Finance watchdog says Salvation Army contract cost has more than doubled

According to the National Audit Office, a contract the charity has with the Home Office to help victims of modern slavery will be worth more than £90m, having been estimated to cost about £43.2m

A contract between the Salvation Army and the Home Office to help victims of modern slavery is set to be worth £90m, more than twice the amount originally forecast.

The figures are included in a National Audit Office report called Reducing Modern Slavery, published today, which says the Home Office "does not have effective oversight of the contract".

The spending watchdog also accuses the Home Office of having "used a series of assumptions to estimate the value of the contract that have turned out to be wrong".

In 2015, the Salvation Army was awarded a three-year contract, with the possibility of a two-year extension, to run a care contract for victims of modern slavery. It works with 12 subcontractors in England and Wales to deliver it.

Initial Home Office estimates for the five-year contract ranged from between £40m and £43.2m, says the report.

The Home Office, which jointly funds the contract with the Ministry of Justice, revised the figure up to £53.2m in 2016. "However, despite the revision, the contract is still overspending and the Home Office forecasts that it will cost about £90m," says the report.

Under the demand-led contract, the Salvation Army is reimbursed for services and any overspend falls to the Home Office.

"The overspend is largely due to the assumptions that the Home Office used to inform the contract budget," the report says. "For example, it assumed that on average clients would be supported for 79 days. Instead, the average length of support is increasing and is now more than three times the original estimate (251 days)."

The report says the Home Office adopted a "light-touch" approach to the contract and "operates on a trust basis with the Salvation Army and does not actively check the information on performance that it receives".

A Home Office spokeswoman said: "Since the NAO examined our work on modern slavery we have made significant strides in a number of areas it identifies in its report."

Anne Read, director of anti-trafficking and modern slavery for the Salvation Army, said: "Finances relating to this contract are completely transparent as the Salvation Army shares monthly detailed financial information with the Home Office on open-book accounting principles.

"In the absence of any official independent inspection regime, the Salvation Army has drawn on its existing auditing infrastructure and long-standing expertise and experience in delivering high-quality services to vulnerable people."

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