1.On the basis of a report by the Comptroller and Auditor General, we took evidence from the Home Office (the Department) about asylum accommodation and support services in the UK.
2.The Department provides accommodation and support for asylum seekers and their families while their cases are processed. The Department has an obligation under the Immigration and Asylum Act 1999 to provide accommodation and support to asylum seekers who would otherwise be destitute. The Department typically places eligible asylum seekers in ‘initial accommodation’ while they apply for financial assistance, and then moves them to more permanent dispersed accommodation once the Department has assessed and confirmed their eligibility for support. From 2012 to September 2019 the Department provided these accommodation services through six regional contracts, known as COMPASS. In 2014, our predecessor Committee raised concerns about how the Department was managing COMPASS, including failing to work effectively with its providers or share necessary information. We concluded that the transition to the new contracts had been poorly managed and the quality of data shared by the Department had been poor. This had resulted in delays to providing suitable accommodation, additional costs and accommodation not being up to standard.
3.In 2019 the Department replaced COMPASS with seven regional contracts, following a two-year extension to the original contracts. The Department awarded the contracts for the new service to three providers—Clearsprings Ready Homes (Clearsprings), Mears Group (Mears) and Serco—who each took on two or three UK regions. The Department also established a new helpline and support service, known as AIRE—Advice, Issue Reporting and Eligibility, awarding the contract to Migrant Help. At the time the new contracts began in September 2019, the Department provided services to approximately 48,000 people. The new contracts have a total estimated value of £4.0 billion over 10 years, from 2019 to 2029.
4.The Department replaced COMPASS with seven similar regional contracts, with some changes intended to improve asylum seekers’ experience and make the service more sustainable. The Department started the process of redesigning the contracts in 2016. The Department told us that this felt like a reasonable time to have started looking seriously at different options, but accepted that in hindsight it could have started earlier. When evaluating the design and procurement stage, the Department concluded that it had not allowed enough time to consider more radical options, such as building new houses or allowing asylum seekers access to mainstream benefits. The new accommodation contracts have a break clause after seven years, while the AIRE contract has breaks after four and seven years. The Department told us that it would need five years to give it adequate time to radically change the service next time, and so if it wanted to do this after seven years of these contracts it would need to set up a project within the next 12 months.
5.The new accommodation contracts include caps on the number of people housed in each geographical area, which the Department included to protect providers from sharp cost increases. If it needed to accommodate more people than the limits set by these caps, the Department would need to renegotiate contract terms with providers and likely pay higher prices. The Department explained that it set the caps according to the regional distribution of asylum seekers in 2018. After it had awarded new contracts, the Department agreed with local authorities in July 2019 a plan to redistribute asylum seekers more equitably across the UK. The Department told us that this redistribution was expected to take place gradually over several years. The redistribution plan agreed with Local Authorities was incompatible with the cap on numbers in the South region contract and is likely to mean that the number of asylum seekers to be housed in the South region will be greater than the contractual cap for that region. The Department explained that, if that happened, it would need to renegotiate a higher cap in that region. The Department accepted that its plan to redistribute asylum seekers could cost it more money.
6.The new national AIRE service brought together different elements of advice and issue reporting previously provided by Migrant Help and accommodation providers separately. Under COMPASS, asylum seekers reported issues with their accommodation directly to their accommodation provider, either to their housing officer or via a call centre. The Department said that its forecasting for this issue reporting element of the helpline was inaccurate, as it was not able to extract full historical data on the numbers of issues reported, nor did it accurately forecast the level of unmet demand under the COMPASS service. The Department told us that the helpline received four times as many calls in the early months than it had predicted. It explained that, since this initial bulge, demand had stabilised at between 35,000 and 40,000 calls per month, but accepted that this was still twice the Department’s forecast.
7.As well as call volumes, we asked whether the AIRE service had underestimated the length of each call. The Department had historical data that suggested calls would take between 12 and 17 minutes. In contrast, Migrant Help based its bid for the AIRE service on an average call length of four minutes, and the Department accepted the bid on this basis. As a result, the AIRE helpline did not have the capacity to deal with the number of calls it received, answering only one-fifth of the calls it received between September 2019 and January 2020. We received written evidence from Asylum Matters, which told us that many asylum seekers and their caseworkers had lost confidence in AIRE and simply stopped calling. The Department explained that as the AIRE provider accumulated more data from issue reporting, its call speed has got quicker. In its written evidence to us, Migrant Help also told us that it had carried out a large recruitment and training programme. The Department explained that the performance of the AIRE service had since improved, and it was now regularly meeting 11 of its 12 key performance indicators. The Department said that in July 2020, the AIRE service answered 95% of calls within 60 seconds, against a target of 90%.
8.The Department told us that it knew at the start of the transformation programme in 2016 that COMPASS was under-priced. It explained that it carried out a ‘should cost’ model to establish a reasonable range of costs, which indicated that the new services should cost between 20% and 31% more. The Department is paying an estimated 28% more to providers, but the NAO found that with more bids it may have been able to secure better prices. The Department awarded three out of seven regions to the sole bidder and had to restart the competition in two regions as there were no initial bids. In total, the Department received bids from only four companies. We asked whether this lack of competition left the Department a customer in a seller’s market. The Department asserted that there had been competition within some regions and that this enabled it to see that there was market pressure. It explained that it had benchmarked across different regions, including those where there had been less competition, to ensure that the prices it was paying were comparable across the country. Overall, it considered retaining the incumbent providers and attracting a new provider was a good outcome from the procurement. However, one of those incumbent providers, Serco, paid £7 million in service credits for not meeting performance standards under COMPASS. We asked why, when their performance had been below standard, they were still able to participate in the new contracts. We were concerned that this suggested that existing providers already had performance challenges.
9.The Department recognised that it had paid more for the new contracts, but told us that as a result it was getting a better quality service, with better support for vulnerable people. We saw little evidence of this and the Department accepted that its ability to determine whether this was the case had been affected by the ability of contractors to share data about the services that were being delivered. The Department was overclaiming success and justifying a higher fee on the basis of an improvement in the quality of service which it could not evidence.
10.The Department expected providers to be able to share data as part of the new contracts, to make sure they are providing the service expected for asylum seekers. The contracts required an automated link for issue reporting between the AIRE provider and the accommodation providers. However, the NAO found that this had not been in place and instead providers had to rely on workarounds such as reporting issues by email, which were inefficient and more prone to errors. The NAO concluded that this lack of integration meant providers could not provide an efficient service for asylum seekers. The Department accepted that automated links had not always been available early on in the contracts, but told us that information was still being shared and that it had agreed a workaround with providers. It said that it was still its firm intention to ensure that information was shared in an automated way and that work was underway to improve the automated sharing of data.
11.The Department estimated that the accommodation providers could make profits of between 5% and 13%. We were concerned that this was about twice as large as would normally be expected by outsourcing companies and asked the Department whether it considered this level of profit excessive, given the level of risk taken on by providers. The Department said that it benchmarked these expected profits against information held by the Cabinet Office and Crown Commercial Service on similar contracts, and concluded they were reasonable. It asserted that this “was explored thoroughly, tested and assured by others in Government with an understanding of a much wider range of contracts with similar risk profiles”. As part of the new contracts, the Department intended to use ‘open book’ accounting to assess providers’ profits from the early months of the contracts. The Department told us that it would carry out this open book exercise annually, and would begin working with providers in the coming months to review their data as they were now a year into the contracts. The Department explained that the contract requires the providers to share with the Department any profits made above that declared in their bids.
12.We examined the Windrush scandal in March 2019 and found that the Department lacked understanding of the needs of applicants for compensation, did not monitor the impact of its ‘compliant environment’ policy on vulnerable members of society and had not done enough to identify people that might have been affected. We recommended that the Department must set out how it intended to incorporate information collected from people affected by the compliant environment system, not just those administering it. The Department committed to ensuring the lessons learned from the Windrush scandal are applied across the whole of the Department. This included listening to the people most affected by the Department’s policies and operations and consulting with a wide range of people and organisations.
13.We received written evidence from stakeholders representing asylum seekers who told us that they needed information on the contracts’ performance to help them better support people. The Refugee Council told us that they needed greater transparency over service standards and performance management to give them confidence that the Department had effective mechanisms in place. Asylum Matters told us that the Department does not share information with local stakeholders such as regional Strategic Migration Partnerships, making meaningful scrutiny of the contracts impossible. We asked why the Department was not publishing data to meet the Cabinet Office’s ‘outsourcing playbook’, which states that departments should publish key performance information for any significant outsourced contract. The Department said that it would be publishing information in line with this guidance later in October.
2 C&AG’s Report, Asylum accommodation and support, Session 201921, HC 375, 3 July 2020
3 C&AG’s Report, para 1.2
4 C&AG’s Report, para 1–3
5 Committee of Public Accounts, COMPASS: Provision of Asylum Accommodation, 54th Report of Session 2013–14, HC 1000, 24 April 2014
6 C&AG’s Report, paras 1–3, 6, 10, 1.4–1.5
7 Q 116; C&AG’s Report paras 3, 6, Figure 4 and para 2.7
8 C&AG’s Report, para 2.2
9 Q 117
10 Qq 126–128; C&AG’s Report paras 17, 4.11
11 Qq 71, 86–87
12 Qq 92, 94–95; C&AG’s Report, para 2.13
13 Q 71; C&AG’s Report, para 12
14 ASY0006 - Asylum Matters
15 Q 92
16 ASY0001 - Migrant Help
17 Q 72
18 Q 97
19 C&AG’s Report, paras 8, 2.4
20 Qq 96–97
21 Qq 119–122
22 Qq 99, 116
23 Qq 104–105
24 Qq 105–106; C&AG’s Report, paras 13, 3.6
25 Qq 104–106
26 Qq 98–99
27 C&AG’s Report, para 2.9
28 Qq 100–101
29 Committee of Public Accounts. Windrush generation and the Home Office, HC 1518, 6 March 2019
30 Q 115
31 ASY0003 - British Refugee Council
32 ASY0006 - Asylum Matters
33 Q 107
Published: 20 November 2020