Billions wasted on asylum hotels due to ‘failed, chaotic’ Home Office system

The Home Office has squandered billions on asylum seeker accommodation due to a lack of long-term strategy and a “chaotic” response to the issue, according to a report by MPs.

The Home Affairs Committee said estimated costs of 10-year accommodation contracts for 2019-2029 have blown out from £4.5bn to £15.3bn, after a “dramatic increase” in demand.

It also said two accommodation providers owe millions to the Home Office in excess profits, but the department had not yet recouped the money and only began the process to do so last year.

“This money should be supporting the delivery of public services, not sitting in the bank accounts of private businesses,” it said.

The Government has promised to end the housing of asylum seekers in hotels by 2029 amid mounting pressure over rising costs and a backlash in local communities.

The report pointed out that break clauses in 2026 and the end of the contracts in 2029 offer the Home Office “an opportunity to draw a line under the current failed, chaotic and expensive system and move to a model that is more effective and offers value for money.””

But the report also warned a promise to appeal to popular opinion without a clear plan for alternative accommodation risks “under-delivery and consequently undermining public trust still further”.

Chair of the Home Affairs Committee, Dame Karen Bradley said: “The Home Office has presided over a failing asylum accommodation system that has cost taxpayers billions of pounds.

“The Home Office has not proved able to develop a long-term strategy for the delivery of asylum accommodation. It has instead focused on short-term, reactive responses.

“The Home Office must finally learn from its previous mistakes or it is doomed to repeat them.”

The report gave the example of the purchase of the £15.4m Northeye Estate in Bexhill, as potential asylum accommodation, which was ultimately deemed unsuitable.

It also referenced the cancelled plans for an asylum accommodation site at RAF Scampton after concluding that the site was not value for money. The Home Office lost £48.5m.

Asylum hotels became a focal point over the summer with multiple demonstrations particularly centred around the Bell Hotel in Epping, where an asylum seeker was charged and later jailed for sexual assault.

The MPs’ report added that protests at asylum sites have involved local residents with “genuine concerns”, as well as people travelling from other areas “to promote divisive agendas or instigate disorder”.

MPs pressed for the Home Office to prioritise closing hotels where there have been “significant community cohesion issues”, as well as hotels in remote areas that can place the most pressure on local services.

The report also detailed how the Government’s approach has led to an uneven distribution of asylum accommodation around the country, often concentrated in areas of high deprivation.

The committee called for a future accommodation system to be based on fairness rather than cost alone, improve communication with local communities and be flexible to meet unpredictable demands.

The report also raised how the department neglected its day-to-day management of the contracts, and had not sufficiently ordered financial penalties for providers who have poor performance.

This includes no fines for failures at hotels and the large accommodation sites at Napier Barracks and Wethersfield, despite hotels making up more than 75% of spending on asylum accommodation.

MPs said they had heard about “too many cases” where asylum accommodation was inadequate and safeguarding concerns about vulnerable people living there had not been addressed.

Reacting to the report, charity Freedom From Torture said for torture survivors, living in asylum accommodation makes rebuilding their lives “almost impossible”.

The charity’s head of advocacy, Sile Reynolds, said: “Everyday Freedom from Torture therapists see first-hand the devastating impact that hotels, military sites and shared bedrooms have on people who came to this country seeking safety.

“Living in fear, without privacy, stability, or access to proper healthcare, strips people of their dignity and undermines their recovery.

“The Government now has a crucial opportunity to once and for all transform our asylum accommodation system so that it is safe, dignified and based in our communities.”

A Home Office spokesperson said: “The Government is furious about the number of illegal migrants in this country and in hotels.

“That is why we will close every single asylum hotel – saving the taxpayer billions of pounds.

“We have already taken action – closing hotels, slashing asylum costs by nearly £1bn and exploring the use of military bases and disused properties.”