The outsourcing firm Serco was awarded new contracts to house vulnerable asylum seekers despite having been fined nearly £7m for previous failings, the Guardian can reveal.
Responsibility for housing people seeking asylum in the UK was taken away from local authorities in 2012 and given to the companies Serco, G4S and Clearsprings under deals with the Home Office known as Compass contracts.
Despite concerns by leading charities that outsourcing the service had resulted in “squalid, unsafe, slum housing conditions”, in January the Home Office awarded Serco, Clearsprings and the company Mears new contracts to provide housing for asylum seekers for 10 years from September.
Figures released following freedom of information requests and a parliamentary question show that £6.8m worth of “service credits” were imposed on Serco between April 2013 and December 2018. The figures do not include the month of March 2016.
Service credits are sums deducted from a company’s monthly invoice when it fails to meet key performance indicators included in its contract, such as property standards or how quickly issues are resolved.
Serco was fined a total of £2.8m for its contracts to provide asylum seeker housing in Scotland and Northern Ireland over that period, and just over £4m for its contract in north-west England.
Serco’s penalties were at their highest in 2013/14 (£3.9m) and 2016/17 (£1.16m). Between April to December 2018, after the new contracts were put out to tender, it was fined £850,000. In January the firm was awarded two contracts to provide asylum seeker housing: – one in the north-west and one in the Midlands and the east of England, from September.
The figures also show G4S was fined just over £2m for breaches of contract – £1.5m for its contract in the Midlands and east of England and £500,000 for its contract in the north-east and Yorkshire and the Humber, both of which end in August. Most of these fines (£1.7m) were incurred in 2013/14.
Clearsprings, which manages asylum accommodation in Wales and south-west England and London and the south-eaast, was not fined, despite also being criticised over standards of accommodation.
The Home Office initially refused to release data on the fines it had imposed, claiming the information was commercially sensitive, but it was forced to do so following a ruling by the Information Commissioner’s Office.
In October 2017 the Guardian heard testimony from asylum seekers and frontline workers that accommodation was infested with vermin, insecure, damp and dirty. One asylum seeker in Greater Manchester said a sink pedestal had crashed though her ceiling, while another in Merseyside shared images of her bedroom ceiling after it collapsed for the second time in six months.
Stuart McDonald, an SNP MP whose parliamentary question prompted the Home Office to release some of the data, said: “These disclosures – which the Home Office sought to block – raise all sorts of questions about the contracts for asylum accommodation.
“How could Serco incur millions of pounds of fines over the duration of the contract, only then to be handed even bigger and more expensive contracts? Were these failings properly taken into account in the tendering process?”
Sabir Zazai, the chief executive of the Scottish Refugee Council, which filed the freedom of information requests, urged the National Audit Office to examine whether the “service credit” regime was helping to improve standards.
“The reality of this ‘service credit’ system is that the Home Office withholds payments from providers for inadequate performance but then they just shift the money away from the service to somewhere else in the department or back to the Treasury’s coffers,” he said.
“This means that no money goes to help the person in the inadequate housing itself nor to the third sector and public services that are forced to step into the gap.”
Jenni Halliday, the director of Serco’s Compass contracts, said: “Following a very difficult service transition six years ago at the start of the Compass contract, and significant operational and delivery challenges through to 2015, Serco’s performance has improved significantly.”
She said service credits were “a natural part of undertaking a demanding and rigorous contract” and that Serco had “developed a strong reputation for service delivery”.
Gordon Brockington, the director of G4S’s Compass contracts, said: “Where issues have arisen the defects have been resolved in accordance with our contractual obligations, and since 2013 less than 20 of the 5,000 properties we manage have been subject to service credits for missed maintenance deadlines. Even where a deadline is missed we still take steps to resolve the issue.”
A Home Office spokesperson said: “We demand the highest standards from asylum accommodation providers and monitor them closely to ensure this is maintained. Where asylum accommodation falls short of the required standards we will take action against providers, including financial deductions for poor performance.”
