Ministers are right to look again at how asylum accommodation is delivered

The government’s decision to end a contract with an under-performing asylum hotel provider is a welcome move – and should provide confidence that the Home Office will act to get the outcomes it needs in asylum accommodation. But this should just be the first step. It is time for reckoning with the underlying challenges in how accommodation for asylum seekers is delivered.

Government is right to take action in response to poor performance

In recent years, asylum accommodation has been beset by a lack of contract oversight. The supplier in question, Stay Belvedere Hotels, was responsible for hotels across South England and Wales. While the problems with its performance are not public, the wider provision of asylum accommodation in hotels has suffered from massive shortcomings, including in safeguarding training and vetting  ²⁵ ICAI, UK aid to refugees in the UK, 29 March 2023, https://icai.independent.gov.uk/review/uk-aid-funding-for-refugees-in-the-uk/review/  – a particular problem given the potentially complex needs of people awaiting an asylum decision. But the true extent of these failures to meet contract expectations is not clear, with unreliable self-reporting from accommodation providers and limited Home Office capacity to regularly inspect hotel sites  ²⁶ ICIBI, An inspection of contingency asylum accommodation, November 2023 – June 2024, October 2024, https://assets.publishing.service.gov.uk/media/671a1b0cf7c956b7d065a417/An_inspection_of_contingency_asylum_accommodation_November_2023___June_2024.p…  leaving the government struggling to get a full picture.  

So it is a sign of progress towards stronger contract management that the Home Office has been willing to take necessary action in response to poor performance. This reflects the department’s investment in commercial expertise  ²⁷ ICAI, Follow-up: UK aid to refugees in the UK, 10 April 2024, https://icai.independent.gov.uk/html-version/icai-follow-up-uk-aid-to-refugees-in-the-uk-html/  and a broader push across the public sector to improve accountability where suppliers don’t deliver as promised.

The challenges in managing asylum accommodation contracts reflect deeper-rooted issues

But ending this contract will not reduce the demand for asylum accommodation – and the contract will be picked up by other existing providers, some of which have faced criticism themselves. With only a relatively small number of providers willing and able to deliver these large and complex contracts, there is relatively little competition. When the current set of contracts began in 2019, the Home Office received bids from only four companies, including an incumbent provider (later granted a new contract) that had previously paid millions of pounds in fines for failing to meet its obligations.  ²⁸ Public Accounts Committee, Asylum accommodation and support transformation programme, HC 683, 20 November 2020, https://committees.parliament.uk/publications/3561/documents/34409/default/  It is harder to sanction a poor performer when you don’t have many other options.

This is why reports that ministers are exploring alternative ways to deliver asylum accommodation  ²⁹ Williams J and Gross A, ‘UK looks at handing asylum seeker housing contracts back to local councils;, Financial Times, 4 November 2024, https://www.ft.com/content/f2f87984-fab6-4f46-a489-e2b01ea0c63f  are particularly welcome – and aligns with the IfG’s previous recommendation to commission ‘deep dive’ reviews into uncompetitive markets. The last time the contracts were due to expire, the Home Office didn’t give itself enough time to redesign the service.  ³⁰ NAO, Asylum accommodation and support, Session 2019–21, HC 375, 2020, www.nao.org.uk/wp-content/uploads/2020/07/Asylum-accommodation-and-support.pdf  It needs to make sure that the ongoing review can properly consider what outcomes ministers wants from accommodation for the new contracts starting in 2029, and it should learn lessons from other parts of the state that also procure temporary accommodation for people with multiple needs – a topic which the government is looking at in depth ahead of the spending review.  ³¹ HM Treasury, Terms of reference for VfM Study on procuring short-term residential accommodation, 11 March 2025, https://www.gov.uk/government/publications/terms-of-reference-value-for-money-vfm-studies/terms-of-reference-for-vfm-study-on-procuring-short-term-re…

Strengthening the role of local government could deliver better value

It makes sense for the Home Office to make administrative decisions on asylum cases – but it is less well-versed in supporting vulnerable people and maintaining accommodation. As the IfG recommended in December, next year’s contract break clause would be a good opportunity to test out a new, decentralised approach. Councils increasingly provide support to asylum seekers, but under the current setup this lacks funding and a clear remit. As the Home Office itself has recognised,  ³² Home Office, ‘Qualitative Evaluation of the Vulnerable Persons Resettlement Scheme (VPRS) and the Vulnerable Children’s Resettlement Scheme (VCRS)’, 30 March 2023, https://www.gov.uk/government/publications/qualitative-evaluation-of-the-vulnerable-persons-resettlement-scheme-vprs-and-the-vulnerable-childrens-res…  local authorities have expertise in housing services that puts them in a good position to provide suitable accommodation for people arriving through protection schemes.  

Delivering asylum accommodation at a local level could also help the government get better value from its contracts. With the right resources, local authorities could draw on their existing property inspection regimes to make sure that providers deliver what is expected of them. And with a shift away from large-scale contracts – the one dropped this week covered 51 hotels – there could be more potential suppliers to choose from.  

The Home Office’s decision to end this contract should help build up some much-needed confidence when it comes to its asylum accommodation contracts. The department needs to continue to identify where providers fall short and push for better performance – but the underlying challenges in the system should prompt some broader thinking in government about who is best suited to deliver accommodation for asylum seekers, and how.