NAO: Alternative asylum accommodation will cost more than hotels

The Home Office expects its large sites programme to cost £1.2 billion and believes the sites will now cost £46 million more than using hotels 

Asylum accommodation at four large sites is expected to cost £230 million by the end of March 2024, with 900 people living in them at end of January 2024 

The Home Office is resetting its large sites programme and developing a longer-term accommodation strategy 

Government’s plans for asylum accommodation will cost more than using hotels, and large sites are housing fewer people than planned, according to a new report by the National Audit Office (NAO). 

In its report – Investigation into asylum accommodation¹ – the NAO found that the Home Office expects to spend £1.2 billion on its large sites programme.  

By the end of March 2024, the Home Office expects to have spent at least £230 million developing four large sites – the Bibby Stockholm, the former RAF bases at Scampton and Wethersfield, and former student accommodation in Huddersfield. At the end of January 2024 they were housing approximately 900 people. 

Government has made progress in reducing the use of hotels accommodating asylum seekers^2, and by the end of January 2024 had stopped using 60 hotels. But, in rapidly progressing its plans to establish large sites, it has incurred losses and increased risk. The Home Office originally assessed that large sites would be around £94 million cheaper than hotels.³ Its latest estimates suggest they will cost £46 million more than using hotels, although the Home Office believes they will provide more appropriate and sustainable accommodation.⁴  

The Home Office’s assessments of value for money are affected by its assumptions of how much it would cost to set up sites. The Home Office originally estimated set up costs at the former RAF bases would be £5 million each, but they increased to £49 million for Wethersfield and £27 million for Scampton.  

So far, two of the four sites – Wethersfield and the Bibby Stockholm vessel - are accommodating people seeking asylum. These two sites were housing just under half the number of people the Home Office expected them to at the end of January.⁵ The Home Office is also considering reducing the maximum number of people it accommodates at the sites in Wethersfield and Scampton.  

The Infrastructure and Projects Authority has undertaken three reviews of the Home Office's work on asylum accommodation since November 2022. All are red-rated; meaning ‘successful delivery of the programme to time, cost and quality appears to be unachievable’. The Home Office has also recognised the challenges to delivery, rating its own assessments of progress as red, and has repeatedly revised accommodation targets downwards.  

Overly-ambitious accommodation timetables led to increased procurement risks, as the Home Office prioritised awarding contracts quickly, and modifying existing contracts over fully-competitive tenders. The Home Office used emergency planning regulations to enable it to start working on sites quickly and secured some large sites before communicating with the local stakeholders about its plans, to reduce the risk of local opposition affecting negotiations. In January 2024 the Home Office was still working with providers to develop specific measures assessing residents’ safety at large sites. 

The Home Office is resetting its Large Sites Accommodation Programme and developing a longer-term accommodation strategy. It is reducing the number of beds it intends to provide through such sites and proposing to identify smaller sites accommodating between 200-700 people. 

Uncertainties regarding the implementation of the Illegal Migration Act will make it more difficult for the Home Office to assess what asylum accommodation it needs.  

The changes that the Illegal Migration Act will introduce make it more difficult to assess how much and what type of accommodation the Home Office will need, as it does not know how effective the deterrent will be or how it will affect the amount of detained or non-detained accommodation it needs.  

Gareth Davies, the head of the NAO, said:  

“The Home Office has made progress in reducing the use of hotels for asylum accommodation. Yet the pace at which the Government pursued its plans led to increased risks, and it now expects large sites to cost more than using hotel accommodation.  

“Home Office continued this programme despite repeated external and internal assessments that it could not be delivered as planned. Its plan to reset the large sites programme makes sense, and the Home Office should reflect on lessons learned from establishing its large sites programme at speed and improve coordination with central and local government given wider housing pressures.” 

ENDS 

Notes for Editors 

1. This investigation was prepared in response to public and parliamentary concerns about the Home Office's plans to accommodate people seeking asylum. It sets out the facts about the demand for asylum accommodation and how this has changed over the last few years; the Home Office’s efforts to reduce hotel use; the costs and expected savings from large sites; the approach to delivering large sites and; future plans. 
2. In December 2022, the Prime Minister made a statement to Parliament in which he pledged that the Home Office would “abolish the backlog of initial asylum decisions” by the end of 2023. He also said that the use of hotels to house people seeking asylum must end, although he did not state a date by which government planned to achieve this. The Home Office’s original ambition had been to stop using hotels by December 2023. 
3. In October 2023 the Home Office announced that it would stop using 50 hotels (housing 3,600 people at the time of the announcement) by the end of January 2024. Between the announcement and the end of January, it stopped using 60 hotels. The Home Office intends to stop using a further 84 hotels by the end of April 2024. It has managed to move out of these hotels because it increased the amount of room-sharing in hotels, increased the number of asylum decisions it is making, slightly increased the amount of dispersal accommodation, and moved some people into its new large sites. 
4. This investigation does not seek to evaluate the efforts by the Home Office to reduce the number of people seeking asylum in the UK, or to conclude on the value for money of the Home Office's procurement and management of asylum accommodation. It also has not assessed the quality or suitability of the Home Office’s accommodation. 
5. The Home Office was accommodating nearly 900 people across two large sites. The Bibby Stockholm vessel docked at Portland Port was providing accommodation for 321 single adult males at the end of January 2024 and the Home Office had expected it to be accommodating 430. The former RAF base at Wethersfield, Essex was accommodating 576 single adult males and the Home Office had expected it to be accommodating 1,445. The Home Office expects to move people into the former RAF base in Scampton, Lincolnshire by April 2024 and former student accommodation in Huddersfield by May 2024.