Written evidence submitted by Institute for Government (AAC0023)

1.              Summary

1.1              In December 2024 the Institute for Government published a report, How the government can design better asylum policy, identifying the reasons why successive governments have struggled to create a more effective asylum system and offering recommendations for how the government can make better asylum policy.

1.2              The Home Office’s provision of asylum accommodation is particularly challenging for a number of reasons:

• Many people seeking asylum have complex needs.
• In recent years, there has been an increase in the number of people applying for asylum and requiring accommodation – a problem exacerbated by the long waiting times for a decision on their cases.
• Accountability for decisions is complex as the Home Office relies on external providers to deliver accommodation and advice helplines.
• While the Home Office is centrally responsible for the accommodation of people waiting for an asylum decision, local authorities take on responsibility for the support of applicants who receive refugee status.

1.3              The 2026 break clause in accommodation and support contracts (AASC) provides an opportunity for the government to address these challenges by testing a new approach, which should inform the provision of accommodation once contracts expire in 2029.

1.4              Recommendations:

1. Redesign new contracts for asylum accommodation and support to more accurately reflect the government’s desired outcomes, including an ability to adapt to changes in the number of asylum seekers needing support.
2. Invest in commercial teams’ skills and capacity to oversee contracts and to support suppliers in delivering against stated key performance indicators (KPIs).
3. An outward facing digital communication system should be developed as part of the Home Office’s wider asylum transformation, to allow public services including local authorities to access data about asylum case flows in their areas.
4. Delegate responsibility for accommodation and support services to local areas, along with the equivalent resources needed to manage the service, beginning with a number of regional pilots once accommodation contracts expire in 2026.

2.              Contract design

2.1              Compared to other forms of immigration, it is difficult to predict exactly the number of people who will apply for asylum in the UK and require accommodation while they wait for a decision. The Home Office has had to rely increasingly on repurposed hotels as contingency accommodation due to a lack of space in longer-term dispersal accommodation.

2.2              The Home Office has said its 10-year strategy for asylum accommodation will be “flexible to changing circumstances”, with “expected demand for each type of accommodation”.[1] This is a welcome recognition of the reality that the number of asylum applications varies dramatically. The Home Office should ensure that accommodation providers are fully aware of their role in making sure they have the capacity to deliver their services effectively in response to changes in demand.

2.3              Recommendation 1: Redesign new contracts for asylum accommodation to more accurately reflect the government’s desired outcomes, including an ability to quickly adapt to fluctuations in the number of asylum seekers needing support.

3.              Contract management and assurance

3.1              Institute for Government research has highlighted that a lack of commercial capability has hindered the government’s ability to hold contract providers accountable for their performance.[2] This has been true of the Home Office – officials told the ICIBI that contract management teams have “lacked the necessary commercial knowledge, expertise, and experience to manage contracted providers effectively”.[3]

3.2              This has partly been a problem in procurement, where the need to secure contingency accommodation rapidly has meant it has been unable to deliver good value for money.[4] But it has also been a problem in overseeing the performance of accommodation providers. One prominent issue, given the potential vulnerabilities experienced by people seeking protection from persecution, is ensuring adequate safeguarding. The Independent Commission on Aid Impact (ICAI) has found that safeguarding training and vetting has been highly variable between accommodation sites.[5] More broadly, the Institute heard from people with lived experience of the asylum system how accommodation staff could be insufficiently responsive to their particular health needs, such as pregnancy.

3.3              The Home Office has committed to ensuring that its contract managers are adequately accredited and trained to manage contract complexity.[6] This is an important step to develop the department’s capacity – if done effectively, it will improve its ability to design contracts and KPIs effectively and oversee providers’ performance. This is oversight is particularly necessary given the ICIBI found that service providers’ self-assurance activities were “not robust”.[7]

3.4              Contract managers should also ensure they have the capacity to understand the particular requirements of asylum accommodation, including by working with relevant expertise in other areas of the department such as the safeguarding team to ensure that service providers understand how to fulfil their obligations.

3.5              Recommendation 2: Invest in commercial teams’ skills and capacity to oversee contracts and to support suppliers in delivering against stated key performance indicators (KPIs).

4.              The Home Office’s relationship with local areas

4.1              While the Home Office is centrally responsible for the accommodation of people waiting for an asylum decision, once applicants receive refugee status local authorities take on this responsibility. Local authorities are responsible for the ongoing support of applicants who receive refugee status, though in practice increasingly provide support for asylum seekers waiting for a decision.

4.2              The Home Office’s central intervention in local property markets means, in practice, that asylum seekers may find themselves moved around the country with little notice. Interviewees with experience of the asylum system told the IfG that frequent accommodation moves disrupted their access to public services such as health care. For local authorities, the short notice at which asylum seekers may be placed mean that they may struggle to connect people with the services they need.

4.3              The handover in responsibilities between central and local government can also be problematic. The 2023 backlog clearance exercise led to a rapid increase in the number of refugees requiring support from local authorities, with little notice – the number of refugees presenting as homeless rose from 920 households in Q2 2023 to 5,140 by the end of the year. The government’s temporary change in policy to increase the transition period from Home Office accommodation to 56 days (up from 28 days) should ease the pressure on local authorities’ homelessness services.

4.4              While the Home Office does have forums to engage with local authorities, it should invest more in this relationship. Its business case for clearing the legacy asylum backlog did not plan for the knock-on consequences for local authorities.[8] It should also improve its communication with local areas about the management of its asylum casework so that they can prepare and suitably meet the needs of people who are likely to be granted refugee status.

4.5              Recommendation 3: An outward facing digital communication system should be developed as part of the Home Office’s wider asylum transformation, to allow public services including local authorities to access data about asylum case flows in their areas.

5.              Delivery of accommodation at a local level

5.1              While the Home Office is well-placed to handle the administrative casework of asylum applications, it does not have the experience of local government in supporting vulnerable people and maintaining accommodation. The Home Office’s evaluation of the Vulnerable Persons Resettlement Scheme identified the benefits where local authorities have drawn on their expertise in housing services to provide accommodation appropriate for people arriving through protection schemes.[9]

5.2              In practice, local councils also increasingly provide support for asylum seekers waiting for a decision on their claim,[10] though this is a ‘patchwork’ approach without a clear remit or funding.[11]

5.3              There is therefore a strong case that accommodation and support services would be more effectively managed at a local level in the long term, co-ordinated by strategic migration partnerships and, where they exist, combined authorities. It would also help to reduce friction for asylum seekers and local authorities by ensuring the more consistent provision of support.

5.4              The current asylum accommodation contracts expire in 2029, with a break clause in 2026. The Home Office did consider redesigning the service when the previous contracts expired, though did not allow enough time to undertake a full review.[12] Given the changing operating environment since that time, with an increase in the number of asylum applications and the widespread use of repurposed hotels, there is a strong case for more radically redesigning the provision of accommodation. The department should use the break clause to decentralise accommodation services to a small number of regions, and use the evaluation of these pilots to inform the decentralised provision of accommodation once contracts expire.

5.5              Recommendation 4: UK government should delegate responsibility for accommodation and support services to combined or local authorities, along with the equivalent resources needed to manage the service, beginning with a number of regional pilots once accommodation contracts expire in 2026.