Source · Select Committees · Home Affairs Committee
Recommendation 7
7
Accepted
Home Office failed to robustly apply financial penalties for poor asylum accommodation provider performance.
Conclusion
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)
Government Response Summary
The government outlined the profit share mechanism in its contracts, reporting that £45.9 million has been received from providers to date, with a further £3.7 million under discussion. It states the outcome of the annual profit-share audit will be reported through the department's annual accounts.
Government Response
Accepted
HM Government
Accepted
Each contract has a Profit Share clause, which obligates the provider to share details with the Home Office to establish whether the threshold for profit has been achieved. On conclusion of each contractual year, the Commercial Contract Management team will investigate retrospective data to establish value of return. As of 4 November 2025, the Home Office has been in receipt of profit share credit notes to the value of £45.9m from the providers. CRH has returned the full £33m. Mears has returned £12.9m and discussions are ongoing about a remaining £3.7m. There is no profit share due back from Serco. The outcome of the annual profit-share audit process, including confirmation of any excess profits recouped from providers, will be reported through the Department’s annual accounts This circular approach would limit our ability to ultimately procure the levels of Dispersal Accommodation required to exit contingency accommodation and in line with standard practice.