Billions of pounds in taxpayer money have been wasted by the Home Office on asylum seeker accommodation in hotels, according to a series of damning reports released on October 27, 2025. The Home Affairs Committee, a cross-party group of MPs, has sharply criticized the government’s management of the asylum system, describing it as “failed, chaotic and expensive,” with costs ballooning far beyond initial projections. The committee’s findings have sparked a renewed debate about the country’s approach to immigration and the stewardship of public funds.
The numbers are staggering: the expected cost of housing asylum seekers has tripled from £4.5 billion to £15.3 billion for contracts spanning 2019 to 2029, as reported by Sky News and corroborated by the BBC and Daily Mail. This dramatic escalation follows a surge in demand after the COVID-19 pandemic and a marked increase in arrivals by small boat across the Channel. At present, the Home Office supports around 103,000 migrants at public expense, with just over 32,000 being housed in 210 hotels across the United Kingdom.
The committee’s report is unflinching in its critique. It accuses the Home Office of “manifest failure” to manage its contracts with private companies tasked with providing asylum accommodation. These firms—Serco, Clearsprings, and Mears—were initially contracted to offer self-catering flats and houses, known as “dispersal accommodation.” However, as the number of asylum seekers soared, the government increasingly relied on hotels as a stopgap measure. What was intended as a temporary fix has now become an entrenched and costly part of the system.
Committee chair Dame Karen Bradley did not mince words. “The Home Office has presided over a failing asylum accommodation system that has cost taxpayers billions of pounds,” she told BBC Radio 4’s Today programme. “Its response to increasing demand has been rushed and chaotic, and the department has neglected the day-to-day management of these contracts.” She added, “The government needs to get a grip on the asylum accommodation system in order to bring costs down and hold providers to account for poor performance.”
The report details a litany of errors: flawed contracts, inadequate oversight, and a lack of financial penalties for poor performance by accommodation providers. According to the Daily Mail, the Home Office failed to reclaim tens of millions of pounds in excess profits owed by these companies. At the same time, the contracts did not require providers to assess the impact on local communities before opening migrant hotels, leading to “unsustainable pressures” on local services and fueling community tensions.
One particularly sensitive flashpoint has been the Bell Hotel in Epping, Essex, where protests erupted in August 2025 after an asylum seeker was charged and later jailed for sexual assault. The committee urged the Home Office to prioritize closing hotels where significant community cohesion issues have arisen. Across the country, similar protests and counter-protests have become more common as frustration mounts among residents and local authorities.
Financially, the difference between hotel and dispersal accommodation is stark. Migrant hotels cost an average of £144.98 per person per night, compared with just £23.25 for dispersal accommodation, according to data cited by the Daily Mail. This disparity, multiplied across tens of thousands of people for months or years, has contributed to the ballooning costs now facing the government.
The contracts in question were signed in 2019 under the previous Conservative government and are set to expire in 2029. They allow for the use of “contingency accommodation”—usually hotels—when demand exceeds supply, but stipulate that hotels should be a short-term solution only. Yet, as Dame Karen Bradley noted, “We just ended up with more people than the contracts ever thought there could be, and that’s meant that the costs have absolutely rocketed.”
Senior officials have not escaped scrutiny. The report highlights “failures of leadership at a senior level,” with shifting priorities and political pressure for quick results leaving the department “incapable of getting a grip of the situation.” The Home Office’s top civil servant at the time, Sir Philip Rutnam, resigned in 2020 after clashes with then-home secretary Dame Priti Patel, and his successor, Sir Matthew Rycroft, oversaw the expansion of hotel use as Channel crossings surged.
In response to the criticism, Communities Secretary Steve Reed told Sky News that the government was “working at pace to fix the problems we inherited,” including expanding the number of caseworkers examining asylum cases. Reed highlighted efforts to use disused military bases instead of hotels, which he described as “the least expensive option available” for housing asylum seekers. Two such sites—MDP Wethersfield in Essex and Napier Barracks in Kent—are already in use, with more announcements expected “within weeks.”
The government maintains it is making progress. 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.”
Despite these assurances, the committee’s report warns that without a clear plan for alternative accommodation, the government risks “under-delivery and consequently undermining public trust still further.” The lack of engagement and transparency has, in the committee’s view, “left space for misinformation and mistrust to grow, which in too many areas has led to tensions and undermined the ability of local partners to promote social cohesion.”
The committee is calling for a new accommodation system based on fairness, improved communication with local communities, and greater flexibility to meet unpredictable demands. It also urges the government to use the 2026 break clause and the 2029 end date of the current contracts as opportunities 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.”
As the debate continues, one thing is clear: the management of the asylum accommodation system has become a major test for the UK government. With billions at stake, community tensions running high, and the lives of tens of thousands of vulnerable people hanging in the balance, finding a sustainable solution will be no small feat.
