Source · Select Committees · Home Affairs Committee
Recommendation 2
2
Deferred
Set out plans for a flexible, cost-minimising asylum accommodation system, incentivising hotel exits.
Recommendation
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
Government Response Summary
The government's response focuses on strengthening its internal contract management capabilities, including investing in capacity, training, and accountability frameworks, and commissioning an independent review of these arrangements, rather than setting out plans for a flexible asylum accommodation system, specific incentives for exiting hotels, or the implications of contractual break clauses.
Government Response
Deferred
HM Government
Deferred
The Home Office recognises the critical importance of robust contract management in ensuring value for money and operational effectiveness of its accommodation suppliers. To ensure this remains a core function, we have taken a series of steps to strengthen our approach and embed best practice across the Department. Over the past year, we have invested in expanding our internal operational and commercial contract management capacity, supported by a surge consultancy team, to ensure the teams have the skills and resources needed to manage complexity and control costs. This includes ongoing training and accreditation for contract managers, ensuring recruitment into roles focuses on the qualifications required to deliver the role and all officials working on the contract have the correct level of training with robust procedures in place to monitor. The introduction of clearer accountability frameworks, and the professionalisation of roles responsible for contract delivery. These improvements have enabled us to recover £74 million in profit share and service credits in the current financial year – the largest restitution since the contracts were mobilised – demonstrating the effectiveness of our strengthened controls. We have also implemented systematic performance management processes, including regular reviews of supplier performance, enhanced inspection regimes and the use of integrated performance databases to support intelligence-led assurance. These measures ensure that officials are held to account for delivery and that operational effectiveness is maintained over time. To further strengthen governance and drive continuous improvement, we have commissioned an independent review of our contract management arrangements, led by Mark Beaton, a Non-Executive Director at the Ministry of Justice with extensive consultancy experience. This review will provide external assurance on the robustness of our systems, help us identify opportunities for further enhancement and ensure that our capability remains resilient and fit for purpose. The Home Office is committed to ongoing investment in skills, resources, and professional standards, so that our teams are equipped to manage contracts competently and deliver best possible outcomes. Oversight of Provider Performance