The Home Office has extended the contracts of G4S and Serco for managing asylum seeker accommodation. The contracts have been extended until 2019, and both private security contractors now face the prospect of significant losses.
The contracts were signed by both companies in 2012 to provide transportation, accommodation and other associated services for people seeking asylum in the UK. However, the two firms have endured sizable losses as the number of asylum seekers has increased exponentially. This, in turn, has increased the cost of accommodation.
The contracts were valid until August 2017 with an option to extend them until 2019. The UK Government has used that option.
Serco had stated earlier that it expected its losses to reach a massive £112 million by 2019 due to the extension, though it has now said that the losses may be lower, somewhere in the region of £20 million. However, the private security firm reiterated that the contract was a loss-making one.
Serco Managing Director of Immigration Business Julia Rogers stated that the contract was challenging considering that the number of asylum seekers has increased twofold since the contract period started in 2012. However, Rogers emphasised that Serco was committed to ensuring that asylum seekers were provided with hygienic and safe accommodation, and the company would fulfil the terms of the contract.
G4S had stated previously that the contract extension would cost the company another £57 million over and above the £45 million loss it is expected to incur by August 2017. G4S has also changed the figure of the expected losses. It now puts the losses at £31 million, claiming that the changes in the contract will help to reduce problems in the future.
G4S said that it was working closely with the Home Office to ensure that it improves its efficiency and delivery while making sure that the contract period is sustainable.