The huge sums made by the three firms Serco, Clearsprings and Mears will reignite outrage at the burgeoning cost to the taxpayer of the government’s asylum policy. Recent disclosures showed that the Home Office will spend £2.2bn of overseas aid money over the next year on housing asylum seekers in hotels.
In 2019, the three companies were given contracts by the then Conservative government worth an expected £4.5bn to provide asylum accommodation across the UK over a 10-year period, in residential properties and hotels. But since these deals were signed the large increase in asylum seekers arriving in the country has seen the firms earn bumper profits.
Using Home Office financial forecasts and analysis of public declared profit margins on these contracts, The i Paper has calculated the pure profit from these deals could exceed £750m.
Home Affairs Select Committee member Paul Kohler MP highlighted King’s place on the Rich List, and said the scale of private profits was “deeply concerning”.
“Taxpayers’ money should be spent on providing safe, decent accommodation not in ensuring Clearsprings owner entered the Sunday Times Rich List. We need to reform the profit-sharing mechanism to cap excessive margins and ensure far stricter oversight. Every pound wasted on inflated profits is a pound not spent on fixing the system.”
The Cresta Court hotel in Altrincham (pictured) , leased by Serco, has been used to house asylum seekers. (Photo: Christopher Furlong/Getty Images)
Asylum accommodation has frequently been criticised by MPs and campaigners to be in a poor state. Last year, The i Paper revealed the scale of rodents, mould and cockroaches in asylum housing run by Mears, after the company racked up £1bn in payments from the Home Office.
As part of the contracts, the three companies are required to “share” profits over 5% with the Home Office, to prevent excessive financial gain for the providers but the details of the profit-sharing arrangements are opaque.
Sir Keir Starmer has revived the idea of off-shore processing of asylum seekers after ending the Conservative administration’s Rwanda deal, and is looking to move failed asylum seekers to “return hubs” abroad once claims fail.
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A Mears spokesperson said: “Mears provides asylum accommodation under contract to the Home Office and operates on a capped-profit, open-book basis. Any profits above the agreed thresholds are returned to the Home Office in line with the terms of the contract. Mears operating margin on the contract of 5%-6% is in line with or below typical margins on large public sector service contracts and represents value for money to our client.
Serco and Clearsprings declined to comment.
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