Asylum crisis: calls to end asylum outsourcing as contracting firm has huge increase on profits to £34m

A private company contracted to provide accommodation for asylum seekers made record profits and more than doubled their margin last year.

Clearsprings Ready Homes recorded profits of more than £34 million in the year to 31 January 2022, a massive increase from the previous year. The company attributed this huge jump in profits to the increased number of asylum applicants, particularly those staying in hotels.

As one of the main contractors for asylum accommodation, a number of facilities operated by Clearsprings have been at the centre of controversies, including Napier barracks and Penally camp.

This comes as more than 150 local councillors from various political parties across the country have written a letter calling for an end to the outsourcing of asylum services.

Profits up almost 600% in a year

One of the main contractors chosen by the Home Office to provide accommodation and support for asylum seekers arriving in the UK recorded bumper profits last year, while the highest paid director of its parent company saw his remuneration rise to more than £670,000.

Clearsprings Ready Homes was set up in 2012 by Graham King, who remains the primary shareholder. The vast majority of its business since then has come from government contracts related to the asylum system, the management company’s director’s report states.

Its current contracts cover the South of England and Wales, meaning it administers Napier barracks - which was found to be in an “extremely poor state” following a visit by MPs last year - and previously ran the Penally camp, which was shut down in March 2021 after inspectors found that it was “rundown and unsuitable”.

The firm’s pre-tax profits rose by 580% in the year to January 2022, to £34,589,745 up from £5,086,588 the previous year. Its pre-tax margin on this work - the rate of profit - more than doubled, from 3.1% to 6.9%.

During this period, directors’ remuneration at Clearsprings Ready Homes increased by more than 15%, with a total of £232,583 paid out to a single director, including pension contributions.

At the parent company, Clearsprings Management, the highest paid director received £674,191, up from £479,933 the previous year - an increase of more than 40%. The vast majority of turnover and profit within the group comes from Clearsprings Ready Homes.

The company has attributed this significant rise in profits to the increased number of people travelling to the UK in order to claim asylum. Many of them make the perilous journey across the Channel in small boats.

In the most recent annual report published on Companies House, the directors note that “the number of arrivals [of asylum applicants] per year is expected to continue at a high level for the foreseeable future”.

The directors took £25 million out of Clearsprings Management in 2022 through a share purchase, after paying up a dividend of almost £28 million from Clearsprings Ready Homes to the parent company, accounts filing show.

In 2019, the Home Office awarded Clearsprings Ready Homes two contracts worth a combined total of £996 million, to provide asylum accommodation and support services for the South of England and Wales.

The contracts are set to run until 2029. These contracts followed on from two in 2012, to provide roughly the same services over a seven-year period, worth a combined total of £242 million. Parliamentary records suggest the group has been involved with the provision of similar services since 2000.

The managing director of Clearsprings group is James Courtenay Vyvyan-Robinson, a former Army major who was awarded the MBE in 1988.

James’ cousin is Peter Dirom Courtenay Vyvyan-Robinson who donated £2,000 to the Conservative Party in 2019. Their uncle, Richard Vyvyan-Robinson, who died in 2020, worked for North Cornwall Conservatives, according to his Facebook page.

According to BBC News, there are currently 395 hotels being used to house asylum seekers, with the vast majority of those in England.

Other than Clearsprings, there are two main companies contracted to provide asylum support with contracts that run for ten years from 2019.

Serco and Mears Group run around 190 hotels between them, according to the BBC.

Both firms have cited growth in the asylum support part of their business in the their most recent accounts, while another firm which the Home Office has used to source hotel accommodation, Calder Conferences, reported an increase in its pre-tax profits from £2.1 million to £6.3 million in 2022

Councillors call for an end to outsourcing

Over 150 local councillors from across the UK and from various political parties are calling on the government to stop outsourcing asylum accommodation to for-profit companies, and instead ensure that local authorities can provide good quality accommodation for people seeking sanctuary.

Outsourcing firms like Clearsprings, as well as Mitie, Serco and Mears Group, as well as firms which they in-turn sub-contract aspects of provision out to make up a complex system which often leaves people seeking sanctuary in substandard accommodation. Councillors say this leaves vulnerable people with nowhere to turn for support and sees them moved from place to place without notice. Instead, the councillors – who include the Labour Party, the Green Party, the Liberal Democrats and several independents – are calling on central government to increase local authority budgets to ensure that communities have the resources to welcome asylum-seekers.

Councillor Doctor Hosnieh Djafari-Marbini of the Migrant Champions Network, said: “The fact is that communities up and down the country want to stand in solidarity with people seeking sanctuary, and provide them a warm welcome. And it’s clear that councillors from across the country are equally committed to making sure that people arriving here have the support they need.

“But decisions taken by central government too often make that impossible. We hope that the government will listen to the voices of these councillors, and equip local communities to provide a warm welcome, instead of pursuing an agenda of hostility and division, and lining the pockets of private companies.”

Clearsprings Ready Homes and the Home Office were approached for comment on this article.