The troubling mismanagement of asylum seeker accommodations by the Home Office can be traced back six years to the agreements made with service providers.

A parliamentary report unveiled today exposes, for the first time, the department’s extensive blunders, which have resulted in the UK incurring billions of pounds in additional expenses for housing migrants in hotels.

The report indicates that the Home Office could have prevented numerous issues related to accommodating the tens of thousands of migrants arriving by small boats across the Channel, who are currently housed in hotels at full board funded by taxpayers.

This mismanagement, according to the findings, has exacerbated community tensions, notably in areas like Epping, Essex.

Recently, Deng Majek, a migrant who arrived by small boat, was convicted of the unprovoked murder of Rhiannon Whyte, a young British mother working at the asylum hotel in Walsall where he resided. The Sudanese national attacked Whyte with a screwdriver, stabbing her 23 times.

The comprehensive 118-page report from the cross-party home affairs committee in the Commons attributes a series of failures to the incompetence of Home Office leadership.

Here we look at what it says.

Initial flaws 

Last week, small-boat migrant Deng Majek (pictured) was found guilty of the unprovoked murder of a British mother of one who worked at the Walsall asylum hotel

When the asylum accommodation system was drawn up in 2018, the Home Office decided to tender seven large contracts, each covering a swathe of the country.

In three regions only one provider bid for the service, and was appointed without competition.

This ‘no doubt weakened the Home Office’s negotiating position and ability to insist on value for money’, the report said.

Critically, there were ‘a series of failures by the Home Office in the design of the original contracts’.

For example, the firms – Serco, Clearsprings and Mears – do not face financial penalties for ‘performance failures’, which MPs said was an ‘inexplicable and unacceptable failure of accountability’.

Perverse incentives

Firms providing migrant hotels have a ‘disincentive’ to move migrants out of the properties into cheaper accommodation.

‘The evidence… leads us to conclude that providers can reap greater profits by prioritising the use of hotels over procuring other, more suitable forms of accommodation,’ the committee found.

‘It is difficult to understand why, with soaring asylum costs and profits, little if any thought appears to have been given post-Covid to the fact providers had no incentive, and a great disincentive, in moving asylum seekers out of expensive hotel accommodation.’

As migrant numbers soared, the Home Office renegotiated the contracts to increase the number of beds available in self-catering accommodation from 70,000 to 103,000.

The Home Office’s handling of migrant hotels has added to community tensions – such as those in Epping, Essex. Pictured: Police outside the Bell Hotel in Essex

But providers have not reached the higher numbers, falling short by about 34,000. In an astonishing oversight, there ‘does not appear to be a contractual mechanism to require providers to deliver up to the agreed caps, or to penalise them for failing to’.

The contracts do let the Home Office claw back profits from the firms once they reach a certain level. But this sensible measure has been mishandled.

The report said it was ‘extremely disappointing’ that moves to recoup profits only began last year. Two of the companies told the inquiry they had set aside nearly £46million to hand back.

But the department has still not made a decision and is still auditing the accounts almost a year after they were submitted.

In a further flaw, the profit claw-back scheme is based on a percentage of profits rather than on cash terms.

This means that ‘as the value of the contracts has increased, providers have been able to make significantly higher cash profits than was anticipated when the contracts were set up’.

The National Audit Office says total reported profit since the contracts began was £383million.

Incompetence

The Home Office failed to engage with communities in the opening of migrant hotels – a 118-page report from the Commons’ cross-party home affairs committee has said

Officials made a series of errors even after the flawed contracts were implemented.

Highlighting their ‘chaotic’, ‘incompetent’ approach, the MPs said civil servants were ‘reactive rather than proactive’.

There was a ‘failure to plan for unanticipated developments, or to get a grip on the contracts as events arose’.

The report said: ‘The Home Office has the right to commission an independent review… to assess if it is receiving value for money, which is a standard clause in Government contracts. If the benchmarking finds the service not to be good value for money, suppliers can be required to implement changes.

‘We find it deeply disappointing and inexcusable that the Home Office has not chosen to exercise this right, given the growth in the cost of the contracts.

‘Basic elements of oversight have been neglected.’

In one case, accounting failures meant the Home Office ‘could not prove all the money it had paid to Clearsprings was genuinely owed’. The Home Office also took ‘years rather than months’ to begin to adapt to new circumstances.

MPs concluded: ‘Failures of leadership at a senior level, shifting priorities, and political and operational pressure for quick results meant the department was incapable of getting a grip of the situation, and allowed costs to spiral.’

Ethiopian asylum seeker Hadush Gerberslasie Kebatu was sentenced to one year in jail for sexually assaulting a teenage girl and a woman, sparking the protests in Epping

The asylum seeker was mistakenly released from prison this week – but he was found after a three-day hunt, and will now be deported

MPs said it faced ‘an extremely challenging environment, but its chaotic response demonstrated it was not up to this challenge’.

Impact on communities

The hotels concentrate ‘large numbers of people in a single location, which can create additional pressures on GPs, children’s social care and education’, the report said.

Essex Council told MPs asylum-seeker families were moved into two hotels in an area with a lack of school places. ‘The Home Office has failed to properly consider the impacts of its approach to the delivery of accommodation on local areas and to engage early with local partners to understand… these impacts,’ the MPs said.

‘It is inexplicable that the Home Office placed no obligation on providers to assess impacts.’ They said this meant some local services experienced ‘unsustainable pressures.’

The department also failed to engage with communities, it said. ‘The lack of engagement and transparency has left space for misinformation and mistrust to grow, which in too many areas has led to tensions and undermined the ability of local partners to promote social cohesion.’