18 February 2020

Simple changes to asylum policy could benefit UK economy by £7 million each year

  • New research by the British Red Cross and the London School of Economics and Political Science has found that closing a loophole in the UK’s asylum policy could benefit the public purse by millions of pounds each year
  • Current Home Office policy, which gives new refugees only four weeks to vacate asylum accommodation, find somewhere new to live, apply for and start a job and receive their first wages, is leaving thousands of refugees in extreme poverty and homelessness.
  • The British Red Cross, who commissioned the report, says extending the support available from four to eight weeks would save millions of pounds each year by easing pressure on public services such as the NHS and Local Authorities. 
A young woman looks sad and alone, and holds her head in her hand in dispair
New research carried out by the British Red Cross and London School of Economics and Political Science (LSE) 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 estimated savings are equivalent to paying for the starting salaries of one of the following: 330 new police constables, 285 new nurses, 283 new teachers or 233 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.”

A man lies on a dirty couch alone, sad with an old sleeping bag
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.”

-ENDS-

Read more and download the full report here. 

For more information please contact Freya Carr
  • Fcarr@redcross.org.uk 
  • +44 07793167035
  • +44 077103 91703 (out of hours) 
  • Spokespeople available and images to download here

Notes to Editors

In order to understand the wider economic and social impact of destitution among newly recognised refugees, the British Red Cross commissioned research by the Centre for the Analysis of Social Exclusion (CASE) at the London School of Economics and Political Science (LSE).

The LSE and British Red Cross report findings are based on a cost-benefit analysis. LSE first explored the risks and additional costs of maintaining the current 28 day move-on period, compared to the risks and costs of extending it to 56 days. Secondly, they explored the additional benefits of extending the move-on period to 56 days, compared to it remaining at 28 days. The difference between the two shows whether extending the period of support to newly recognised refugees from four to eight weeks is advisable, from a financial perspective. 

In this case, the benefits identified were the positive impacts that would result from an extension of the move-on period for refugees to 56 days. This includes:

  • The risks of homelessness and destitution associated with retaining the current 28-day period. Evidence is used to estimate likely levels of public expenditure on services like health, mental health, prevention and relief of homelessness (including the provision of more expensive Local Authority temporary accommodation), and other welfare services, as a result of homelessness and destitution prompted by the 28 day limit. Such expenditure is a direct cost to public services (at local and central government levels). 
  • The more positive opportunities associated with extending the period. These include specific direct benefits from additional tax revenue collectable when refugees get jobs more quickly. It also includes benefits associated with increased “wellbeing” or life satisfaction linked to avoiding destitution, homelessness or the stress of dealing with uncertain accommodation processes. Wellbeing has a well-evidenced and quantifiable value to society in areas such as better general health, better employment outcomes, and improved social relations including contribution to local community life.

The estimated costs associated with the extension of the move-on period to 56 days include:

  • An additional 4 weeks of the weekly Section 95 income grant (£37.75 per week) 
  • An additional 4 weeks of Section 95 accommodation.

For full details of the methods, background evidence and data sources, please see the full technical appendix at www.redcross.org.uk/refugee-move-on-period. 

How does the British Red Cross help people who are experiencing destitution? 

  • The British Red Cross is the UK’s largest provider of support to refugees and people seeking asylum and has destitution services in around 50 towns and cities across the country. These provide services ranging from food parcels, clothing and small amounts of emergency cash to help finding housing, individual casework and nappies and maternity packs for new mothers. 
  • Last year we supported over 16,500 destitute refugees and people seeking asylum to access essentials such as food, clothing and sanitary items. This included distributing almost 19,000 food parcels and over 1,000 nappies.
  • Almost 20% of people given this support had refugee status, and therefore may have benefited from an extension to the support available to them.
  • The top 5 nationalities of destitute refugees and asylum seekers seen by the British Red Cross in 2019 was as follows:

1. Iran (1,705)

2. Sudan (1,287)

3. Iraq (1,233)

4. Nigeria (1,195)

5. Eritrea (1,158)

  • In 2019 Glasgow saw the most destitute refugees and people seeking asylum (1,865), followed by London (1,655), Leicester (1,161), Birmingham (1,031) and Bedfordshire (793).
  • These figures reflect the number of people supported by British Red Cross destitution services and their dependants. The true number of destitute refugees and asylum seekers in Britain is likely to be even higher, but conclusive figures on this do not exist as they are not collected by the Home Office.

What is destitution?

The Red Cross defines an individual as destitute if they don’t eat sufficiently, have no fixed home, cannot afford essential items (such as clothes and toiletries) and/or are experiencing worsening health.

In the Immigration and Asylum Act 1999, the UK Government defines an asylum seeker as destitute if they do not have adequate accommodation or any means of obtaining it or cannot meet other essential living needs.

Why do refugees and people seeking asylum become destitute?

Through our destitution services across the UK, we know that living in poverty is a common reality for people who come to the UK seeking asylum. We know it is something that happens to men, women and children at like, at all stages of the asylum process.

The reasons for this are many. Whereas refugees in the UK have permission to work and claim mainstream benefits, people seeking asylum do not and rely on asylum support payments of approximately £37.75 a week.

The most common reasons for people seeking asylum becoming destitute are problems with asylum support payments, or support being stopped or suspended when an asylum claim is refused. Refused asylum seekers are not entitled to asylum support unless they can demonstrate exceptional circumstances, such as a health problem that prevents them from leaving the country.

New refugees also frequently become destitute upon being granted leave to remain in the UK, at which point 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 receive benefits
  • vacate asylum accommodation
  • find somewhere new to live and move in.


Our frontline experience and research has found that this process often takes much longer than four weeks. New refugees often therefore find themselves destitute, and in some cases homeless, as a result of being given permission to live in the UK.

For over 150 years, the British Red Cross has helped people in crisis, whoever and wherever they are. We are part of a global voluntary network, responding to conflicts, natural disasters and individual emergencies. We enable vulnerable people in the UK and abroad to prepare for and withstand emergencies in their own communities. And when the crisis is over, we help them recover and move on with their lives. www.redcross.org.uk 

Simple changes to asylum policy could benefit UK economy by 7 million each year