Corporate report

Government response to the Independent Commission on Aid Impact’s review of UK aid funding for refugees in the UK, March 2023

Published 6 July 2023

Recommendation 1

The government should consider introducing a cap on the proportion of the aid budget that can be spent on in-donor refugee costs (as Sweden has proposed to do for 2023-24) or, alternatively, introduce a floor to FCDO’s aid spending, to avoid damage to the UK’s aid objectives and reputation.

Response: reject

The Official Development Assistance (ODA) cost of support for refugees and asylum seekers in the UK has increased very significantly following the establishment of schemes offering refuge to people from Ukraine and Afghanistan fleeing conflict and oppression and reflecting wider migration pressures. Recognising the pressure these unforeseen costs place on the ODA budget, and the implications this would have for the UK’s wider aid objectives, the Government provided additional ODA resources of £1 billion in 2022-23 and £1.5 billion in 2023-24 at the 2022 Autumn Statement. This will result in ODA spending exceeding 0.5% of gross national income (GNI) and restrict the impact in-donor costs would otherwise have had.

The Government will continue to strike an appropriate balance between fiscal responsibility and its development objectives when managing these pressures. In highly constrained fiscal circumstances reflecting the impact of the Covid-19 pandemic and Russia’s invasion of Ukraine, the Government has helped meet much of these exceptional costs with additional resources, but difficult decisions have still been required to prioritise within ODA budgets. The Government remains committed to spending 0.7% of GNI as ODA when the fiscal circumstances allow, as set out to Parliament in July 2021.

Recommendation 2

The UK should revisit its methodology for reporting in-donor refugee costs, as Iceland did, with the aim of producing a more conservative approach to calculating and reporting costs.

Response: reject

All UK ODA spend is reported in line with the OECD Development Assistance Committee’s (DAC’s) rules on ODA. In 2021 the DAC reviewed and published the UK methodology for estimating in-donor refugee costs (PDF, 389 KB). Since the introduction of schemes such as the Afghanistan Citizen Resettlement Scheme and Ukraine Visa Schemes, all departments reporting in-donor refugee costs have developed their methodologies to incorporate new costs in line with the ODA rules. Details of the methodologies used by spending departments will be published in a report prior to the publication of Statistics on International Development: Final UK aid spend 2022 in autumn 2023. This report will demonstrate that the methodology is fit for purpose while highlighting areas for potential development.

We are in contact with Iceland to understand what lessons from their review might be applicable to the UK’s approach, particularly around making conservative cost estimates, in line with the DAC guidance.

Recommendation 3

The Home Office should strengthen its strategic and commercial management of the asylum accommodation and support contracts, both individually and as a group, to drive greater value for money.

Response: accept

These are known areas for improvement and the improvements are underway. There are three key themes to these improvements: capacity and capability, value for money, and performance management (KPIs).

1. Capacity and capability

The Home Office has been recruiting into its commercial team for some time and continues to do so. Offers have been made and accepted and the team will be up to full complement soon. In the meantime, the team is supported by contractor surge support. This team is trained, with CIPS qualifications and is managing BAU and conducting transformation activities.

The transformation work covers the following areas: stakeholder management, data management, collaborative working, strategic documentation, upskilling and resources. We are actively working to strengthen these areas and have results to evidence:

• better feedback from operational team and other service areas
• creation of obligations matrices and contract management plans; and
• focus on strategic supplier relationship management

All relevant staff are attending contract management training with Cabinet Office.

2. Value for money

As recommended by the ICAI, the Home Office has created trackers and ‘should cost’ models for dispersal accommodation. These are broken down by supplier and already signpost areas for possible efficiencies and track the price we pay against the underlying cost base. This allows mature, objective, and fact-based conversations about value for money with the suppliers. The recent volume cap negotiations are a good example of this, where ‘should cost’ models were created and later signed off by the NAO.

Following the negotiation work increasing the overall volume cap for asylum seekers in dispersal accommodation from 70,000 to 100,000, our focus is on putting service users into dispersal accommodation and thus providing better value for money to the Home Office.

For hotels, we have also broken down the costs into the underlying elements driving the cost base. This is different across all suppliers. We always request discounts from the rack rate, and we are currently making significant savings on this key area for the Home Office.

3. Performance Management (KPIs)

KPIs are continuously reviewed and assessed as per ICAI’s recommendations. Evidence of this includes the below:

• amendments made to the AASC contracts at negotiation of volume caps. These specifically address measures that were proving too hard to achieve and other measures that slowed down the provision of accommodation at the expense of superficial and cosmetic issues with potential accommodation
• significant amendments have been made to AIRE and Migrant Help contract KPIs. These changes have been made to tighten up the indicators in some places, reduce the burden where this is appropriate and ensure that the requirements of integrated contracts are consistent. This contract was singled out by ICAI as requiring revision of its KPIs
• finally, we have produced a contract integration matrix to ensure that all KPIs and performance reporting mechanisms align across the suite of contracts

As per the recommendations, reviewing the KPI regime is now included as a regular obligation in the obligations matrices that have been created as part of the capability and capacity workstream.

Recommendation 4

The Home Office should consider resourcing activities by community-led organisations and charities as sub-contractors in the asylum accommodation and support contracts for dedicated activities to support newly arrived asylum seekers and refugees.

Response: accept

Community-led organisations and charities make a highly valued contribution in supporting asylum seekers. These organisations have introduced asylum seekers to a range of activities such as sports activities, tickets to local events, English language help and translation services. As referenced in ICAI’s report, one of the Home Office’s largest partners, Migrant Help, is a charitable organisation that helps thousands of asylum seekers and service users on a 24/7 basis. The Home Office also provides grant funding to voluntary sector organisations, including an Asylum Seeker Therapeutic Support Grant to Barnardo’s.

Accommodation providers routinely engage with local stakeholders to establish Multi-Agency Forums (meetings created to discuss issues arising in contingency accommodation in a particular setting) and link into existing Voluntary Community Sector (VCS) groups and faith sectors to offer additional nuanced support to service users, whilst considering local VCS infrastructure.

Additionally, through the Refugee Transitions Outcomes Fund (RTOF), the Government is piloting holistic and place-based approaches to addressing the challenges and barriers that newly granted refugees face. The RTOF aims to support innovative approaches, with a focus on achieving employment, housing and wider integration outcomes. It will encourage new partnerships and evaluate activities to better understand what works for refugees. Lessons learned from these pilots will inform future support available to refugees.

Recommendation 5

The government should ensure that ODA-funded in-donor refugee support is more informed by humanitarian standards, and in particular that gender equality and safeguarding principles are integral to all support services for refugees and asylum seekers.

Response: partially accept

The UK is committed to ensuring that all UK ODA spending departments effectively safeguard against sexual exploitation, abuse and harassment wherever we work across the world. The Home Office has safeguarding requirements in place for its partners as well as safe and confidential reporting mechanisms, and will carefully consider the review’s findings to identify potential areas for further improvement.

Recommendation 6

The Home Office should strengthen its learning and be more deliberate, urgent and transparent in how it addresses findings and recommendations from scrutiny reports.

Response: partially accept

The Home Office takes all scrutiny reports and constructive evaluation extremely seriously. All information from these sources forms an integral part of our continuous improvement process.

Once recommendations are recorded, they are allocated to the relevant Departmental business unit. That business unit is then supported by other colleagues from other relevant policy areas, as well as data, finance, legal, and operational colleagues to ensure cross departmental expertise and support is received in responding fully in a timely manner.

Responses to recommendations made by the Independent Chief Inspector of Borders and Immigration are published at the same time as the Chief Inspector’s report is laid in Parliament. Responses to recommendations made by the Public Accounts Committee are tracked, until closure, through Treasury Minutes which are published routinely on gov.uk.

The Home Office takes a structured approach to addressing recommendations from external reports assessing Departmental performance. The Department documents the content of reports to ensure these are accurately recorded and allocated to appropriate teams for response. This includes reports from sources the Home Office has a statutory duty to respond to and those drafted by authoritative NGOs and other institutions.

In relation to the use of hotels and our response to the Independent Chief Inspector in December 2020, this has been clearly impacted by the continued illegal crossings of the channel by migrants in small boats. Over 28,500 made the journey in 2021 and over 45,750 in 2022.

The Government has a statutory responsibility to accommodate asylum seekers who would otherwise be destitute, and in some situations has had to use hotels as emergency bridging accommodation. However, this is not sustainable.

That is why the Home Office has announced that alternative accommodation sites, such as surplus military sites, will accommodate asylum seekers who enter the UK illegally on small boats, to reduce expensive hotel use and drive down costs.

Bridging hotels were established at pace in July 2021 for Afghan refugees who were evacuated from Afghanistan under Operation Pitting, and who were eligible for resettlement in the UK as part of the Afghan Citizen’s Resettlement Scheme (ACRS) or the Afghan Relocations and Assistance Policy (ARAP). These accommodation solutions were always intended as a short -term solution to bridge the gap between arriving in the UK and moving into settled accommodation. We have been working as fast as possible to support Afghan families into homes of their own, so that they can settle into their local communities, feel safe and independent, pursue education, and rebuild their lives in the UK.