G4S and Serco are facing extensive losses as a result of the Home Office’s decision to extend its asylum seeker accommodation contracts until 2019, despite efforts to improve the agreements.
Under the contracts, which were signed in 2012, both firms provide accommodation, transport and other related services for asylum seekers across the UK.
The so-called ‘Compass’ agreements were due to end in August 2017 but had an optional two-year extension period, which the Government has decided to exercise.
Serco and G4S have experienced far higher costs than they originally intended from the contracts, as the number of asylum seekers coming into the UK has risen along with the cost of accommodation.
Serco had previously said that it expected losses arising from the extension of the contract to hit £112m by 2019. It plans to recalculate future losses in the coming weeks and it expects the figure to be slightly reduced, potentially by as much as £20m, although it said the programmes would “continue to be heavily loss-making”.
Julia Rogers, managing director of Serco’s immigration business, said: “Managing the Compass contract is challenging, particularly as the number of asylum seekers in our care has doubled since the contract started in 2012. However, we are absolutely committed to providing decent, safe and secure accommodation for all the people in our care and meeting our obligations under this contract.”
Meanwhile, G4S had previously warned that extending the contracts to 2019 could cost it a further £57m, on top of an estimated £45m loss which it expects to make on the contracts by next August. However, it said that having recalculated, it now expects a £31m loss by next August, and that the changes put in place had reduced future problems.
It said it continued to work “closely and co-operatively with the Home Office to improve service delivery and efficiency and to support a sustainable contract extension”.
The firm’s chief executive Ashley Almanza told The Daily Telegraph in March that were the contract before the firm now, it would not enter into it.
As well as costing the firms huge sums of money, the Government, Serco and G4S have come under attack for allegedly providing unsuitable homes for people.
Robert Goodwill, the Government’s Minister of State for Immigration, said this morning that there were “improvements that can be made” to the contracts, including increasing the amount of money which the Home Office pays for the provision of welfare officers and property management, which would result in better standards in accommodation.
He also committed to ensuring that fewer people were housed in hotels as a temporary solution when they first sought housing by increasing the amount of accommodation available.
He also introduced a new higher price band for any increases in the number of asylum seekers requiring accommodation, allowing more scope for housing people in different areas.
“The department will continue to monitor the providers closely to ensure that they comply with the requirements of the contract and work closely with non-Government Organisations and service users to respond to feedback and continue to improve the system,” he added.