Firms 'place asylum seekers in sub-standard housing'
Private security firms G4S and Serco have placed asylum seekers in sub-standard properties, according to a report by the National Audit Office.
A report on contracts awarded by the Home Office also criticised the length of time taken to house asylum seekers.
Three providers - G4S, Serco and Clearel - signed contracts in March 2012 to find housing for destitute asylum seekers.
The move was intended to save around £20m a year over seven years.
But the NAO has found that in 2012-13, it achieved a saving of only £8m.
G4S and Serco were singled out for particular criticism, after struggling to get their contracts up and running because of "negotiating difficulties" with the existing housing suppliers.
The NAO noted that overall performances were now improving, but that G4S and Serco were "still failing to meet some of their key performance targets" relating to the condition of housing provided and the time taken to secure it.
In three of the six regions for which the firms are responsible, the transition to the new contracts took longer than planned - up to three months in some cases.
Ninety per cent of those requiring accommodation were able to remain in their existing place of residence.
But around 2,000 asylum seekers who had to move as a result of the new contracts received "mixed messages", the NAO said, and those messages were "not routinely translated".
The report reveals that both G4S and Serco took on housing stock without inspecting it, and then found that many of the properties they had taken on did not meet the required quality standards.
The housing stock is the subject of a continuing commercial dispute between G4S and the Home Office, in which G4S claims the cost of bringing the housing up to the required standard is prohibitive.
By contrast, the Home Office argues that providers were aware that they would be taking on the risks associated with property standards when they submitted their bids.
Amyas Morse, head of the National Audit Office, warned that as things stand "it will be difficult for the Home Office, providers and local authorities to develop the mature relationships needed to achieve the envisaged savings and an effective service".
James Thorburn, managing director of Serco's home affairs division, said the company had worked "extremely hard to raise standards".
He conceded that the handover from previous contracts was "challenging", but said Serco had "concentrated on minimising the disruption" and remained committed to further improvement.
A Home Office spokesperson said the UK had a "proud history of granting asylum to those who need it" and welcomed the report's recognition of contractors' recent improvement.
The National Audit Office report also raised concerns that some asylum applicants may be occupying houses to which they are not entitled.
In order to receive accommodation and support, asylum seekers must be assessed as destitute.
But the NAO said its fieldwork had revealed that in some cases "it was clear that the occupants may have a level of income above that expected".
Housing officers who observe "signs of wealth" in the course of regular inspections have a duty to report it, and the Home Office will also seek to recover overpayments.