LONDON (Reuters) - Britain extended by two years a contract with G4S (CO:G4S) and Serco to provide asylum-seekers with accommodation and said it would provide extra funds to improve standards and widen the areas in which asylum-seekers are housed.
The budget boost follows criticism of the so-called Compass contracts over the standards of property and the time taken to acquire housing for asylum-seekers.
In January, asylum seekers in the northern English town of Middlesbrough said they were suffering abuse because they had been housed in properties run by a G4S sub-contractor that almost all had red front doors, making them easy targets.
The interior ministry subsequently carried out what it called an urgent audit of housing for asylum seekers in the northeast.
"There has been considerable interest in the accommodation and support that is provided to asylum-seekers," Immigration minister Robert Goodwill said in a statement on Thursday.
"Therefore I have taken this opportunity to make changes and additional investment to address the concerns that have been raised and improve the services that are provided."
He did not specify how much extra money would be made available but said it would allow accommodation providers to increase their property portfolios if required and widen the areas in which they operate.
"This will reduce the need to continually increase the number of asylum seekers accommodated in certain communities," Goodwill said, adding that his department would closely monitor the performance of service providers.
Both G4S and Serco said in statements that the contracts would continue to be loss-making, with Serco adding that part of the challenge was that the number of asylum seekers in its care had doubled since the Compass contracts started in 2012.
G4S guided that the changes to the contract announced on Thursday would not make a difference to an existing onerous contract provision it had made, while Serco estimated its future liabilities would be reduced by about 20 million pounds.
Shares in Serco traded up 2.3 percent to 14.6 pence at 1335 GMT (2.35 p.m. BST), while G4S was down 0.2 percent at 223.7 pence.