Home Office incompetence costs billions on asylum hotels

Holly Bancroft, The Independent

Billions of pounds have been squandered on asylum hotel contracts thanks to Home Office mismanagement and incompetence, a major report has found. Ministers and civil servants have become heavily reliant on the costly use of hotels for asylum accommodation, creating huge contracts for providers with little accountability or oversight, MPs from the Home Affairs Committee have warned. In a damning new report published on Monday, MPs said that the projected cost of the Home Office's asylum accommodation contracts between 2019-2029 has more than tripled, from £4.5bn to £15.3bn.

Millions of pounds in excess profits are owed to the government by two accommodation providers, but the Home Office have yet to reclaim this money, the report found. Chair of the Home Affairs Committee, Dame Karen Bradley, said "urgent action is needed to lower the cost of asylum accommodation and address the concerns of local communities". Migrant hotels became flashpoints of protest over the summer after an asylum seeker in Epping, Essex, sexually assaulted a 14-year-old girl. Epping council sought to close down the hotel, taking their legal fight to the High Court. Dame Karen added: "The Home Office has presided over a failing asylum accommodation system that has cost taxpayers billions of pounds." She warned against ministers making "undeliverable promises to appeal to popular sentiment", such as pledging to end hotel use by 2029.

She accused the Home Office of being unable to plan long-term, saying: "It has instead focused on short-term, reactive responses." The Home Office was housing around 103,000 people as of June 2025. While the number of asylum seekers in hotels has gone down compared to the peak, with 32,059 people in this accommodation in June, this is still up on the previous year. Sixty per cent of asylum seekers living in hotels are in the South of England, with the value of the 10-year accommodation contract for this region soaring from £0.7bn to £7bn since 2019. A growing asylum backlog, coupled with the pandemic, saw demand for migrant hotel accommodation soar from 2020. The Home Office negotiated contract changes with providers to require them to deliver hotels, which were significantly more expensive than the flats and houses of multiple occupancy (HMOs) that providers had been sourcing.

The average cost of a person staying a night at an asylum hotel is £144.98 compared to £23.25 in dispersal accommodation, such as HMOs. The hotel contracts were "signed in a rush in the summer of 2022", according to then-home secretary Yvette Cooper, as the government scrambled to find places to house destitute asylum seekers. Use of hotels has now become a "widespread and embedded part of the asylum accommodation system", MPs concluded. The current asylum accommodation and support contracts are delivered by Serco, Clearsprings and Mears. The Australian travel firm CTM, which ran the controversial Bibby Stockholm migrant barge, also have a more recent hotel accommodation contract with the government worth £550m, which was not examined by the committee.

MPs said that the Home Office's failure to get a grip on the contracts as hotel demand increased was "chaotic and led to significant costs to the taxpayer". "We find this incompetence unacceptable," the Home Affairs Select Committee said. They added: "Basic elements of oversight have been neglected over the course of these contracts." MPs said that the Home Office had focused on "pursuing high-risk, poorly planned policy solutions", such as the Tories' failed Rwanda scheme, and "lost sight of the day-to-day work of effectively monitoring the asylum accommodation contracts". This "allowed costs to spiral", with civil servants failing "to undertake basic due diligence", particularly with large asylum sites.

The Independent has previously revealed how Home Office officials in charge of asylum hotel contracts were unaware who was actually delivering crucial services at a hotel where an asylum seeker died. An inquest into the death of Colombian migrant Victor Hugo Pereira Vargas heard that senior Home Office officials in charge of asylum accommodation, and the person in charge of managing the relevant hotel contract, did not know who was actually staffing the hotel. Freedom of information data shared with The Independent also showed that hundreds of complaints have been made to the three Home Office accommodation providers, Mears, ClearSprings Ready Homes and Serco.

Data shows that 620 complaints were escalated to Serco from asylum seekers housed by them in 2024, 592 complaints to ClearSprings and 264 to Mears. MPs also warned that children were still being wrongly placed in adult accommodation due to faulty age assessments. The select committee cautioned against turning to large sites, such as former military bases, as alternative accommodation, as this is more costly than hotels.

Enver Solomon, CEO at Refugee Council, said: "Everyone agrees that the Home Office's reliance on hotels is a serious failure: they cost the taxpayer billions, unfairly trap people 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 safeguarding." Sile Reynolds, at the charity Freedom from Torture, said the government must "act now to relieve pressure on hotels by making better quality and faster asylum decisions, including swiftly granting status to people from countries where they are almost always recognised as refugees, like Syria and Sudan". 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 a billion pounds and exploring the use of military bases and disused properties."