Asylum contracts ‘unlikely to meet savings ambitions’

24 Apr 14
Changes to government contracts with providers of asylum seeker accommodation were poorly planned and unlikely to realise the savings intended, the Public Accounts Committee has warned.

By Richard Johnstone | 24 April 2014

Changes to government contracts with providers of asylum seeker accommodation were poorly planned and unlikely to realise the savings intended, the Public Accounts Committee has warned.

Examining the Home Office’s implementation of the Compass programme (Commercial and Operating Managers Procuring Asylum Support), which saw the number of contracts cut from 22 to 6, MPs said the decision to use fewer contractors led to delays in providing suitable accommodation.

Six Compass deals were in March 2012 with three providers to provide accommodation for around 23,000 destitute asylum seekers, with the intention to cut costs by around £140m over seven years. Two were with G4S, two with Serco and two with Clearel, a joint venture between firms ClearSprings and Reliance.

However, PAC chair Margaret Hodge said the transition to the new contracts was not handled well by the Home Office, while neither G4S nor Serco had any previous experience of accommodating asylum seekers.

‘Instead of brokering a smooth transition between outgoing and incoming contractors and with local authorities, the Home Office short-sightedly decided to take a hands-off approach and only allowed three months to get the new contracts up and running,’ she said.

‘G4S and Serco failed to inspect and check the properties before taking them over. This lack of information contributed to delays, extra cost, and disruption and confusion for a very vulnerable group of service users.’

It was therefore unlikely the savings target will be met, the Compass: provision of asylum accommodation report concluded. Only £8m was saved in 2012/13 because the department had incurred additional costs as part of the transition, including inspecting the accommodation itself.

However, it was expected they would secure a saving of about £27m over the first 18 months.

‘The change was poorly planned and badly managed and is unlikely to yield the savings intended,’ Hodge stated.

The move to larger regional contracts also led to a loss of knowledge from experienced specialist providers and had effectively reduced the number of providers, the committee warned. The Home Office had also failed to ensure that providers upgraded sub-standard accommodation in a timely manner.

‘None of this was helped by the department’s failure to impose penalties on contractors in the transition period,’ Hodge added.

‘Looking beyond the Compass contracts, the Home Office must insist adequate plans are in place for how it will manage the introduction of any new contracts in the future, including an understanding of what will be inherited from previous contractors, and clear arrangements for exiting previous arrangements.’

Responding to the report, a Home Office spokeswoman said: ‘Our new Compass contracts are generating vital savings to the taxpayer – £8m was saved in the first six months of operation and further significant savings are predicted for 2013/14.

‘While we accept there are challenges with the contracts, we are disappointed with the PAC’s findings and will respond in due course.’

Spacer

CIPFA logo

PF Jobsite logo

Navigation

Top