Billions ‘wasted’ on hotels for migrants: Bombshell report reveals ‘incompetent’ Home Office staff let private firms make ‘excessive profits’ from small boat crisis

The Home Office ‘wasted’ billions of pounds on asylum hotels, according to a damning report.

MPs criticized the department’s ‘incompetence’ in managing a ‘failing, chaotic and expensive’ system.

There was a ‘clear failure’ by the Home Office to ‘control’ contracts with private companies appointed to house asylum seekers, experts concluded.

As a result, firms were allowed to make ‘excessive profits’ from the Canal crisis.

In one of the most damning reports ever released into the dysfunctional ministry, MPs said the Home Office was ‘unable to rise to the challenge’ and demanded a series of major changes.

The House of Commons’ home affairs select committee said it was ‘inexplicable’ that the Home Office did not require accommodation providers to assess the impact on local areas before opening migrant hotels.

This had led to ‘some local services facing unsustainable pressures’, undermining community cohesion and leading to ‘the growth of misinformation and mistrust’.

Committee chair Dame Karen Bradley MP said: ‘The Home Office presided over a failed refugee accommodation system that cost taxpayers billions of pounds.

The department has come under fire for its handling of migrant hotels by MPs (Image: Protesters at the Bell Hotel in Epping in August 2025)

Committee chair Dame Karen Bradley MP said the Home Office had ‘presided over the failure of asylum accommodation’ (Image: Police outside the Bell Hotel in August 2025)

‘Its response to increased demand has been hasty and chaotic, and the department has neglected the day-to-day management of these contracts.

‘The government needs to gain control over the asylum accommodation system to reduce costs and hold providers accountable for poor performance.

‘Urgent action is needed to reduce asylum accommodation costs and address the concerns of local communities.’

He added: ‘There is now an opportunity to draw a line under the current failing, chaotic and expensive system, but the Home Office must finally learn from its previous mistakes or it is doomed to repeat them.’

In 2019, the Home Office signed 10-year contracts with three companies to provide accommodation to asylum seekers across the UK.

Serco holds contracts for the North West, Midlands and East of England, while Clearsprings operates in the South and Wales; and covers Mears, Yorkshire and the Humber, the North East, Scotland and Northern Ireland.

The contracts were initially focused on providing self-catering flats and houses, referred to as ‘dispersed accommodation’ by the Home Office, but have been expanded to include hotels with the increase in Channel crossings since the pandemic.

The companies also operate large-scale accommodation centers at former military sites in Wethersfield, Essex and Napier Barracks in Folkestone, Kent.

At the time it was signed, the contracts were estimated to cost taxpayers £4.5bn over ten years, but officials now estimate the final bill will be £15.3bn.

According to the latest figures, the Home Office is supporting 103,000 migrants at taxpayers’ expense, including more than 32,000 in hotels.

Immigration hotels cost taxpayers an average of £144.98 per person per night, compared to just £23.25 for dispersed accommodation.

A number of errors were identified in the report published today.

According to the latest figures, the Home Office is supporting 103,000 migrants, including just over 32,000 in hotels (Image: Protesters outside the Britannia Hotel in Bournemouth in September)

He stated that the Ministry of Internal Affairs had ‘repeatedly cut corners and wasted significant amounts of taxpayers’ money’, adding that this amounted to ‘billions in waste’.

There was ‘a series of failures by the Home Office in the design of the original contracts’ and later ‘a clear failure to grasp the contracts and respond to growing demand’.

“Failure to plan for unexpected developments or to control contracts as events unfolded was a chaotic situation and resulted in significant costs to taxpayers,” the report said.

‘We find this incompetence unacceptable.

‘Rather than acting as a short-term emergency measure, the use of hotels has become a widespread and established part of the refugee accommodation system, increasing the cost of refugee accommodation contracts by billions of pounds beyond the original estimate.

‘Senior leadership failures, changing priorities and political and operational pressure for rapid results meant the department was unable to grasp the situation and caused costs to soar.

‘The Home Office was undoubtedly operating in an extremely challenging environment, but its chaotic response showed that it was not up to the challenge.’

The report found that the contracts prepared by the ministry were unable to impose financial penalties on companies for ‘performance failures’ at immigrant hotels, Napier Barracks and Wethersfield.

“This is an inexplicable and unacceptable failure of responsibility,” the statement said.

The debacle was blamed on ‘failures of senior leadership’.

The Home Office’s most senior civil servant at the time the contracts were first signed was Sir Philip Rutnam, who resigned in February 2020, claiming constructive dismissal following clashes with the then home secretary, Dame Priti Patel. He later reached a settlement with the ministry for £340,000.

He was replaced as permanent secretary by Sir Matthew Rycoft, who oversaw the expansion of migrant hotels amid a boom in Channel crossings.

Immigrant hotels cost taxpayers an average of £144.98 per person per night (Image: Protesters near the Britannia International Hotel in Canary Wharf, London, in August 2025)

He left his job in March this year on a £455,000-a-year pay package.

As the number of arrivals on small boats soared, Sir Matthew walked away with a £20,000 performance-related bonus on top of his £200,000 annual salary, plus a £50,000 ‘exit payment’, of which £30,000 was tax-free, and a pension of £179,000 for the year.

Sajid Javid was the Tory home secretary when the deals were signed in January 2019, followed by Dame Priti, Suella Braverman and James Cleverly until Labour’s Yvette Cooper takes over after the general election in the summer of 2024.

But a former Home Office source told the Daily Mail: ‘The civil service did not give ministers access to the contracts on the grounds that they were commercially sensitive.

‘Politicians were not given the opportunity to challenge or change anything in these agreements and did not even know what was included in them.

‘These failures are entirely the responsibility of the officers.’

The committee called on the Government, which has pledged to close all migrant hotels by 2029, to make an “urgent assessment” of how the contracts could be improved when termination provisions are reached next year.

When the contracts expire in 2029, the Home Office needs to come up with a plan to ‘prevent the same mistakes from being repeated’.

A Serco spokesman said: ‘Serco wants to see the end of hotel use and agrees with both the Government and the select committee that this should be a priority.

‘We have workable solutions to end hotel use and we continue to work with the Home Office to deliver a long-term strategy that will serve taxpayers.’

Mears and Clearsprings did not respond to requests for comment.

A Home Office spokesman said: ‘The Government is outraged at the number of illegal immigrants in this country and in its hotels.

‘That’s why we will close all asylum hotels and save taxpayers billions of pounds.

‘We have already taken action; ‘We have closed hotels, cut asylum costs to almost a billion pounds and explored the use of military bases and disused property.’