Asylum accommodation: Dysfunctional culture at Home Office must be confronted, says Public Accounts Committee

A troubling culture at the Home Office allows key controls in its processes to be easily abandoned. In a report published today, the Public Accounts Committee (PAC) warns that, if the Home Office fails to address its dysfunctional culture of repeated mistakes and weak internal challenge, it risks repeating the failures seen in the poorly managed acquisition of former HMP Northeye for use as asylum accommodation.

Northeye was purchased by the Home Office with £15.4m of public money. This was more than double what its owners had paid for it a year previously, with the Home Office also told building repairs could cost over £20m. It also received clear warnings the site would require significant remediation work, including risks around asbestos, contaminated ground, and that it might not be possible to connect the site to utilities. The plan had been for it to provide 1,400 bed spaces for asylum seekers, but the Home Office has now decided Northeye is unsuitable for this purpose, cannot be used, and intends to dispose of it.

The report finds that it has often appeared the Home Office has prioritised appearing to address the issue of asylum accommodation, over value for money and effective implementation. The PAC warns that much of the Home Office's learning from its poor management of Northeye focuses on improving processes, rather than directly addressing a culture in which key controls could go by the wayside. It recommends Home Office set out how the profile of control and assurance will be raised across the department.

The PAC repeatedly heard from the Home Office that it was working at pace to reduce its reliance on costly hotel accommodation for asylum seekers. The report notes that this does not excuse it from its responsibility to safeguard taxpayers' money. Further, the Home Office knew about Northeye in May '22, with contracts exchanged in March '23, meaning there was not an unusual rush to purchase it. It did not even commission a proper valuation, so it did not know whether it was paying a fair market price for the property. The Home Office further argued that it had to be innovative in its approach to securing such sites. The report notes that buying land and buildings is not inherently innovative.

The Home Office has since accepted it did not strike the right balance between due diligence and operating at pace, and that it has identified “over 1,000” lessons from its acquisition of large asylum accommodation sites. The report notes that some of these 'lessons', one of which was to work to ensure that such acquisitions are in the “right places,” should have been evident at the time, raising concerns as to whether such an unacceptable waste of public money could happen again. It remains unclear to the PAC how Home Office plans to strengthen processes to avoid similar failings in future acquisitions.

The report further warns that Home Office efforts to reduce reliance on hotels in asylum accommodation could increase homelessness and drive up rental prices, placing unacceptable financial pressure on local authorities. It notes positive steps on joint working with local government, but warns that it remains to be seen whether the Home Office will be able to achieve planned savings in the cost of supporting asylum seekers without pushing costs to other parts of the system.

Sir Geoffrey Clifton-Brown MP, Chair of the Committee, said: “Northeye was one of a series of failed Home Office acquisitions for large asylum accommodation sites, totalling a cost to the public purse of almost a hundred million pounds of taxpayers' money. Treasury rules for safeguarding public money are there for a reason and should only be overridden in extreme circumstances. This case clearly demonstrates why those safeguards should normally be followed. The Home Office says it has learned the lessons from its disastrously managed acquisition of the Northeye site. These are lessons for which the taxpayer has paid a steep price.

“It is deeply frustrating that advice was offered to the Home Office, from expert property teams from other parts of Government, on the Northeye acquisition that the Home Office chose not to use. When officials are working under pressure the public must still have confidence that appropriate controls are being followed in Government, to secure the best outcomes for the people it is trying to help. The Northeye site should serve as an example to all Departments that ignoring warnings and abandoning controls for a quick outcome is fraught with risk. We hope the recommendations in our report help Government to avoid cases like this in the future.”

PAC report conclusions and recommendations

The Home Office rushed to spend public money in trying to reduce the cost of supporting asylum seekers, but has very little to show for its efforts.  Despite spending significant amounts of public money, it has not delivered the planned benefits. The Home Office spent £15.4 million to purchase the Northeye site, but it failed to deliver the promised 1,400 bed spaces. The site remains contaminated and in need of remediation, and the Home Office now plans to transfer it to another government department or sell it. To date, the Home Office has spent £34 million on the Bibby Stockholm vessel, which housed far fewer asylum seekers than expected and will not be used past January 2025; £60 million on the Scampton site, which was abandoned before it could open; £2.9 million on the cancelled site in Linton-on-Ouse; and approximately £715 million on the Rwanda scheme, which we understand failed to remove anybody who was not going to go voluntarily, before it was scrapped.  The Home Office repeatedly emphasised that it was working at pace to reduce its reliance on costly hotel accommodation for asylum seekers, but this does not excuse it from its responsibility to safeguard taxpayers' money. As we have previously found, in some cases these programmes have cost more than the alternative of using hotels.

Recommendation 1. The Home Office should, as part of its Treasury Minute response, provide a detailed breakdown of: how much money it has spent on asylum programmes that have now been cancelled, including additional remediation costs; what benefits these programmes have delivered for asylum seekers and the taxpayer; how much alternative accommodation would have cost; and how much public money has been wasted. This breakdown should include all large asylum accommodation sites, the Rwanda partnership, and any other asylum accommodation initiatives that have not met their intended objectives. 

In its haste to purchase the Northeye site, the Home Office ignored opportunities to properly understand the risks and costs of developing it, leading to poor value for money for the taxpayer. The Home Office asserts it did a "fair amount" of due diligence before acquiring the Northeye site, but the NAO highlighted significant shortcomings. The Home Office rejected offers of expert property advice within government, ignored valid criticisms of contract terms that increased its costs, and failed to act on recommendations from the due diligence reports it had commissioned. Furthermore, the Home Office overlooked the value of fully engaging with local stakeholders, which could have provided critical insight into the site's condition. The decision to proceed was based on an incomplete Accounting Officer assessment, filled with uncertainties and overly optimistic assumptions. Despite this, the Home Office assured the Cabinet Office it could manage the risks and proceeded with the purchase - only now acknowledging that the risks were unacceptable and that it should in fact have done much more due diligence. Indeed, the Home Office did not even commission a proper 'red book' valuation, so it did not know whether it was paying a fair market price for the property. We have previously warned that working at pace does not absolve the Home Office of its responsibility to manage projects effectively and safeguard value for money. The Home Office has since accepted it did not strike the right balance between due diligence and operating at pace. However, even with assurances about lessons learnt, it remains unclear to us how the Home Office plans to strengthen its processes to avoid similar failing in future acquisitions.

Recommendation 2. The Home Office should, as part of its Treasury Minute response, set out what changes it has made to ensure future investment decisions are made on a comprehensive range of information, following a full and transparent consultation with a range of stakeholders, even where decisions need to be made at pace.

The Home Office failed to ensure it had sufficient capability to manage the commercial and property risks during its acquisition of the Northeye site. In 2023, the Home Office was acquiring several large asylum accommodation sites at the same time but lacked the in-house skills and capacity to effectively manage the commercial risks. Despite offers of support, including expert advice from the Ministry of Justice's property team, the Home Office chose not to use these options. It brought in contracted staff to manage the acquisition of the Northeye site, but did not have the skills to adequately oversee their work. This led it to agree to unusual contract terms that were almost impossible to meet, resulting the Home Office paying a £0.5 million penalty for delays in completing the purchase. We are concerned about the Home Office's lack of expertise in both undertaking commercial transactions and overseeing the work of contracted staff. With a shift towards using smaller asylum accommodation sites and the potential retendering of its Asylum Accommodation and Support Contracts, the Home Office must urgently strengthen its capabilities to effectively manage the risks of future projects. Without this, there is a significant risk to both value for money and the successful delivery of these initiatives.   

Recommendation 3. The Home Office should, as part of its Treasury Minute response, set out: how many dedicated commercial and property staff it now has working in its asylum accommodation team (and how many it had at the time it purchased the Northeye site); their level of seniority and experience and/or professional accreditation; and its further plans for strengthening its commercial capability.

We are concerned that the Home Office's culture allowed it to override too easily the controls and processes in place to protect taxpayers' money. The Home Office appears to have been operating in crisis mode for several years and now asserts that it is moving back to business-as-usual. It argues that its response to an "emergency" meant it had to make quick decisions, which led it to unreasonably abandon controls and weaken approval processes in acquiring the Northeye site and other large asylum accommodation sites, such as the Bibby Stockholm vessel. While the Permanent Secretary told us he was "proud" of how hard Home Office staff have worked to deliver these programmes, many of these programmes have ultimately failed. Home Office staff were no doubt working hard in challenging circumstances, yet the failures surrounding the Northeye acquisition suggest a troubling culture of repeating mistakes and a lack of internal challenge. Moreover, it has often appeared that the Home Office has prioritised appearing to address the issue of asylum accommodation over value for money and the effective implementation of projects. In 2023-24, the Government Internal Audit Agency found "weaknesses" in the Home Office's control framework and provided a 'limited' opinion on the overall adequacy of its governance, risk management and controls, as it has done for the last six years. We are particularly concerned that the Accounting Officer did not seek a Ministerial Direction in the case of Northeye, given how marginal the decision was and how little was understood about the risks involved. Much of the Home Office's learning from this poorly managed acquisition focuses on improving processes, but does not directly address the culture in the Home Office that allowed key controls to be abandoned so easily. Without confronting these cultural issues, the Home Office risks repeating past failures in future projects.

Recommendation 4. The Home Office should, as part of its Treasury Minute response, set out how it will raise the profile of control and assurance across the department.

We are not convinced that the Home Office has learned the lessons it identified from its costly acquisitions of large sites. The Home Office claims it has identified "over 1,000" lessons from its acquisition of large asylum accommodation sites. It argues that it had to be innovative in its approach to securing these sites and is proud of this innovation and its ability to learn lessons. However, buying land and buildings is not inherently innovative, and innovation should not be an excuse for failing to make well-informed decisions or managing risks. We are deeply concerned that the large sites programme has come at a high cost to the taxpayer and has gone so drastically wrong. The Infrastructure and Projects Authority criticised the Home Office for not applying lessons from the failed Linton-on-Ouse site to its other acquisitions at the time. Given this, we remain to be convinced that the Home Office will prevent such mistakes from happening again. This is particularly important as the Home Office now intends to transfer or sell the Northeye site as it is no longer suitable for asylum accommodation. If no other government department requires the site, it is imperative that the Home Office resells the property and it should ensure that it properly applies the lessons learnt and achieves the best possible sale price in line with the market.

Recommendation 5. The Home Office should, alongside its Treasury Minute response, write to the Committee detailing the lessons it has identified from its acquisition of all large asylum accommodation sites and explain how it has changed its structures and processes to prevent it from making the same mistakes again.  As part of this, it should explain how it is applying these lessons to its approach to smaller asylum accommodation sites.

We are concerned that the Home Office's work to resolve the asylum backlog may increase costs elsewhere, such as for Local Authorities or the Ministry of Justice. The Home Office has a track record of poor engagement with local authorities, and some of the written evidence submitted to us illustrates the missed opportunities to better understand the impact of its work on local areas. Furthermore, as we have previously stressed, the Home Office's efforts to reduce its reliance on hotels could continue to have unintended consequences, such as increasing homelessness and placing unacceptable financial pressure on local councils by driving up rental prices. We are pleased to hear the Home Office has increased the number of liaison officers and is introducing a joint working group with local authorities to improve engagement. The Home Office told us it also plans to work with the Ministry of Justice to fund additional capacity within the courts and tribunal system to manage the growing number of asylum appeals. It also asserts that the newly introduced Border Security Command will, in time, help reduce the number of people illegally arriving in the UK to claim asylum. While these steps are positive, the Home Office will need to act quickly to achieve the planned savings in the cost of supporting asylum seekers. It remains to be seen whether the Home Office will be able to do this without pushing costs to other areas of the asylum system.

Recommendation 6. The Home Office should, alongside its Treasury Minute response, write to the Committee setting out how it intends to reduce spending on asylum support, including: by when it will have processed the current backlog of asylum claims; how it will work with HMCTS to ensure Immigration Tribunals have enough capacity to hear appeals in a timely way; by when it expects to stop using hotels to accommodate asylum seekers; how it will ensure asylum seekers are fairly dispersed and integrated in Local Authorities; and by when it expects the Border Security Command to reduce arrivals from small boats.