Problems with government contracts with G4S and Serco to provide accommodation for asylum seekers mean it will be “difficult” to hit a savings target.
In a report the National Audit Office (NAO) said the contracts aimed to produce savings of £140 million over seven years, but in the first year delivered just £8 million.
The NAO said G4S and Serco “struggled to get contracts up and running owing to negotiating difficulties with existing housing suppliers” and negotiations are taking place that could see up to £4 million being paid to the Home Office as a rebate for failure to hit KPI targets.
The cost of providing asylum seeker accommodation in 2011/12 was £150 million and in 2012 six new contracts called COMPASS were signed with G4S, Serco and Clearel to house 20,000 asylum seekers, according to the NAO. COMPASS replaced 22 separate “Target” contracts with 13 different suppliers.
The NAO said: “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.
“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.”
Amyas Morse, head of the NAO, 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.”
A Home Office spokesman said: “We are pleased that this report recognises the recent improvement of COMPASS contractors, as well as the £8 million of savings over the last year. We will carefully consider the report's findings and will respond further in due course.”
A G4S spokesman said: “We agree with all recommendations made and many of these have already been implemented as part of our ongoing commitment to service improvement.”
James Thorburn, managing director of Serco’s home affairs business, said the transition to the new contracts was “challenging” but the company had “worked extremely hard to raise standards”.
“We accept that there remains scope for further improvement and we are committed to working with the Home Office and our partners in local government, the NHS and the voluntary sector to achieve that,” he said.