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Private Shareholders Have Banked £120m From Companies Providing Government’s Asylum Seeker Accommodation

(Alamy)

8 min read

Private companies contracted to run Government-funded accommodation for asylum seekers in the UK have collectively paid £121m in dividends to shareholders since securing the most recent contracts in 2019, according to research by PoliticsHome.

Mears, Serco and Clearsprings, the three firms that have been awarded contracts to run the vast majority of the UK’s asylum seeker accommodation, also posted a collective profit of well over £800m in that time. 

Since 2019, Clearsprings Ready Homes Ltd has posted profits of £42.7m and paid £37.9m in dividends, according to Companies House filings. Clearsprings housing stock is mostly used for asylum seeker accommodation, but they also provide private rented accommodation as well as non-convention rentals, such as homes for ex-convicts. 

Mears, a social housing provider, has recorded net profits of £89,800,000 from a combination of conventional rentals and asylum seeker accommodation. The company won the contract to provide asylum seeker accommodation in the North East and Yorkshire, Scotland and Northern Ireland in 2019 and has paid £26.27m in dividends to its shareholders in that time. 

While Serco has posted profits of £729.6m since 2019, the firm runs a wide array of other services meaning profit from housing asylum seekers only accounts for a fraction of this income. It also paid £56.8m in shareholder dividends.

Serco's Justice and Immigration sector, which includes prison services and secure immigration detention as well as asylum seeker accommodation,, had the highest percentage rise in revenue of any of 'core sectors' listed in its latest annual report (£843m to £1212m, or a 44 per cent rise). Serco has previously said that it stood to make at least £150m annual revenue specifically from its provision of asylum seeker accommodation.

Both Serco and Mears are publicly traded companies. The duo saw a major jump in the price of company shares when they were awarded the multi-billion pound contract in 2019. Clearsprings is privately owned.

Conditions in government-provided asylum seeker accommodation, the delivery of which is outsourced to private contractors, has faced scrutiny in recent years, as the number of people needing to be housed while asylum claims are processed has risen.

The number of asylum applications in the UK has risen sharply from a record low of 17,916 in 2010 to 74,751 applications last year.

In 2019, Mears, Serco and Clearsprings were all awarded a share of the £4bn national contract to house those who have made applications for asylum in the UK covering hotel and longer term accommodation and handle other support for asylum seekers that need to subsist on £47.39 a week without food or £9.58 a week with meals.

Many asylum seekers will spend long periods in this accommodation as there is a backlog of at least 166,300 people awaiting decisions on their asylum applications. 

Providers of government-contracted accommodation for asylum seekers have faced allegations of providing poor quality of the housing, in both hotels and longer-term settings. 

Representatives of a number of refugee charities told PoliticsHome it was “scandalous” and a “disgrace” that people stood to benefit financially despite the reports of substandard conditions. 

One Afghan refugee family living in accommodation provided by Mears told PoliticsHome they had experienced a vermin infestation in their property. They believed the infestation had resulted in members of the family developing a serious rash. Another family said a ceiling had collapsed in the property in which a mother and child were sharing one bed. They also said there was a rodent infestation in the property. 

Hannah* a refugee, shares a bed with her child in a one bedroom property provided by Mears. She told PoliticsHome there have been problems since they moved in including a mouse infestation. She said she has reported the problem, along with other issues of disrepair to Mears, but they have not been addressed over eight months. 

“I don’t even remember how many times I’ve complained about it… it feels like I’m banging my head against a wall,” she told PoliticsHome

She also alleged that a ceiling had collapsed in the property after she had reported an issue with a leak that also went unaddressed. “I was really scared,” she explained. Repairs were made following the ceiling/roof collapse. 

When Imran* and his family, who were forced to flee Afghanistan after the Taliban took over due to Imran’s work with Western forces, recently moved into their new Mears-provided accommodation, they said they were told there were no outstanding issues. But soon after, Imran, his wife and child started to develop rashes that they say their GP attributed to an insect infestation at the property. 

They say they reported the issue to Mears, but that the issue was not addressed for two months. They claim Mears' contractors failed to turn up to a scheduled house visit to look into the issue.

“It was very hard for my wife and for my son to sleep at night. We tried to contact our housing provider team, but they were also not very responsive to our queries,” he said. 

"We were scared. We saved our life from one situation and now we are trapped in another situation where the health impact could be really serious.”

Later, they say they were told that the provider was aware of the problem, as the previous tenant – also an asylum seeker, had also reported the issue. 

A spokesperson for Mears said: “Mears provides accommodation that is safe, habitable and fit for purpose, meeting all contractual requirements and regulatory standards. 

“Mears has supported over a hundred thousand people across the UK in asylum accommodation and feedback is generally positive about the way our staff work with service users and the quality of our provision. 

“Repairs and maintenance is carried out where required and service users can report any issues directly through our resident welfare managers, or to the independent ‘AIRE’ reporting service.  

“Mears financial performance is a matter of public record. Our margins on the provision of asylum accommodation are small and are subject to a cap in the contract.” 

Earlier this year the news site openDemocracy reported that the government was planning to legalise accommodation without Homes of Multiple Occupancy (HMO) licences for asylum seekers. HMO licences are a licence required for homes housing multiple people who are not related, and are used to ensure that the homes in question are fit for habitation and meets the minimum standards for housing in the UK.

OpenDemocracy also reported that the Home Office helpline for asylum seekers had received 11,800 calls, including 1,400 complaints relating to hotel accommodation.

Clearsprings, which government has contracted to run asylum seeker accommodation in Wales as well as the South of England and London has also received complaints relating to its properties. 

PoliticsHome has previously reported that a refugee family faced damp, mouldy conditions in asylum seeker accommodation provided by Clearsprings. At the time Clearsprings told PoliticsHome that while they can’t comment on individual cases they “treat any complaint of this nature very seriously and the health and safety of the people we accommodate is paramount to us”. Clearsprings declined to comment for this story.

Nazek Ramadan, a director of campaign group Migrant Voice, told PoliticsHome that they received regular reports of issues with government-provided asylum seeker accommodation from the people they support. 

"We have seen first-hand the mental and physical harm which the unsuitable, and disgusting, conditions a number of people seeking asylum are forced into,” Ramadan said. 

“That some firms involved are making millions of pounds worth of profit off the suffering of others is a disgrace. Yet again, profits are being put over protection. 

“This government knows that it could provide better, more humane, standards of living for those seeking safety. Yet instead, firms are receiving contracts worth billions.”

Tim Naor Hilton, chief executive of Refugee Action also condemned financial gain from property with allegedly poor conditions. 

“The amount of profit being made from the Government’s cruel, racist and dehumanising asylum system is scandalous,” he said. 

“People who have fled war and persecution are condemned to live in often decrepit homes, awful hotels, or prison barges while private firms trouser millions of pounds from the taxpayer.”

A spokesperson for Serco said: “Our teams are committed to supporting the asylum seekers accommodated by Serco with compassion, dignity and respect. Their safety and wellbeing is always our top priority. All the accommodation we provide is regularly inspected and complies with the terms of our contract with the Home Office and all appropriate housing standards. Where food is provided this meets appropriate nutritional standards as well as cultural, religious, health or other specific requirements.

“Serco is an international business with 55,000 people working in over 20 countries, and we earn a fair return for the services we deliver. Our reported financial results are for the whole international group and in 2022 three-quarters of Serco’s profits were from our operations outside the UK.”

A Home Office spokesperson said:  “The number of people arriving in the UK who require accommodation has reached record levels and has put our asylum system under incredible strain.  
“We have been clear that the use of hotels to house asylum seekers is unacceptable – there are currently more than 51,000 asylum seekers in hotels costing the UK taxpayer £6 million a day.

“The contracts with our providers were awarded following a fair and competitive tender in 2019.”

 

*names have been changed to protect the anonymity of interviewees at their request.

 

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