‘Woeful’ budgeting behind asylum overspends, says IFS

A think tank has blamed “woeful budgeting” at the Home Office for repeated overspending on asylum support.

Over the last three years, the department’s initial budgets for spending on asylum, border, visa and passport operations amounted to £320m.

But the Institute for Fiscal Studies (IFS) said it had ended up spending £7.9bn over the period, £7.6bn more than forecasted.

The IFS also warned the department had submitted figures it “knows to be insufficient” for this year.

Government departments submit estimated spending to Parliament up to four times a year, so that MPs can approve the use of public money in advance.

According to Treasury guidance, departments must ensure their estimates are “consistent with their best forecasts of requirements”, which the IFS report says “certainly does not appear to be the case” for the Home Office.

IFS research economist Max Warner said estimates should not be “unrealistically low” and fail to identify spending “that the government knows will occur but does not want to budget for”.

“There is a strong case that the current budgeting process is failing for asylum spending,” he said.

He added that the Home Office had got into a “bad habit of submitting initial budgets to parliament that it knows to be insufficient”, expecting the Treasury to top this up from reserves later in the financial year – as happened last year, when its asylum budget was topped up by more than £4bn.

He said: “When there is a one-off unexpected spike in costs or demand, spending more than was budgeted is entirely understandable.

“But when it is happening year after year, something is going wrong with the budgeting process.”

The department’s budgeting has also been repeatedly criticised by the Commons home affairs select committee.

Despite this, the IFS highlighted how the same pattern appeared to be playing out again this year, with the Home Office already saying its estimated asylum spending for the year would not be “sufficient”, despite a £1.5bn top-up.

Last month Chancellor Rachel Reeves put an estimated £6.4bn asylum overspend at the heart of a £22bn “black hole” in spending for this year which she said she had inherited from the Conservatives.

The IFS said it understood that the £6.4bn included the £1.5bn top-up already requested.

An additional £4bn was “almost inevitable” on top of that, it added, despite an estimated £800m saving from scrapping the previous government’s Rwanda deportation scheme.

Mr Warner warned that, while top-ups had previously been made from the Treasury’s reserves, the reserves available for this year seemed to have already been earmarked for elsewhere, and so might not be available this time round.

A Labour spokesperson accused the previous Tory government of having “covered up the true extent of the crisis” in the Home Office.

“They knowingly overspent on departmental budgets, covered it up, called an election and ran away from the problem, leaving a £22 billion black hole in the country’s finances for Labour to clean up,” they told BBC News.

The Home Office and the Conservatives have been contacted for comment.