Brief new report says Home Office got into bad habit of submitting budgets it knew would be insufficient
A notable brief new report published today by the Institute for Fiscal Studies (IFS) details the "deeply unsatisfactory" way in which the Home Office and the Treasury have budgeted for asylum costs in recent years.
Image credit: WikipediaYou can read the report online here.
The IFS is an independent economic research institute that specialises in research on UK taxation and public policy.
In its new report, the IFS explains how the Home Office set "unrealistically" low budgets for asylum, border, visa and passport operations between 2021–22 and 2023–24, spending a staggering £7.6 billion more than the £320 million budgeted.
The report states: "The crux is that between 2021–22 and 2023–24, the Home Office planned at the start of each year to spend an average of £110 million on asylum, border, visa and passport operations (the relevant spending category). But spending turned out much higher: an average of £2.6 billion per year. It was clear that the amounts being budgeted were insufficient – the Home Office acknowledged as much. But every year, the Home Office would submit unrealistically low Main Estimates, and the Treasury would top them up later in the year (at the 'Supplementary Estimates') from the Reserve (a contingency fund supposedly set aside for 'unforeseen, unaffordable and unavoidable' spending items)."
Last month, the new Chancellor, Rachel Reeves, said the previous Conservative government had left a £22 billion 'black hole' in government finances. An article by the Byline Times highlighted how spending on asylum was one of the biggest contributors to the budgetary black hole.
Today's IFS report notes that an increase in asylum costs since the Covid-19 pandemic is the major reason for the higher-than-planned spending by the Home Office in recent years. There has been an upward trend in both the number of people seeking asylum in the UK and the costs per asylum seeker, with hotel accommodation being a major contributor to higher costs.
"The key point is that asylum costs are much higher now than pre-pandemic and have been elevated for several years, and so higher spending is entirely foreseeable (if difficult to predict with precision) – but this has not been reflected in the Main Estimates presented by the Home Office each year," the report emphasises.
The IFS explains why the Home Office's budgeting was "clearly not a sensible way to plan public spending" and also appeared to be at odds with Treasury guidance.
The report states: "The Home Office has got into the bad habit of each year submitting Main Estimates to parliament that it knew would be insufficient, relying on a top-up from the Treasury Reserve later in the year. Despite repeated reprimands from the Home Affairs Committee, and the fact that this behaviour seemingly contravenes Treasury guidance, it has been the practice of the past few years. The plan was to repeat this again in 2024–25. When Rachel Reeves pointed to a £6.4 billion in-year spending pressure on the asylum system, she was in effect pre-recognising the top-up that the Home Office was banking on receiving later in the year. The problem is that this time around, with major spending pressures elsewhere, there does not seem to be enough left in the Reserve for such a top-up."
A Labour spokesperson told the Guardian that the previous Conservative government had knowingly overspent on departmental budgets, covered it up, called an election and ran away from the problem.
"Instead of reflecting the real costs of the asylum system in Home Office budgets, the previous Conservative government covered up the true extent of the crisis and its spending implications, leaving behind an unforgivable inheritance with nothing to show for it except record high small boat crossings in the first half of the year," the spokesperson was quoted as saying.