Britain’s three biggest providers of asylum housing are on course to post record profits in 2025, as Home Office spending on accommodation surges to levels critics say are unsustainable for taxpayers and harmful for people stuck in the system. Clearsprings Ready Homes, Serco and Mears have together made £383 million in profits since 2019 through Home Office contracts, according to figures compiled from company results and government data. With hotel bills still high and long-term contracts swelling in value, executives and investors are preparing for another bumper year.
Serco, which manages large parts of the accommodation estate for the Home Office, reported £146 million in profit in the first half of 2025, a 2% increase from 2024 that puts it on track to surpass last year’s record of £274 million. Mears posted a 5% increase in its half-year results, booking £32 million in profit and also heading to beat its 2024 high of £64 million. Clearsprings Ready Homes, which runs asylum housing across the south of England, is estimated to have made nearly half of the total profits since 2019 and, as of December 2024, was responsible for housing more than 40,000 asylum seekers. Officials say the value of Clearsprings’ 10-year regional contract has increased tenfold since 2019 to £7 billion.
The spending behind those returns has risen sharply. Home Office annual outlays on asylum support climbed from £739 million in 2019-2020 to £4 billion in 2024-2025, with £2.1 billion spent on hotels alone in the most recent year as ministers struggled to move people into cheaper long-term accommodation. The total value of the contracts with the three providers has tripled since 2019, from £4.5 billion to £15.3 billion, reflecting the scale of reliance on private companies to fulfil statutory duties to house asylum seekers while their claims are processed.
Prices vary starkly by type of accommodation, intensifying the squeeze on the public purse. The cost to house an asylum seeker in a hotel is £145 per night, compared with £23 per night in dispersal housing or other shared accommodation — six times higher. Despite pledges to end hotel use, a recent parliamentary assessment found nearly a third of people in the asylum system remain in hotels, a bottleneck that is both expensive and, campaigners say, damaging to mental health as claimants wait months or years for decisions.
A Home Affairs Committee report described the asylum accommodation programme as
“failed, chaotic and expensive,”
and said the department had
“squandered billions of pounds on asylum accommodation due to long-term mismanagement of a ‘failed, chaotic and expensive’ system.”
MPs and watchdog groups have zeroed in on the mechanics of the contracts signed in 2019, which include clauses requiring companies to return “excess profits” to the government. However, no reimbursement has yet been made. The Home Office began auditing accounts only in 2024 and has yet to recover £46 million it says is owed under the terms of those agreements.
The numbers housed on the state’s books underline how quickly the system has expanded. As of June 2025, 103,000 asylum seekers were living in accommodation funded by the government, up from 47,500 at the end of 2018. Within that total, the committee found that 32,000 people were still in hotels. Providers say they are delivering at scale under difficult conditions, but the persistence of high hotel use has drawn sharp criticism across the political spectrum and from taxpayer groups.
Chris Murray, a Labour MP and member of the Home Affairs Select Committee, called the situation
“a public procurement scandal of the highest order,”
arguing that private firms had profited from chaos and delay. “These private providers have been able to make huge profits on a system that is driving people absolutely bananas across the country, is doing a terrible job for the asylum seekers themselves, and is actually costing the taxpayer billions of pounds,” he said. Advocates for people seeking asylum say long or repeated moves and years stuck in temporary sites have eroded trust and stability, while councils complain they had little say in placements that strained local services.
Callum McGoldrick, spokesperson for the Taxpayers’ Alliance, said the public was being taken for a ride.
“I think what we’ve seen is profiteering here and they’ve been quite frankly taking advantage of which has in fact just meant that British taxpayers have been taken advantage of,”
he said. The group has pressed ministers to publish more granular data on contract performance and value-for-money assessments, and to impose tighter profit caps that trigger automatic repayments.
Prime Minister Keir Starmer has signalled he wants to reset the policy and end the dependency on hotels, while accelerating decisions on claims.
“We inherited a huge mess in relation to pretty well all departmenting government and that includes the Home Office… I’m determined that we will close those hotels with processing the claims much more quickly and where people have no right to be in our country we’re removing them but at a higher rate,”
he said. Officials have said they are exploring alternatives such as former military bases and disused properties to reduce hotel use, though the long-term contracts agreed six years ago mean the government remains “on the hook” for rising costs even as it shifts the shape of provision.
Clearsprings Ready Homes, which runs large sites in the south of England, has become a lightning rod for anger over asylum housing after a series of local disputes about new sites and conditions in older ones. Company accounts show it has benefited as the state moved thousands into contingency accommodation at pace, turning the 10-year award into one of the Home Office’s largest single outsourcing deals. Serco, a large government contractor across multiple sectors, has told investors it expects margins to remain robust as it delivers services under the contracts, pointing to scale efficiencies and improved operational performance. Mears, which also manages social housing, has said its asylum portfolio is performing well, even as it faces pressure to expand dispersal capacity more quickly.
The government’s own numbers show the fiscal trade-offs at stake. Every asylum seeker moved from a hotel into dispersal housing reduces the nightly bill by £122, yet the pace of transfers has lagged behind targets. Councils have pressed for resources to expand suitable housing stock and for guarantees around funding for local services that pick up costs when populations rise suddenly. In some towns, residents have protested outside hotels and former institutional buildings repurposed for asylum housing, while local charities have warned that abrupt moves have disrupted schooling and healthcare.
Ministers argue that faster processing will reduce demand for accommodation overall, but the backlog — and the cost of carrying it — has proven stubborn. The Home Office says it is hiring more caseworkers and refining triage for straightforward claims, while ramping up removals for those deemed to have no right to stay. The committee’s finding that audits only began in 2024 has also prompted calls for stronger oversight now, not later, including clearer triggers for clawing back profits and penalties for poor performance. The department’s immigration statistics and policy updates are published quarterly by the government, including asylum support and accommodation data available via the Home Office’s immigration statistics collection.
In the middle of the political row sit tens of thousands of people who cannot legally work while they wait and who often have little control over where they live. Charities report that prolonged hotel stays have left families isolated, with children sharing rooms and few places to study or play, and that repeated transfers cut off access to GPs, schools and community ties. The committee’s report said the system is
“not just bad for local communities, but for the asylum seekers themselves,”
describing how long stays in temporary accommodation have hurt mental health and delayed integration for those eventually granted protection.
The contractual structure that enabled profits to soar is now under heavy scrutiny. The tripling of overall contract value since 2019 reflects both higher volumes and the costliness of contingency accommodation. For Clearsprings Ready Homes, the leap to a £7 billion contract value over a decade shows how quickly the market expanded once hotel use became widespread. In aggregate, the £383 million in profits since 2019 has prompted opposition MPs and taxpayer groups to call for renegotiation, tougher clawback mechanisms and full publication of any calculations related to “excess profits.” The Home Office’s failure so far to recover the £46 million it says is owed under the profit-sharing clauses has become a touchstone for critics who say auditing should have begun years earlier.
Providers argue that they stepped in when demand spiked and that the state would have struggled to source beds at scale without them. They point to the logistical challenge of securing entire hotels at short notice, managing security and welfare services, and maintaining dispersed housing in a tight rental market. Yet the arithmetic remains stark: as long as 32,000 people are in hotels at £145 per night, the overall bill will dwarf what the department would spend if dispersal capacity were sufficient to accommodate them at £23 per night. To get there, councils need stock and funding, and the Home Office needs to clear cases faster than new arrivals push in.
Serco’s and Mears’ latest results illustrate how the system’s design cushions providers from volatility. With revenue underpinned by multi-year contracts and demand driven by statutory duties, both firms have told investors they have clear visibility into pipeline and margins. For Serco, the 2% year-on-year increase in half-year profit to £146 million confirms the trajectory set in 2024, when it posted £274 million. For Mears, the 5% nudge to £32 million halfway through 2025 signals another full-year record if current trends hold. For Clearsprings Ready Homes, which is not publicly listed, estimates indicate it accounts for nearly half of the combined £383 million in profits since 2019, consistent with its scale and its concentration in the south, where reliance on hotels and large sites has been particularly high.
The political response has shifted from promises to close hotels to a more granular focus on throughput and cost. Starmer’s commitment to
“close those hotels”
while processing claims
“much more quickly”
and increasing removals of those without a right to remain sets clear benchmarks by which the government will be judged. But the reality of long-term contracts signed in 2019 — which have tripled in total value to £15.3 billion — means reform must thread a needle: reduce the use of expensive hotels, expand cheaper dispersal housing, and improve casework, all while honouring contract terms or negotiating changes without triggering costly penalties.
For residents living near hotels or large-scale sites, patience has worn thin. Local leaders say communication has improved in some areas but remains patchy, and that the speed of placements has sometimes outpaced planning. For people inside the system, the promise of swifter decisions is welcome, but after years of limbo, trust will depend on what happens next. If the number in hotels falls sharply and more people move into stable housing, pressure on the public purse could ease and services could be better tailored. If not, another year of record profits for Serco, Mears and Clearsprings Ready Homes will fuel demands to rethink a model that, in the words of one MP, is
“a public procurement scandal of the highest order.”
McGoldrick’s charge of “profiteering” captures the mood among many taxpayers watching billions flow out in contracts without visible improvement on the ground.
“I think what we’ve seen is profiteering here and they’ve been quite frankly taking advantage of which has in fact just meant that British taxpayers have been taken advantage of,”
he said, framing an argument likely to persist as the government moves from diagnosis to delivery. The test, now, is whether ministers can align incentives so the cheapest, most humane accommodation becomes the default and the exceptional becomes, once again, the exception. Until then, the figures tell their own story: tens of thousands still in hotels, bills that run six times higher than shared housing, and profits that keep climbing for the companies at the centre of the asylum housing system.
