Government Accused of Wasting Billions on Asylum Hotel Mismanagement

Members of Parliament (MPs) have criticized the British government for squandering vast sums of money—billions, really—on mishandling a controversial scheme aimed at housing asylum seekers in hotels at taxpayers’ expense.

A report from the House of Commons Home Affairs Committee revealed that government mismanagement was primarily responsible for the staggering increase in asylum accommodation contract costs, which soared from £4.5 billion to an alarming £15.3 billion since the agreements were made in 2019 under the previous Conservative administration.

The report stated, “Failures in leadership at senior levels, shifting priorities, and political and operational pressures for quick results led to the department being in the dark, causing costs to spiral.” It went on to assert that the Home Office had repeatedly cut corners, wasting millions of taxpayer money and is now facing urgent pressure to reduce hotel occupancy.

While the number of migrants in hotels dropped from a peak of 56,042 in September 2023, recent data indicates a rise under Sir Keir Starmer’s Labor government, with hotel use climbing by 8% to 32,059 from June 2024 to June 2025.

The report criticized the government’s strategy to block hotel bookings through contractors like Clearsprings Lady Homes, Mears, and Serco, suggesting it financially encourages private companies to opt for more expensive hotels instead of cheaper alternatives for migrants.

This year, staying in a hotel cost an average of £145 per night, in sharp contrast with £23.25 for other private housing options.

According to the deal arranged by the Conservatives, at least 5% of profits made by these companies should go to the Home Office. Yet, the report indicates this can easily be bypassed using subcontractors—typically the hotels—that aren’t subject to such stipulations.

MPs pointed out, “We see no evidence that the Home Office has maintained adequate oversight of sub-contracting arrangements,” emphasizing that performance management of providers and subcontractors dealing with multi-billion-pound contracts has been overlooked.

The report further highlighted that the Home Office has yet to recover nearly £46 million in excess profits from Clearsprings and Mears over the past six years, stressing that this money “should be supporting public services instead of lining the pockets of private firms.”

“We are frustrated that the Home Office lacks a proper mechanism to prevent providers from amassing excessive profits as contract values rise, largely because of the continued reliance on hotels,” the MPs remarked.

The government has pledged to eliminate the hotel accommodation scheme by 2029, but the MPs suggested that the 2026 termination clause in the decade-long contract should be utilized as an “opportunity to abandon this flawed, chaotic, and costly system in favor of a more effective model.”

Additionally, the committee found that the current plan might result in concentrating refugee accommodation in areas with “high levels of poverty and low-cost accommodation,” placing a disproportionate burden on working-class regions.

The report advised that the Home Office should “prioritize shutting down unsuitable hotels, especially those in remote locations or with limited infrastructure that adversely affect residents and strain local services.” It should also focus on discontinuing hotels in areas where community cohesion is particularly fragile.

The use of hotels for housing migrants—many of whom are young men who have entered the country illegally—sparked widespread protests over the summer. This followed an incident involving the sexual assault of a 14-year-old girl by an Ethiopian national staying at a migrant hotel in Epping. Although the protest movement secured a High Court injunction to halt the hotel’s closure as a migrant accommodation site, the government successfully appealed, arguing that the rights of asylum seekers to stay, funded by taxpayers, outweighed local safety concerns.

Dame Karen Bradley, chair of the Home Affairs Committee, expressed her views on the report’s findings, stating that the Home Office has “oversaw a failed refugee admissions system that has cost taxpayers billions.” She noted, “Authorities have hastily and chaotically responded to increasing demand, neglecting the daily management of these contracts. The government must gain control of the asylum accommodation system to reduce expenses and hold providers accountable for their failures.”

In response, the Home Office stated, “The Government is incensed by the current situation regarding illegal immigrants staying in hotels. We will close all asylum hotels and save taxpayers billions. Actions to close hotels, cut asylum costs by nearly £1 billion, and consider using military bases and unused land are already underway.”