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G4S, Serco reviewed

Two of the new private providers awarded Home Office contracts to provide accommodation for asylum seekers in the UK, struggled to get contracts up and running owing to negotiating difficulties with the housing suppliers. This has resulted in poor performance, delays and extra costs for the Home Office, according to a National Audit Office (NAO) report published in January.

In 2011-12, the cost to the Home Office of providing accommodation for asylum seekers was £150 million. In March 2012, the Home Office signed six new contracts called COMPASS (Commercial and Operating Managers Procuring Asylum Support) with three providers – G4S, Serco and Clearel – aiming to save around £140 million over seven years. In 2012-13, it achieved a saving of £8 million.

Although overall performances are now improving, two of the providers, G4S and Serco, are still failing to meet some of their key performance targets, notably relating to the standards of property and the time taken to acquire properties for asylum seekers, the auditors say.

In three regions – the North West; Midlands and East of England; and North East, Yorkshire and the Humber – transition to the new contracts took longer than originally planned, up to three months in some cases. Clearel was the only contractor to meet the original September 2012 deadline for completion of transition in both of its regions. According to the NAO, G4S and Serco struggled throughout the transition period to establish a robust and reliable supply chain of housing using existing housing providers and to source new houses. This resulted in delays to transition and continued uncertainty for asylum seekers.

Of the 20,000 asylum seekers housed by the Home Office at the time of transition to the new contracts, around 90 per cent were able to stay in their existing accommodation. Some of those who were asked to move received mixed messages, and communications were not routinely translated, risking gaps in understanding among those affected.

The NAO adds that commercial negotiations are still going on over whether the contracts need to change, what extra costs have been incurred by the Home Office and what rebates to the Home Office from the providers should be applied for poor performance.

The providers believe the information supplied to them by the Home Office during procurement was inadequate in some areas and has resulted in some of the difficulties now faced in running the service. For example, historical information on demand and the service user population does not match the reality the providers are facing, with take-up of asylum accommodation higher than the Home Office predicted.

Amyas Morse, head of the National Audit Office, said: “The transition to the COMPASS contracts happened during a demanding period for the Home Office. However, many of the problems that arose remain and are continuing to affect the performance of G4S, Serco and Clearel. Until they are resolved, it will be difficult for the Home Office, providers and local authorities to develop the mature relationships needed to achieve the envisaged savings and an effective service.”


The Home Office provides accommodation and support for individuals and families seeking asylum in the UK who are assessed as being destitute. In 2012-13 the Department provided accommodation for around 20,000 asylum seekers. In March 2012, the Department signed six new contracts for the provision of these services, collectively called COMPASS (Commercial and Operating Managers Procuring Asylum Support). It awarded G4S, Serco and Clearel contracts to supply accommodation services, with each awarded a contract to deliver these services in two of the six regions of the UK. The Department aimed to save around £140 million over seven years through the introduction of the new contractual arrangements. The six regions are:

• North West
• Scotland & Northern Ireland
• North East, Yorkshire & the Humber
• Wales & South West
• Midlands & East of England
• London & South East.


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