Government fails to monitor firms with £4bn contracts to house asylum seekers

The government is failing to monitor private firms holding asylum accommodation contracts worth billions of pounds, openDemocracy and Liberty Investigates can reveal.

A joint investigation has found that the Home Office holds no centralised data on the performances of its three main accommodation providers – Serco, Mears and Clearsprings Ready Homes – which together house almost all of the 100,000 asylum seekers in government accommodation.

In 2019, these firms were awarded public contracts initially estimated to be worth £4bn over 10 years, though costs have since spiralled. Earlier this year the National Audit Office said it expects the Home Office to have spent “£3.1bn on hotels” in the financial year ending in March 2024 alone.

The three companies often act as middlemen – placing asylum seekers in hotels or other accommodation owned by firms in their networks. But our investigation has revealed that the Home Office’s most recent lists of all the subcontracted providers are five years out of date.

One think tank said the Home Office’s admissions, made between November 2023 and May 2024 in response to Freedom of Information requests submitted by Liberty Investigates, are evidence of a “systemic failure” that has seen taxpayers’ bill for asylum housing spiral despite accusations that people are routinely being held in sub-standard accommodation with inadequate care.

Clearsprings, Serco and Mears are contractually required to update the Home Office whenever a subcontractor is appointed or has its contract terminated – regardless of the contract’s value. The Home Office said its latest lists of suppliers are from 2019 and feature only firms with contracts worth over £500,000.

Several firms known to be housing asylum seekers are missing from these lists, including Stay Belvedere Hotels, a subcontractor for Clearsprings that describes itself as a “leading provider” of asylum accommodation.

Stay Belvedere saw its six-monthly net profits increase more than four-fold between 2021 and 2022, rising from £6.9m to £28.1m. Because the Home Office does not have a recent list of subcontractors, it is not known when the firm began working for Clearsprings, though a previous court case reveals the partnership dates back to at least February 2021.

Other firms missing from the Home Office’s lists of Clearsprings’ suppliers include Crown Lodge and Lions Group, both of which were involved in housing Victor Hugo Pereira Vargas, a Colombian asylum seeker who died in a suspected suicide in a Home Office hotel room in East Sussex last October. A coroner is investigating whether any safeguarding failures occurred.

Clearsprings, Serco and Mears are required to submit performance data, such as whether targets are being met, to the Home Office every month. Targets include maintenance issues and complaints being resolved within set timeframes, the provision of appropriate transport, and the time taken to move residents into properties.

But officials in the government department are also failing to keep proper records of this data – making it difficult to know whether the contractors are being held to account for any missed targets.

“The information … is not held centrally by the department,” the Home Office said in an FOI response. “To provide the information on performance, officials would need to go back through each provider report … This information would need to be analysed further to calculate how many points have been accrued and the level of service credits this represents.”

There is no evidence that Clearsprings, Mears or Serco have been failing to submit updates to the Home Office.

The lack of centralised performance data is made more worrying by the fact that the number of inspections of asylum accommodation carried out by the Home Office has fallen by 45% in recent years.

The government department conducted an average of 378 inspections every month between April 2016 and January 2018, according to the independent chief inspector of borders and immigration. The latest Home Office figures show this dropped to an average of 208 inspections per month in the six months to March 2024.

The Home Office could not confirm the number of times properties were found to not comply with its standards for asylum accommodation during inspections between 2020 and 2023.

“Figures on full compliance with AASC [Asylum Accommodation and Support Contracts] requirements are not available from inspection records for previous or the current year, although these will be available going forward,” it said in November 2023.

Asked again to provide that information several months later, in May 2024, the department said: “We are currently working on developing a system that will record this information.”

The department was also unable to say how many financial penalties it had applied to service providers for underperformance.

Lucy Mort, senior research fellow at the Institute for Public Policy Research’s Migration Policy Unit, described our findings as “deeply concerning” and a reflection of a “systemic failure” within the Home Office.

Mort added: “Despite the enormous amount of money being funnelled into these contracts, there is a glaring lack of oversight and accountability regarding the quality of housing provided.

“Without significant reforms, the cycle of poor housing and financial management will continue, to the detriment of both asylum seekers and the public purse.”

The Home Office expects to have spent £4.7bn on asylum support in the financial year ending March 2024, according to the National Audit Office. More than £3bn of this is on hotels – dwarfing the £400m the government said it would spend on asylum accommodation annually when awarding contracts in 2019. The final figures for the most recent financial year will likely be published in the Home Office’s annual report in the autumn.

Last week an investigation by Liberty Investigates and Prospect revealed how Clearsprings’ founder Graham King became one of Britain’s richest men off its asylum contracts, weathering a series of scandals and repeated accusations that his company provides substandard accommodation and poor resident care.

Tim Naor Hilton, the chief executive of charity Refugee Action, said a lack of oversight and transparency was allowing firms to collectively make hundreds of millions in profit while providing “appalling conditions” for people to live in.

The new government has a “golden opportunity” to give local councils the responsibility and funding to run asylum housing instead, Naor Hilton added.

The Home Office has previously failed to take action when providers are found to be falling below agreed standards. In March, the High Court found the then home secretary, Conservative MP James Cleverly, had “not once used his contractual power to enforce the […] performance standards”, despite a “persistent failure” by Clearsprings to meet at least one of its key performance indicators.

Describing Cleverly’s “‘light touch’ approach to enforcement”, the judge noted: “If the contract is not enforced then contractors are not incentivised to reach performance standards.”

Concerns about the compliance regime for asylum accommodation were raised as far back as 2017, when the Home Affairs Select Committee described it as “not fit for purpose”, adding that “inspections are infrequent and the low number of penalties appear at odds with the persistent criticisms of the standard of asylum accommodation”.

A Home Office spokesperson said: “Asylum accommodation contracts are awarded following a competitive, transparent procurement process. Contractors and their providers are closely monitored to ensure they are meeting the standards required.”

A version of this article was published by openDemocracy.