Simple changes to asylum policy could save £7 million a year

Giving people more time could reduce the risk of homelessness and destitution, but also result in a wide range of financial savings.
- Bert Provan
refugees 747 x 560
Red Cross

New research carried out by the British Red Cross and LSE's Centre for the Analysis of Social Exclusion (CASE) has estimated that extending the support provided to new refugees in the UK could benefit the economy by £7 million pounds each year, outweighing the costs of doing so by up to three times. The total estimated savings are equivalent to paying for the starting salaries of one of the following: 315 new nurses, 290 new police constables, 287 new teachers or 250 new midwives.

In the UK, a person seeking asylum is entitled to £37.75 each week and access to asylum support accommodation. However, after being granted refugee status, people have only four weeks before they are evicted from asylum accommodation and all asylum benefit payments are stopped. Before the end of this four-week period, newly recognised refugees must:

  • open a bank account
  • find and start a job and receive their first wages, or apply for and receive mainstream benefits
  • vacate asylum accommodation
  • find somewhere new to live and move in.

But according to new calculations from LSE, extending the support available to newly recognised refugees from four to eight weeks could save the UK economy millions of pounds each year by easing the pressure on Local Authorities, the NHS and charities – who are currently picking up the costs of destitution and homelessness among new refugees.

According to the analysis, Local Authorities would benefit most under the proposed changes, saving more than £2 million each year as a direct result of giving new refugees longer to find permanent housing and therefore reducing the use of more costly Local Authority temporary accommodation.

The NHS and mental health services could also be set to save up to £1 million each year by reducing the need for NHS interventions, particularly in response to complex mental health needs, which are five times more likely among refugees than the general population. 

The research also estimates that preventing rough sleeping – which at a conservative estimate affects between five and seven per cent of new refugees - could benefit the public purse by up to £3.2 million each year.

The British Red Cross, who commissioned the research, is now calling on the government to fix the loop-hole in the asylum system by extending the move-on period by four weeks to at least 56 days, mirroring the period provided to prevent homelessness under the Homelessness Reduction Act 2017.

Currently over 5,000 people a year would benefit from this simple change.

Last year the charity, which is the UK’s largest provider of support to refugees and people seeking asylum, supported over 16,500 people to access essentials such as food, clothing and sanitary items. Almost 20% of people given this support had refugee status, and therefore may have benefited from an extension to the support available to them.

Dr Bert Provan, lead researcher at LSE, said: “For someone who has been granted protection in the UK, the moment should be one of joy and relief. But for too many refugees this momentary relief is immediately followed by panic.

“Successfully moving from asylum accommodation and subsidy payments can be difficult, highly stressful, and time consuming. This research not only suggests that giving people more time could reduce the risk of homelessness and destitution, but also result in a wide range of financial savings to the public purse.”

Naomi Phillips, Director of Policy and Advocacy at British Red Cross, said: “The design of our current asylum system rips away the safety net of support from people who have fled conflict and persecution, at the moment they need it most to get back on their own feet and start rebuilding their shattered lives. These are people the Government recognises as refugees with a right to stay in the UK, and yet they are left to rely on charity and hard-pressed public services just to feed themselves and have a roof over their heads.

“This isn’t about overhauling the whole system but creating one small and simple change to extend that period of support from four to eight weeks, which would not only prevent refugees from falling into unnecessary destitution, but which would almost certainly offer significant cost-savings to some of our most stretched services and communities.”

The new research echoes calls made by British Red Cross in 2018 in their report evidencing the incompatibility between the Home Office policy of stopping support to new refugees after only 28 days and Universal Credit which has an inbuilt delay of 35 days before the first payment, leaving newly recognised refugees at further risk of destitution, exploitation and homelessness.

Zikee, a 22-year-old refugee from Namibia who ended up homeless after being granted refugee status says: “The biggest problem I faced when I received my refugee status was having to move out of my Home Office accommodation within 28 days. My asylum support also stopped so I had to move out of my home without a single penny. When I was eventually able to apply for universal credit, they told me that it would take four weeks or more.

“I always thought that when I received my refugee status everything would get better; I’d finally feel safe. But I ended up worse off than I’d been before. I became really depressed. I had nothing. I didn’t have a place of my own to wash or sleep, or any money to buy food and take care of myself. I ended up with no choice but to present as homeless and live in a shelter with people I didn’t know for several weeks. But I’m one of the lucky ones, some of my friends have ended up in homeless shelters for months for the exact same reason.”

“This experience completely shattered my confidence and sense of identity. The government must rethink their policy so that refugees like me can live in dignity.”

Download the British Red Cross policy report here.

 LSE technical report available here.