Billions squandered on inadequate asylum hotels thanks to Home Office mismanagement, major report finds
Billions of pounds have been wasted on asylum hotel contracts due to Home Office mismanagement and incompetence, a major report has found.
Home Affairs Committee MPs have warned ministers and civil servants have become heavily reliant on the costly use of hotels for refugee accommodation, creating large contracts for providers with little responsibility or oversight.
The Home Office’s estimated cost of asylum accommodation contracts between 2019 and 2029 has more than tripled from £4.5bn to £15.3bn, MPs said in a new report published on Monday.
The report said two accommodation providers owe the government millions of pounds in excess profits, but the Home Office has not yet claimed the money back.
Dame Karen Bradley, Chair of the Home Affairs Committee, said “urgent action is needed to reduce the cost of asylum accommodation and address the concerns of local communities”.
Migrant hotels became a flashpoint for protests over the summer after an asylum seeker in Epping, Essex, sexually assaulted a 14-year-old girl. Epping council tried to close the hotel by taking its legal fight to the High Court.
Dame Karen added: “The Home Office presided over a failed refugee accommodation system that cost taxpayers billions of pounds.” He warned against ministers making “unfulfillable promises to appeal to public sentiment”, such as promising to end hotel use by 2029.
He accused the Home Office of failing to plan for the long term, saying: “Instead it focused on short-term, reactive responses.”
The Ministry of Internal Affairs housed approximately 103,000 people as of June 2025. Although the number of asylum seekers in hotels is down from a peak of 32,059 in June, the figure is still higher than the previous year.
Sixty per cent of asylum seekers living in hotels are in the south of England, and the value of 10-year accommodation contracts for this region has increased from £0.7bn to £7bn since 2019.
.jpeg)
Growing numbers of asylum seekers along with the pandemic have seen demand for migrant hotel accommodation rise rapidly from 2020 onwards. The Home Office negotiated contract changes with providers to require them to deliver hotels that were significantly more expensive than the multi-occupancy flats and houses (HMOs) they supplied.
The average cost for a person to spend a night in an asylum hotel is £144.98, while in dispersed accommodation such as HMOs the figure is £23.25. According to then home secretary Yvette Cooper, the hotel contracts were “hastily signed in the summer of 2022”; During this period, the government was trying to find places to accommodate poor refugees.
MPs concluded that hotel use had now become “a widespread and established part of the asylum accommodation system”.
.jpeg)
Current refugee accommodation and support contracts are provided by Serco, Clearsprings and Mears. Australian travel firm CTM, which operates the controversial Bibby Stockholm migrant barge, also has a newer hotel accommodation contract with the government worth £550 million, which was not reviewed by the committee.
MPs said the Home Office’s failure to control contracts as hotel demand grew was “chaotic and resulted in significant costs to taxpayers”.
“We find this incompetence unacceptable,” the Home Affairs Select Committee said. They added: “Key elements of oversight were neglected throughout these contracts.”
MPs said the Home Office had focused on “pursuing high-risk, poorly planned policy solutions” such as the Conservative Party’s failed Rwanda plan and had “overlooked the day-to-day work of effectively monitoring asylum accommodation contracts”. This led to civil servants failing to “perform basic due diligence”, particularly at large asylum sites, “allowing costs to escalate”.
Independent has previously revealed that Home Office officials responsible for asylum hotel contracts were unaware of who was actually providing crucial services at the hotel where an asylum seeker died.
The inquest into the death of Colombian immigrant Victor Hugo Pereira Vargas heard that senior Home Office officials responsible for asylum seeker accommodation and the person responsible for managing the relevant hotel contract did not know who was actually working at the hotel.
Shared freedom of information data Independent It also showed hundreds of complaints had been made to three Home Office accommodation providers Mears, ClearSprings Ready Homes and Serco.
The data shows that in 2024, 620 complaints from the asylum seekers they housed were forwarded to Serco, 592 complaints to ClearSprings and 264 complaints to Mears.
MPs also warned that children were still being incorrectly placed in adult accommodation due to faulty age assessments.
The select committee has warned against turning to large areas such as former military bases as alternative accommodation as it is more costly than hotels.
Refugee Council chief executive Enver Solomon said: “Everyone agrees that the Home Office’s reliance on hotels is a serious failure: they cost taxpayers billions of dollars, leave people unfairly in limbo and have become a lightning rod for division. As this report proves, hotels are particularly unsuitable for children and vulnerable people who need responsible protection.”
Sile Reynolds, of the charity Freedom from Torture, said the government should “act now to ease the pressure on hotels by making better quality and faster asylum decisions, including quickly granting status to people from countries where they are almost always recognized as refugees, such as Syria and Sudan”.
A Home Office spokesman said: “The Government is furious at the number of illegal immigrants in this country and in its hotels. That’s why we will close all asylum hotels, saving taxpayers billions of pounds.”
“We have already taken action to close hotels, cut asylum costs by nearly a billion pounds and investigate the use of military bases and disused property.”
