Home Office squandered billions on asylum hotels, MPs say

A report by a committee of MPs has concluded that the Home Office has squandered billions of pounds of taxpayer funds on asylum accommodation. The Home Affairs Committee stated that flawed contracts and incompetent delivery left the department unable to cope with a surge in demand, forcing it to rely on hotels as go-to solutions rather than temporary stop-gaps.

Key Findings and Costs

The expected costs for the Home Office's asylum accommodation contracts, running from 2019 to 2029, have more than tripled, soaring from an anticipated £4.5 billion to over £15 billion. The committee noted that insufficient action has been taken to recover excess income from providers to recoup excess profits. According to the survey, three billion operators currently owe millions in excess revenues that the Home Office has failed to reclaim.

The current system, negotiated by the previous government with private companies in 2019 and set to expire in 2029, allows for the use of convenience accommodation—primarily hotels—when demand outstrips supply, but stipulates this should be short-term. The report found that this reliance on hotels is prohibitive, unpopular with local groups, and unsuitable for asylum seekers.

The committee highlighted that the Conservative Party's contracts for accommodation providers were flawed, and inadequate oversight had resulted in mishaps that went "unnoticed and unaddressed." It also criticised the department for mishandling the day-to-day administration of the contracts and failing to properly issue financial penalties for poor provider performance. No fines were paid for hotel and major accommodation sites, despite poor results, and excess revenues from providers are still to be recovered. The committee insisted that this money should be used on public facilities, not kept in private companies' bank accounts.

Government and Home Office Response

A Home Office spokesperson responded by stating the government was furious about the number of illegal migrants being housed in hotels, and promised to stop using asylum hotels by 2029. The government is currently housing just over 103,000 asylum seekers, with over 32,000, or around a third, accommodated in 210 hotels.

The spokesperson claimed: "We've already taken action – closing hotels, slashing asylum costs by nearly £1 billion, and investigating the use of military bases and disused buildings."

The use of hotels has increased due to external factors, including the pandemic and the dramatic rise in small boat arrivals, which forced the Home Office to accommodate a growing number of people for longer stretches of time. The MPs also factored in the previous Conservative government's decision to delay asylum decisions while pursuing the initiative to deport migrants to Rwanda.

Committee's Analysis and Recommendations

While acknowledging the challenging environment, the report argued that the Home Office's "tumultuous reaction revealed that it had not been up to the challenge." Committee chair Dame Karen Bradley told BBC Radio 4's Today programme that the result was "more people than there should be," which meant the costs had "absolutely rocketed."

Dame Karen attributed the failures to "failures of leadership at a senior level" which left the Home Office "incapable of grasping the facts." She added that the department "neglected the day-to-day administration of these jobs" and focused on "short-term, reactive responses," noting that the necessary skills to handle the assignments "were simply not present in the Home Office when they were drawn up."

Housing Secretary Steve Reed accused the previous administration of "pouring taxpayer money down the drain."

The government is now looking at housing asylum seekers on disused military bases, such as MDP Wethersfield and Napier Barracks, which are considered the most cost-effective option available. Dame Karen welcomed the promise to move away from hotels but cautioned against repeating past failures, such as moving people into unsuitable accommodation too quickly.

• Political Context: The administration of the asylum system is a major issue for the government. Ministers have a deadline to end hotel use by the next general election, likely 2029, but want to demonstrate progress sooner. Labour ministers are especially concerned about hotels causing dissent in communities. The criticism of the Home Office follows a number of recent controversies, including a spying scandal and issues around the 'one in one out' deportation policy.