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NAO finds Home Office plans for large-scale asylum accommodation will cost more than hotels and will deliver fewer places than planned


National Audit Office publishes results of its investigation into cost of accommodating asylum seekers

Date of Publication:
20 March 2024

The National Audit Office (NAO) has today published a report examining the cost of asylum accommodation provided by the Government.

Picture of moneyImage credit: UK GovernmentYou can download the 51-page report here.

An investigation was undertaken by the NAO in response to public and parliamentary concerns about the Home Office's plans for asylum accommodation, in particular, the plan to move away from using hotels and towards large-scale accommodation sites such as ex-military bases and barges.

The headline findings from the NAO's investigation are that the Government's plans for large-scale asylum accommodation will cost more than using hotels, and the large sites are housing fewer people than planned.

As the report notes: "In the financial year to March 2024, the Home Office expects to spend £4.7 billion on asylum support, including £3.1 billion on hotels. The Home Office has stated that it intends to reduce the number of hotels it is using and reduce costs to the taxpayer. As part of this, it is identifying alternatives to hotels, such as vessels or ex-military bases (large sites) for single adult males, increasing room-sharing in hotels and increasing the amount of dispersal accommodation."

The NAO says that in December 2023, the Home Office paid £274 million for up to 64,000 beds in hotels, 45,800 of which were being used, though by the end of January 2024, the Home Office had stopped using 60 hotels.

In order to move away from using hotels, the Home Office expects to have spent at least £230 million on developing four large sites by the end of March 2024. In January 2024, however, it was only accommodating around 900 people across two sites.

According to the NAO, the Home Office's own analysis suggests that the total spend to accommodate asylum seekers on large sites will actually cost more than hotels.

The NAO said: "The Home Office updated its value-for-money assessments in January 2024. The new assessments changed how long some sites would be used, and excluded 'sunk' costs of around £199 million, so the investment decision was focused on the additional spending that would be required. These assessments concluded that large sites would be around £153 million cheaper than hotels. However, the Home Office expects that, when the sunk costs are included, the sites will, in total, cost £46 million more than using hotels over the same period. Most of the additional cost compared to hotels comes from using the Scampton site. The Home Office hopes that the large sites will bring other benefits over hotels, including that they will be more 'appropriate and sustainable'. But, to date, it has not included these benefits in its analysis. It told us that it expects to update its analysis of the value for money of sites quarterly, and plans to produce a full benefits strategy."

In addition, both the Home Office and the Infrastructure and Projects Authority (IPA) rated the plans to deliver accommodation on large-scale sites as being high risk or undeliverable.

The report states: "The IPA has reviewed three iterations of the Home Office's plans, rating each as 'red', meaning successful delivery of the programme to time, cost and quality appears to be unachievable. The IPA recommended that the Home Office be clearer about the scope and objectives of its programmes and said its plans were unrealistic. […] The Home Office recognises the risks in its programmes, and assesses many of its own delivery risks as 'red'."

Gareth Davies, head of the NAO, noted that the Home Office continued its large site accommodation programme despite repeated external and internal assessments that it could not be delivered as planned.

Targets for the number of beds available at large-scale site have also been repeatedly revised downward by the Home Office.

"[The Home Office] lowered both its expectations on how many people its future sites will accommodate and its targets for the number of beds it will provide through these sites. It is now looking to make up to 2,500 beds available (but not necessarily occupied) by March 2024 and a total of 6,500 beds by December 2026 and it expects to find sites that will accommodate between 200 and 700 people in each, rather than more than 1,000 people," the report says.

The Illegal Migration Act 2023 has added to the Home Office's problems, with the NAO noting that the Act will require an increasing number of people to be placed in immigration detention. The uncertainty over the impact of the Act makes it difficult for the Home Office to plan what accommodation it will need in the future.

In conclusion, the NAO states:

"The Home Office has made progress in its plan to reduce the use of hotels to accommodate people seeking asylum. But, in rapidly progressing its plans to establish large sites, it has incurred nugatory spending and increased risk. The site at Scampton is yet to open, and Wethersfield and the Bibby Stockholm are accommodating far fewer people than originally planned. It appears inevitable that, collectively, these early sites will now cost more than the alternative of using hotels.

"The Home Office's plans to develop a coherent strategy for the type and quantity of accommodation it needs are welcome, but it will need to build in flexibility, because of the inherent difficulty of predicting the number of people who might choose to seek asylum, and the uncertainty created by the implementation of the Illegal Migration Act. It should also reflect on the lessons from its attempts to establish accommodation at large sites and work in a coordinated way with central and local government, particularly given the wider pressures on available housing."