Recommendation 6

The Home Office has not demonstrated it has the commercial capabilities needed to manage asylum accommodation effectively. Managing asylum accommodation at scale requires strong in-house commercial expertise to oversee complex contracts, manage risks, and monitor provider performance. However, both the previous Public Accounts Committee and the Home Affairs Committee have repeatedly identified significant weaknesses in the Home Office’s commercial capability, including weak contract oversight, limited specialist capacity and poor transparency about provider performance. But the Home Office still cannot demonstrate that it fully understands the levers and controls available to it – for example, are providers delivering what is required or can the Home Office effectively monitor and respond when performance falls short? The Home Office has highlighted steps it is taking to strengthen its commercial capability, 6 including commissioning an external review of asylum accommodation and contract management arrangements, but it has not yet demonstrated that these weaknesses have been addressed or that it can prevent similar failures in future. It is also unclear whether risks are being shared appropriately between the Home Office and its providers, especially when assumptions on demand or delivery prove overly optimistic. While the Home Office asserts that it “clawed back £46 million of excess profit” from providers last year, we do not find this wholly reassuring. Rather than showing effective oversight, it highlights weaknesses in the original contract design and raises questions about whether the Home Office has the skills to manage these or future contracts in a way that prevents excessive profits accruing in the first place. Under the current system of cost-plus contracts, permitted profits are in many cases excessive. However, when we suggested that excess profits clauses be applied either retrospectively or prospectively, there was clear reluctance to do so. recommen