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The news has been dominated this week with the revelation of a £22 billion ‘black hole’ in government finances that Labour has been left by the last Government.
The financial shortfall – which the Government has said was caused by the Conservatives spending a £9 billion emergency pool of funding for unforeseen costs by “more than three times over” – has led to the Chancellor announcing plans to cut back on government spending, most notably the winter fuel allowance for the elderly to cover only those receiving pension credits or other means-tested benefits.
The Office for Budget Responsibility (OBR) has also launched an unprecedented formal review into former Chancellor Jeremy Hunt’s spending plans after the discovery of what it called “one of the largest year-ahead overspends” ever outside of the pandemic.
One of the biggest contributors to the budgetary black hole is the last Government’s spending on its asylum system – particularly accommodation for those awaiting Home Office processing, which chewed up some £6.4 billion of that overspend, on top of the billions more already spent on the system.
In its investigations into the asylum system, Byline Times has repeatedly found glaring failures that have left asylum seekers stuck in limbo, and private companies making millions in public money.
How the Asylum System Works
When someone claims asylum in the UK – an individual who is distinct from migrants more generally as they have specifically left their previous country and are seeking protection, often from persecution – they can be provided with accommodation by the government.
Usually taking the form of a hotel room, they and their family are required to stay there while the Home Office determines whether they are eligible to remain in the UK as a refugee.
While awaiting that ruling, they are not allowed to work or claim benefits. They are given an £8.86 per person weekly stipend, rising to £49 if the accommodation they are in does not provide food.
At the end of last year, the asylum seeker case backlog reached some 128,786 people. That dropped slightly in the ensuing months and, as of March 2024, that waiting list stood at 88,400 awaiting an initial decision.
When Byline Times investigated one asylum seeker hotel in Manchester, residents reported waiting for months and, in one case, a year without their case ever being ruled on by the Home Office.
That wait often has a dire impact on the wellbeing of asylum seekers themselves, with this newspaper previously covering cases of suicides, serious mental health problems, physical threats from far-right protestors, leaking ceilings, overcrowded rooms, and more.
Even when some of these individuals receive refugee status, the speed at which they are evicted from Home Office accommodation and the lack of extra support has left many homeless.
Byline Times has previously reported that allowing asylum seekers the ability to work could boost the economy by £1.2 billion over five years.
Who is Profiting From Asylum Seekers?
The asylum system is so profitable because almost every stage of the migration process – from arrival, to the hotels themselves, to case management, and even deportation centres and managing hotel bookings – are handled by private companies the government has outsourced the work to.
The three main private firms managing the UK asylum system are Mears, Clearsprings, and Serco. As of last year, these companies had collectively paid £121 million in dividends to shareholders since securing their most recent contracts in 2019.
Of the three companies, Clearsprings was the subject of the most complaints filed to the Migrant Help hotline, a third-party charity contracted by the Home Office to handle complaints and offer advice to asylum seekers.
Unlike Mears and Serco, Clearsprings is privately owned by one Graham Ian King. Between 2019 and 2022, the firm posted profits of £42.7 million and paid £37.9 million in dividends to its owner, according to Companies House filings. King maintains a 94% stake in the firm, and it receives the equivalent of more of Britain’s foreign aid budget than Ghana.
In 2001, a company King was listed as a director of, Thorney Bay Park, made a £3,000 donation to the Conservative Party. In 2010, another company run by King, Pemican, made a further donation of £2,000 to the party.
Ahead of this year’s General Election, the Home Office refused to reveal the size of a profit cap in its contracts with Mears, Serco, and Clearsprings that was supposed to limit the amount of money the firms could make from the system.
The three companies often don’t even run the accommodation themselves – they simply manage the asylum seeker system, with people actually housed in homes provided by different private landlords or hotel firms.
Many of those homes are of dire quality, with three-quarters of local councils logging complaints about the conditions of asylum seeker accommodation in the private rented sector.
Among hotel chains, one of the biggest beneficiaries has been the Britannia Hotels group.
Voted Britain’s worst hotel chain for 11 years in a row by consumer group Which?, the chain has made so much money from the system that its octogenarian owner, Alex Langsam, has been labelled the ‘asylum king’.
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Byline Times previously found that the chain has made tens of millions of pounds and brought itself back from financial uncertainty after it became one of the Home Office’s main sources of accommodation for asylum seekers.
Between 2002 and 2003, and 2013 and 2014, the company was struggling financially, making just £23 million across the entire period – but, after first being reported to start housing asylum seekers for the Government in 2014, things took a turn. That year, the company’s profits shot up to £14.2 million – a 441% increase.
In 2021 to 2022, the company posted a record profit of £33.3 million – or £91,232 in profit a day. That rose by another 18% last year to hit £39.3 million.
Since coming to power, the Labour Government has announced a swathe of changes to the asylum system, including scrapping its predecessor’s controversial Rwanda scheme (which cost hundreds of millions of pounds, despite no deportation flights ever taking off) and the closing of the Bibby Stockholm barge. It has also announced plans to extend refugee status to re-include those who arrive in the UK illegally.
It remains to be seen what other changes, if any, to the costly accommodation system put in place by the last Government may come after the latest financial revelations.