Asylum housing costs criticised

The NAO says contracts signed by the Home Office are inflexible

Taxpayers are being hit with housing bills for asylum seekers which are £25m more than the real market rate, the government spending watchdog has said.

The National Audit Office says because contracts are so inflexible, landlords are often paid for unoccupied rooms.

It said the National Asylum Support Service must take into account regional differences when negotiating rates.

Immigration Minister Tony McNulty said contracts were being redrawn and costs would be cut by a third this year.

The average cost of housing each asylum seeker is £703 a month, with short term accommodation even more costly at £846.

In all, £439m was spent by the service to house asylum seekers in 2003/4.

That was out of a total Nass budget of £1.07bn and consultants hired to look at the Home Office organisation concluded there was considerable scope for savings.

Unresponsive?

Of 23 contracts with landlords, six were being paid the full amount for empty properties and 11 more were receiving 70% to 90% of the rent.

"Existing arrangements are not sufficiently responsive to changes in the number of asylum seekers," the NAO report said.

"Any declines in demand are unlikely to lead to much of a reduction in cost as some accommodation providers are paid whether their properties are occupied or empty."

NAO chief Sir John Bourn said: "Providing suitable accommodation for asylum seekers is one of the most complex and difficult tasks facing the government.

Shifting the risks?

"The Nass was stretched to the limit when the number of asylum seekers in accommodation reached over 67,000 in March 2003.

"Although the service managed to deal with this workload, its contracts did not always provide value for money."

Sir John suggested the "risks and responsibilities" be passed on to contractors.

Minister Mr McNulty said: "Since Nass was set up the asylum situation has changed very significantly.

'Savings of £37m'

"The number of applications has fallen sharply and is now 73% lower than the peak of October 2002.

"We have speeded up the system so that over 80% of initial decisions are now taken in two months, and the number of outstanding claims is at the lowest level for a decade and numbers receiving Nass support continue to fall.

"As a result of these achievements we are renegotiating contracts, saving £37m in 2004/05 and remain on track to cut asylum support costs by a third by the end of 2005."