How the Home Office, Serco and G4S catastrophically mishandled asylum contracts

Hodge chairs the public accounts committee and contributed to the report
Hodge chairs the public accounts committee and contributed to the report
Ian Dunt By

It was mishandled every step of the way. Each stage of the outsourcing of asylum housing contracts to three private sector providers was typified by incompetence and indifference.

Today's public accounts committe report lays it out step-by-step, in depressing detail.

In March 2012, the Home Office decided it wanted to shave off £140 million from the price of housing the 23,000 destitute asylum seekers waiting to be cleared. It did this by taking the 22 contracts from 13 different suppliers, scrapping them, and instead handing just six contracts to three suppliers - G4S, Serco and Clearel - only the latter of which has any experience in this area.

This is against government policy, which is supposed to be encouraging small-and-medium-sized companies to supply government services. Instead, the Home Office handed more work to a firm which was at that exact moment spectacularly failing to satisfy its contractual obligations for the London Olympics.


The trouble with streamlining providers is that it turns any breakdown from an inconvenience into a catastrophy. Where there is a diversity of supply, there is a limit on how many people are affected when something goes wrong. Once you're down to just three suppliers, it will affect many more asylum seekers. When it comes to housing for the most vulnerable people in the country that can have severe reprecussions, from homelessness to forced prostitution.

"The knowledge of experienced specialist providers has been lost and there are fewer alternative options available to the department if the contractor fails," committee chair Margaret Hodge said.

There was no business case for the change. There does not appear to have been a risk assessment.

The contractors did not even bother to inspect the properties they had inherited.

There was a three month 'mobilisation' period for these complex new contracts, which was a particularly ferocious time frame given the dearth of experience among the firms given the work. The Home Office decided to take a 'hands-off' approach and rushed through transition activities. It didn't facilitate the exchange of information between outgoing and incoming contractors.

The Home Office failed to show any interest in the process. And Serco and G4S showed no interest in inspecting the properties or carrying out due diligence. "This lack of information contributed to delays, additional cost, and disruption and confusion for a very vulnerable group of service users," the report found. But who cares, right? They're only asylum seekers.

Predictably, the Home Office then incurred additional costs. It needed to extend existing contracts  during the transition period and then had to start inspecting property itself.

The quality of the data shared by the department was branded "poor" by the committee at every stage of the process - tender, transition and delivery. Contractors said the Home Office had failed to give them good information, particularly about the quality of the housing stock they were inheriting. But then, they didn't even bother checking it. Poor data apparently contributed to the assumptions which underpinned the bids, such as the ease with which they thought they'd be able get approval from local authorities.

The Home Office even failed to share information about predicted inflows of refugees.

"The standard of the accommodation provided has often been unacceptably poor for a very fragile group of individuals and families," Hodge said. "The companies failed to improve quality in a timely manner. None of this was helped by the department's failure to impose penalties on contractors in the transition period. It is disturbing that over a year into the contract the accommodation is still not of the required standard and the department has only chalked up £8 million in savings."

Serco, G4S and the Home Office really are as bad as each other. They are entangled in a marriage of mutual suspicion, laziness and failure of communication. Their behaviour towards the most vulnerable people in Britain is typified by indifference.

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