A commission report, Another country, says the asylum system is under severe strain with a backlog of around 100,000 claims waiting to be assessed. London continues to house over 85% of asylum seekers and refugees.
Between December 1999 and March 2000, councils had to meet a shortfall of£10m. Between April and December 1999 the shortfall was£19m, 92% of which came from London councils.
The new national funding framework for dispersal does not cover healthcare and education costs arising from dispersal, and standard spending assessment increases may not 'reflect the full cost of providing services to this high needs client group'.
Other obstacles to dispersal include central government's slowness in processing applications, a concentration of services in the capital and 'emotive and sensational media reporting' which raises tensions in the community.
Local Government Association social affairs head John Ransford said: 'We're delighted it finds what we've been saying all the way through - that councils are underfunded for this. We will continue to argue with the Home Office that it should fully fund these arrangements. We have made progress over the past year - they're funding more than they did, but it's still insufficient to meet requirements.'
Another country is available from Audit Commission Publications, tel: 0800 502 030.
Only 12% of social service departments have a refugee strategy in place
Legal advice and interpretation services are in short supply outside London
Some schools and GPs are reluctant to accept asylum seekers, especially if they impose new demands on stretched services
There is low staff awareness of asylum seekers' rights and entitlements outside the capital
Insufficient accommodation has been secured for dispersal.