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Epoch Times
15-05-2025
- Business
- Epoch Times
Providers Made Large Profits from Asylum Hotels but Haven't Returned Excess, MPs Told
Asylum housing providers have made higher profits from hotel use than other accommodation types, but have yet to return excess earnings to the taxpayer, MPs have heard. Executives from Clearsprings Ready Homes, Serco, and Mears Group appeared before the The Home Office is responsible for Private companies such as Clearsprings Ready Homes, Serco, and Mears Group deliver these housing services. The UK's asylum system uses two types of housing: dispersed accommodation (DA), which is longer-term housing like shared flats managed by contractors, and contingency accommodation, such as hotels or temporary sites used when standard housing runs short. The financial burden of these arrangements has grown significantly. Related Stories 7/23/2024 9/6/2024 The total cost of the UK's asylum housing contracts is expected to Hotel Dependency Under Fire The committee focused heavily on the continued use of hotels, which now account for 76 percent of annual spending on asylum accommodation, despite housing just 35 percent of people in the system. Liberal Democrat MP Paul Kohler noted that when the migrant accommodation contracts were determined, the assumption would be most of it being dispersed accommodation. 'Vast amounts are now going to far more expensive contingent hotels, the costs are higher. Therefore 7 percent of that higher turnover is a huge bonus to you, isn't it, in comparison to what was assumed to be the case when the contracts were first established?' he said. Steve Lakey, managing director of Clearsprings, admitted that hotels are more profitable than other accommodation types, but insisted they were only ever intended as a temporary solution. 'There is a big push and lots of work to try and reduce the hotels and increase the dispersal accommodation,' he told the committee. This follows the Home Office's pledge Claudia Sturt of Serco and Jason Burt of Mears echoed the view that hotels were introduced under emergency conditions during the COVID-19 pandemic and should be phased out. Still, they admitted they remain a key part of the system today owing to ongoing pressures and lack of other available accommodation. The sign outside the Home Office in Westminster, London, on April 29, 2018. Yui Mok/PA Wire Providers Acknowledge Profit Margins Under the UK's asylum accommodation contracts, providers like Clearsprings, Mears, and Serco have a profit-sharing threshold. If their profits exceed the 5percent cap, the excess must be returned to the Home Office. Clearsprings confirmed that its profit margin had reached 6.9 percent and said £32 million was set aside to be returned, pending audit. Mears said it expects to return £13.8 million, also awaiting final clearance, while Serco said it has not yet triggered profit-sharing under its contract. Despite these acknowledgements, MPs criticised the lack of actual payments made to date. 'You haven't paid a pound back into the Home Office,' said Labour MP Shaun Davies. The providers pointed out that the mechanism for paying back is driven by the Home Office, which is still auditing their accounts. Committee members also questioned Clearsprings about the personal wealth of its founder, Graham King, who appeared on the Sunday Times Rich List after a 35 percent rise in his net worth. Lakey declined to comment but emphasised the company's intention to reinvest funds. Regional Disparities MPs also questioned the uneven geographic spread of asylum housing, particularly the concentration in London and the southeast. Lakey explained that the majority of arrivals come into the southeast, mainly through Kent and Croydon intake units, and around airports where they have the most hotel availability. Providers said they must follow Home Office dispersal plans, which limit how many asylum seekers can be housed per capita in each area. They praised European models in countries like Switzerland, Germany, and Austria, where local authorities handle housing and integration, suggesting that such devolved systems are more responsive and effective. According to the latest figures, the number of people accommodated under asylum housing schemes has more than doubled, from around 47,000 in December 2019 to approximately 110,000 in December 2024.
Yahoo
13-05-2025
- Business
- Yahoo
Asylum hotel companies vow to hand back some profits
Two companies that receive taxpayers' money to house asylum seekers in hotels have said they will hand back some of their profits to the Home Office. Under contracts signed by the previous Conservative government, Clearsprings, Mears and Serco must pay back any profits of more than 5%. A report released last week said the three companies had made combined profits of £383m since 2019, after the expected costs of housing asylum seekers tripled. Appearing before a parliamentary committee, Clearsprings and Mears said they would be paying money back. Serco said they had not made enough profit to do so. The cost of asylum accommodation has concerned ministers for a number of years and was an issue raised repeatedly by Reform UK during the recent local elections in England. Representatives of the three companies responsible for finding that accommodation made a rare appearance at the Home Affairs Select Committee. The director of health and safety compliance at Mears, Jason Burt, told MPs on the committee that the company expected to pay back £13.8m, "subject to Home Office audit". Clearsprings' managing director, Steve Lakey, said his firm had £32m "ready to go" but that they were "waiting for the Home Office" before it could be transferred. The Home Office auditing processing is understood to still be ongoing, with no indication of when it will be completed. Overall profits at the three companies involved are still expected to rise, due to an increase in the amount of hotels being used to house asylum seekers. When the taxpayer-funded contracts were signed in 2019, the vast majority of people were housed in accommodation within communities. Around a third are now housed in hotels, which come at a far greater expense to the public finances. The National Audit Office (NAO) said last week that three quarters of all the money spent on asylum accommodation currently goes on hotels. Labour and Conservative governments have both pledged to end the use of hotels to house asylum seekers. Serco, Mears and Clearsprings all said they supported a move away from hotel use, despite the positive impact it has had on their bottom lines. Decisions taken by Boris Johnson's government to stop processing many asylum claims are seen as a major driving force behind the initial increase in the use of hotels. Clearsprings' founder and director, Graham King, has previously donated to the Conservative Party, through other companies he has owned. The Sunday Times reported last weekend that King had recently become a billionaire thanks to soaring profits at the company. A senior Home Office source said the Labour government "inherited chaos right across the system". They said the Conservatives signed "disastrous contracts that were not properly scrutinised – wasting millions in taxpayer money". The source pointed to a recent government decision to block Clearsprings from using one provider, as evidence that ministers are willing "to take whatever action necessary to guarantee value for money for the taxpayer". When quizzed by MPs about the government's criticism of the contracts, the three companies defended the services they were providing. Mr Burt said he believed Mears was providing a "reasonable" service to the Home Office. He also told MPs that companies do not take into account the potential impact on local areas when suggesting asylum hotel locations to the Home Office. Burt said the government had an opportunity to raise any concerns, but that it was not the job of companies such as Mears to carry out those assessments. Asylum accommodation costs rises to £400m in NI, says watchdog Asylum seeker hotel contract to be scrapped due to failures
