Asylum accommodation Contents

1Introduction

Background to the COMPASS contracts

1.Individuals seeking asylum in the UK, and who can prove they are destitute, are eligible for support from the Home Office. Support can be financial—asylum seekers are entitled to receive £36.95 a week—and in the form of accommodation. Since 2012 accommodation has been provided to asylum seekers via six regional Commercial and Operational Managers Procuring Asylum Support Services contracts, known as COMPASS. COMPASS replaced a previous system of 22 separate contracts with 13 different suppliers (a mixture of private providers, local authorities and the voluntary sector). The COMPASS contracts also include transport services, which were previously covered by a separate contract.1

2.Three companies each won two of the six contracts: Serco (Scotland and Northern Ireland; North West England), G4S (North East England, Yorkshire and the Humber; Midlands and East of England), and Clearsprings Group2 (Wales and South West England; London and South East England). Of these companies (hereafter referred to as Providers), only Clearsprings had any previous experience in providing accommodation to asylum seekers. G4S and Serco were however experienced in providing services to Government, having already held several major contracts in other areas of public sector delivery. Although the system of three Providers looks straightforward on the surface, below it lies a complex network of contractors, sub-contractors and hundreds of private landlords.

The cost of COMPASS

3.The COMPASS contracts were originally for a five year period, from 2012 to 2017, with a possible two-year extension. Over this seven-year period the Government aimed to reduce the cost of providing accommodation to asylum seekers by an estimated £140 million. (In the last year before COMPASS was introduced, FY 2011–12, the annual cost of delivering the contracts was approximately £150 million.)3 It is not clear whether the Government will realise these savings. For two of the Providers, the contracts will result in significant losses as costs have been far higher than originally anticipated, because both the number of asylum seekers coming into the UK and the cost of accommodation have risen.

4.Two of the provider companies supplied information on the payments they receive from the Home Office. Serco stated that, in February 2016, its average income per month per service user was around £300, but that the average cost to Serco was around £450. For a full year, the average revenue Serco is paid per service user is around £3,600, and the loss per service user per year is around £1,850.4 G4S told us that the average payment it receives is £9.35 per service user per night, which equates to £280 per month or £3,412 per year.5 In March 2016 Ashley Almanza, the Chief Executive of G4S, told the Daily Telegraph that “were this contract before us today we would not be entering into it”.6 Rupert Soames OBE, Chief Executive of Serco, told us that one of the problems was that Serco under-bid when the contracts were originally let:

The price was too low. I have to say that a system of reverse Dutch auction conducted over the internet may not be the best way to establish pricing for a contract to provide care to tens of thousands of people, but that is up to us.7

G4S has previously warned that extending the contracts would cost it £57 million on top of estimated losses of £47 million, while Serco has said that an extension of the contract could see losses of up to £112 million by 2019.8

5.On 8 December 2016 the Government announced that the COMPASS contracts would be extended for two years until August 2019 and that work had started on putting in place new arrangements for the period following the extension.9 The terms of the contracts have been revised as part of the extension process and G4S and Serco estimate that their losses will be reduced as a result. Serco expect that, while the contract will “continue to be heavily loss-making”, its expected losses could potentially be £20 million lower.10 G4S do not expect to incur further losses beyond the £47 million already announced.11

Our inquiry

6.In advance of the decision on the future of the COMPASS contracts we decided to assess whether they have been an effective means of providing accommodation and related support to those seeking asylum. Our inquiry was also prompted by concerns raised with us over the quality of the accommodation being used by Providers and reports of poor treatment of the asylum seekers that they house, and concerns that Providers were finding it difficult to make suitable and sufficient accommodation available within the constraints of the COMPASS contracts. We have reported on some of these issues previously as part of our regular examination of the work of the Home Office’s Immigration Directorates.12

7.In the course of almost a year’s work on this topic, we have taken evidence from all three COMPASS Providers and some of their sub-contractors; from the Local Government Association and organisations representing asylum seekers and refugees; and from Home Office Ministers. We have also received written evidence. We are grateful to all those who have contributed to this inquiry, and we note the willingness of Providers to engage with us. We should particularly like to thank the West Midlands Strategic Migration Partnership, St Chad’s Sanctuary and G4S for facilitating our visit to Birmingham in November.

Our Report

8.In this Report we examine the system of providing asylum accommodation and make recommendations to improve upon it. Some of our recommendations look to the long-term future of the asylum system and should be considered as part of the consultation on the successor to COMPASS; others however are more urgent. We acknowledge that the Home Office and Providers have agreed contracts to extend the COMPASS system for two years, but that should not prevent the Government and Providers from addressing the most pressing of our concerns.


1 National Audit Office, COMPASS contracts for the provision of accommodation for asylum seekers, HC 880, January 2014

2 The contract was originally won by Clearel, a joint venture between Clearsprings and Reliance, but Reliance later withdrew.

3 National Audit Office, COMPASS contracts for the provision of accommodation for asylum seekers, HC 880, January 2014.

4 Letter from Rupert Soames OBE, Chief Executive, Serco Group Plc, to the Chair of the Committee, 26 February 2016 (ACC0010)

5 Letter from Peter Neden, Regional President - G4S UK & Ireland, to the Chair of the Committee, 22 February 2016 (ACC007)

7 Q224

9 Written Statement, 8 December 2016, HCWS335

12 See for example Sixth Report of Session 2015–16 The work of the Immigration Directorates Q3 2015, HC 772, which highlighted concerns about the treatment of those in asylum accommodation, particularly with regard to residents being required to wear coloured wristbands (in Cardiff), and asylum accommodation being easily identifiable by means of red front doors (in Middlesbrough).




24 January 2017