must have effective control and oversight. Regardless of the model the Home Office adopts, working in partnership with local stakeholders nevertheless remains essential, and the Home Office should work with the Ministry of Housing, Communities and Local Government and local government to shape a future approach that is more locally led but better centrally coordinated. (Conclusion, Paragraph 197)

In principle, a decentralised model could provide a viable alternative to a centralised system that has simply not worked. A more localised approach could have a number of benefits, in particular enabling greater co- ordination between asylum accommodation and other services. Delivering such a system effectively will require resources, time and a clear strategy. Shifting to localised delivery would not by itself deal with the challenges inherent in the system, and could create new risks, such as increasing fragmentation, and exacerbate existing problems, such as poor central oversight. Fairness and equity, rather than cost, should be paramount 107 regardless of the system used. The Home Office remains ultimately responsible for the asylum accommodation system, regardless of who is leading on delivery on the ground. That should not change; but it must ensure it devotes the necessary resources to overseeing the system. If the Home Office chooses to pursue a more decentralised model for the delivery of asylum accommodation, it needs to develop a strategy for capitalising on the opportunities presented by decentralisation while addressing the considerable challenges. (Conclusion, Paragraph 198) 108