The Home Office is piloting different ways to provide asylum accommodation ahead of break clauses for major contracts coming up next year.
Home Office minister Dame Angela Eagle told a committee of MPs she has “clocked” the break in the contracts as officials look at ways to evolve away from the current approach.
It comes as findings from the National Audit Office revealed the cost of asylum accommodation is expected to be more than three times higher than previously estimated at £15.3 billion over 10 years.
Hotel accommodation accounted for 76% of the annual cost of contracts – £1.3 billion of an estimated £1.7 billion in 2024-25.
Pilots include working with the Ministry of Housing Communities and Local Government for a joined-up approach to temporary housing and local authorities on providing accommodation, the Commons’ Home Affairs Committee heard.
Asked about the break clause, Dame Angela said: “We are looking closely to see via the pilots what we might be able to do given there are opportunities with the break clause which represent for us to evolve away from the system we’re in at the moment to something different.
“I think that’s all I can say at the moment, but I’ve clocked the break clauses.”
Pressed on whether they have capacity to come up with other options before the break clauses come in, she added: “The idea of the work that’s going on at the moment, including, and crucially, the pilots that we’re going to be doing, are precisely to give those kinds of choices as the break clauses approach.”
Dame Angela said told MPs she does not personally like the current model of prime contractors who then use subcontractors, and she did not think it is “something I would have signed off on”.
She added: “My instinct personally, I would prefer to see something that’s a bit more collaborative locally and available locally than have a top down, constant, you know, all encompassing contract with a private company.
“I think that there are different, better ways of trying to achieve this kind of service than the ones that we’ve inherited.”
The minister was also pressed on what the Home Office was doing to get money back from two contractors, Clearsprings and Mears, who had told the committee they had profit shares of £32 million and £13.8 million waiting to be taken back by the department.
But Dame Angela said: “We’re doing our own independent checks, and I would expect that people would expect us to have that degree of forensic approach to it, so that we get the right amount paid back, rather than the amount that they’re telling us they’re keeping.”
Elsewhere, Home Office second permanent secretary Simon Ridley told MPs the department has been able to reduce the cost of the asylum system over the last year “quite considerably”, including bringing the cost per person per night, down.
He said there is a saving of around £500 million estimated for this financial year.
