UK made bad decisions in buying ex-prison to house asylum seekers, says report

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The UK Home Office under the Conservatives rushed the acquisition of a derelict former prison to detain asylum seekers, paying more than double what it cost the vendors, according to parliament’s spending watchdog.

The previous government’s plans for the Northeye site in Bexhill, East Sussex, were among the most contentious within a programme designed to reduce the cost of the asylum system and deter migrants from crossing into the UK.

The purchase of Northeye raised concerns because of the price of £15.4mn the Home Office paid a year after it had been acquired for £6.3mn, and the dilapidated state of the brownfield site, an RAF base built in the 1940s, which was converted into a prison in 1969.

The site was subsequently owned by the United Arab Emirates for “training” purposes but had been disused for the previous 13 years.

The National Audit Office report on the acquisition, published on Friday, said the department in its 2023 purchase of Northeye had dispensed with established procedures, failed to provide a full business case and underestimated the scale of asbestos pollution at the site.

“During the purchase, the Home Office rejected offers of expert advice from other parts of government, relying instead on contracted staff but without putting in place sufficient oversight,” the NAO said.

“There was limited reference to the potential scale of contamination or the need for further investigation in key decision-making documents, resulting in poor decisions,” it said. 

The Brockwell Group Bexhill, a property development company that acquired the site from the UAE for £6.3mn in August 2022, had scoped out the possibility of leasing it to the Home Office for £6mn a year via government contractors Clearsprings Ready Homes, according to the report.   

Instead, the Brockwell group turned a 143 per cent profit when they flipped the site to the Home Office in September 2023.

The Northeye acquisition fits the pattern, identified in an NAO report in March, of the previous government underestimating the cost of rehabilitating former military bases to house asylum seekers, paying £49mn for works at RAF Wethersfield and £29mn at RAF Scampton when original costs had been put at £5mn each.

A technical due diligence report carried out for the Home Office prior to purchase found that the cost of repairs to buildings at Northeye could exceed £20mn.

A separate geo-environmental review carried out for the government found the cost of replacing contaminated topsoil could be between £100,000 and £1mn, the NAO said.

The Home Office went ahead with the purchase despite these concerns and without having commissioned a formal valuation of the site, the NAO said.

Since winning the general election in July, the Labour government has scrapped Conservative plans to deport asylum seekers to Rwanda, and closed the Bibby Stockholm barge where several hundred migrants had been housed, which campaigners had likened to a prison hulk.

Rachel Reeves, chancellor, in July projected the cost of the asylum system would rise to £6.4bn this year from £4.7bn in 2023-24.

Labour is hoping to cut this by at least £800mn by ending the Rwanda plans, and speeding up the processing of claims to reduce the hotel costs.

The Home Office told the NAO that since the July election “changing government policy may result in the Northeye site being unsuitable for asylum accommodation”, and that the site could be sold instead.

The Home Office said the government had inherited an asylum system under “exceptional strain”.

“We are getting the asylum system moving again, increasing returns of people who have no right to be here, with over 9,000 people removed since July 2024,” it added.

“We will continue to restore order to the system so that it operates swiftly, firmly and fairly.”