Source · Select Committees · Public Accounts Committee
Recommendation 13
13
Accepted
Home Office underestimated large accommodation site set-up costs due to optimism bias and inadequate expertise.
Conclusion
We were concerned by the Home Office’s assessment of the set-up costs to convert the two former RAF bases to accommodation. At the outset, the Home Office estimated that such costs would be £5 million for each site, but the costs increased to £49 million at Wethersfield and £27 million so far at Scampton. We asked the Home Office how it got its estimates so wrong. It told us it was dealing with a “national emergency” and that it considered that it “should be doing what our colleagues during Covid had done”. It explained that it had decided to “press on quickly” to increase its stock of accommodation and to take a “novel and creative” approach to setting up the sites. The Home Office acknowledged there was “a very significant optimism bias” in its estimates and some unforeseen costs, but repeatedly stated that the Home Office was working “at pace”.20 The Home Office listed some of the unforeseen costs that arose, such as gas and electrical requirements, and fire requirements, remedial works, improving security and installing CCTV. We questioned why these elements had not been foreseen. The Home Office stressed again that the government needed to find accommodation that was not previously available because it was spending too much on hotels. It told us that it only carried out non- intrusive surveys and pre due-diligence checks before purchasing the sites. We reflected that if a similar sort of assessment were produced in the private sector, such shortfalls might have resulted in negligence claims. The Home Office acknowledged its mistakes, and said that it did not have the right expertise on the programme at the time, and that some of the problems were “definitely avoidable at the time”. It said it had now recruited very experienced programme directors and sought more external advice.21
Government Response Summary
The government agrees and states measures have been implemented to address weaknesses in cost estimation and project delivery, including restructuring the programme, improving technical construction expertise, ensuring value for money assessments and business cases for sites, and conducting earlier due diligence.
Government Response
Accepted
HM Government
Accepted
2.1 The government agrees with the Committee’s recommendation. Recommendation implemented 2.2 A raft of measures has been implemented to address weaknesses. The programme was recently restructured to deliver smaller sites, requiring lighter touch refurbishment and supporting the reframed strategic aim to deliver a flexible accommodation-estate that can respond with agility to changes in demand. 2.3 Lessons have been learned regarding cost profiling and projections: the programme has improved technical construction expertise to ensure that a more accurate estimation of set up and delivery costs is better considered for future sites. Accounting officer advice including value for money assessments and business cases are completed for each site. Alongside significant work to lower operational costs, this will further assure the value the programme offers to the taxpayer. 2.4 The Asylum Support, Resettlement and non-detained Accommodation Programme ASRA) has balanced the requirement to deliver accommodation at pace to meet changing demand and brought forward due diligence to enable decisions around viability and value for money to be taken at an earlier stage, reducing potential cost and commercial risk. It has also improved engagement with local authorities and partners, introducing this at an earlier stage. 2.5 As a result of these measures, an independent review undertaken by the Infrastructure and Projects Authority found that successful delivery of the programme to time, cost and quality appears feasible.