The United Kingdom 🇬🇧 has faced ongoing criticism for using its foreign aid budget to cover the costs of asylum accommodation within its own borders. This practice, which involves spending money meant for international development on domestic hotel stays for asylum seekers, has become a major point of debate in 2025. The Independent Commission for Aid Impact (ICAI) has issued strong warnings, saying this approach not only delivers poor value for money but also reduces the Home Office’s motivation to fix the root causes of the accommodation crisis. Here’s a detailed update on what’s changed, who is affected, the latest data, and what actions are needed for those involved in the UK asylum system.
Summary of What Changed
ICAI’s 2025 Review and Warnings
In its most recent review, ICAI highlighted that using Official Development Assistance (ODA)—the UK foreign aid budget—for domestic asylum accommodation is creating the wrong incentives. Instead of pushing the Home Office to solve the accommodation crisis, this funding method allows the problem to continue. ICAI says this practice diverts money away from helping poorer countries and fails to encourage real investment in better, long-term housing solutions for asylum seekers.
Hotel Use and Accommodation Crisis
As of March 2025, 32,345 asylum seekers—about 30% of those receiving support—were still living in hotels. While this is a 15% drop from the end of 2024, projections suggest that, unless there are big policy changes, hotels could be used for another four years. The total number of people getting asylum support was 106,771, which is a 5% decrease from the end of 2024.
Foreign Aid Spending
The cost of the UK’s asylum system reached £5.4 billion in the 2023/24 financial year. This is more than double what was spent in 2021/22. A large part of this money came from the ODA budget, which has caused concern both in the UK and abroad.
Who Is Affected
- Asylum Seekers: Those waiting for decisions on their claims, especially people living in hotels, are directly affected. Long stays in hotels can harm their mental health and make it harder to settle into UK life.
- Home Office: The department responsible for immigration and asylum policy is under pressure to find better solutions and reduce costs.
- Local Authorities: Councils in areas with many hotels used for asylum accommodation face extra strain, often without enough resources or say in the process.
- International Aid Recipients: Money taken from the UK foreign aid budget for domestic use means less funding for projects in poorer countries.
- Taxpayers: The high cost of hotel accommodation means public money is not being used as efficiently as possible.
Effective Dates and Recent Policy Changes
- Labour Government Pledge (July 2024): The new government has promised to stop using hotels for asylum accommodation. However, no clear deadline has been set, and the problem is expected to continue for several years unless major changes are made.
- Illegal Migration Act 2023: In July 2024, the government removed the rule that applied the Act to past cases. This allowed many paused asylum cases to move forward, doubling the number of initial decisions made in the last six months (65,853 decisions from October 2024 to March 2025).
- ODA Policy Review: The Foreign, Commonwealth & Development Office (FCDO) and Home Office are being urged to change the rules about using ODA for domestic asylum costs. As of July 2025, no major changes have been announced.
Required Actions for Stakeholders
For Asylum Seekers:
– Stay Informed: Keep up to date with any changes in accommodation policy and support payments. The Home Office provides updates on asylum support.
– Know Your Rights: If you are in hotel accommodation, you should receive weekly cash support (£49.18, or £8.86 if meals are provided in hotels).
– Pending Applications: If your case was paused under the Illegal Migration Act, it may now be moving forward. Check with your legal adviser or the Home Office for updates.
For Local Authorities:
– Prepare for Changes: Be ready for possible shifts in where asylum seekers are housed, especially if the government moves away from hotel use.
– Engage with Central Government: Advocate for more resources and better consultation to manage the impact on local services.
For Advocacy Groups:
– Continue Campaigning: Push for investment in community-based, long-term housing and better support for asylum seekers.
– Monitor Policy Developments: Watch for any changes to ODA rules or accommodation policies that could affect asylum seekers’ well-being.
For the Home Office:
– Invest in Sustainable Solutions: Focus on expanding dispersal accommodation and improving caseworker productivity to reduce hotel dependency.
– Increase Transparency: Provide clear updates to all stakeholders about policy changes and timelines.
Quantitative Data and Trends
- Asylum Support Recipients: 106,771 as of March 2025, down from a peak of 123,758 in September 2023.
- Hotel Accommodation: 32,345 people in hotels (March 2025), down from 56,042 at the September 2023 peak.
- Backlog: 91,000 pending asylum applications at the end of 2024, plus 42,000 appeals waiting in the courts.
- Geographic Spread: 89% of supported asylum seekers are in England, with the North West and London each hosting about 19% of the total.
- ODA Diversion: The UK is one of the biggest users of ODA for domestic asylum costs among OECD countries.
Policy Implications and Practical Effects
Incentive Structure
ICAI and other experts warn that using UK foreign aid for domestic asylum accommodation reduces the Home Office’s motivation to invest in better, long-term solutions. As long as ODA can be used to pay for hotels, there is less pressure to expand dispersal accommodation or speed up case processing.
Value for Money
Hotel accommodation is much more expensive than dispersal accommodation. It also leads to worse outcomes for asylum seekers, who often spend months or even years in unsuitable living conditions. This approach is not good for taxpayers, as it means more public money is spent for less benefit.
Impact on Aid
Diverting ODA to pay for domestic asylum costs means less money is available for overseas development projects. This undermines the UK’s commitments to help poorer countries and damages its reputation as a global leader in international aid.
Step-by-Step Process for Asylum Accommodation
- Asylum Application: People apply for asylum and, if they have no money, ask for support.
- Initial Accommodation: Applicants are placed in hotels or other temporary housing while their claim is processed.
- Dispersal Accommodation: If there is space, applicants are moved to longer-term housing in the community.
- Support Payments: Asylum seekers get weekly cash support. The amount depends on whether meals are provided.
- Case Processing: Delays in making decisions and handling appeals mean many people stay in hotels for long periods.
- Outcome: If asylum is granted, people move to regular benefits and housing. If refused, they may get limited support if they cannot leave the UK.
Background and Historical Context
Hotel Use Surge
The use of hotels for asylum accommodation increased sharply during the COVID-19 pandemic. Backlogs in processing claims and a lack of available dispersal accommodation have kept hotel use high ever since.
ODA Controversy
The UK started using ODA for domestic asylum costs in line with OECD rules. However, the scale and length of time this has continued have led to criticism from ICAI, Parliament, and international partners.
Stakeholder Perspectives
- ICAI: Strongly criticizes the use of UK foreign aid for domestic asylum costs, calling for urgent reform and warning of risks to the UK’s aid program.
- Home Office: Says ODA funding is needed to meet urgent humanitarian needs but admits hotel accommodation is not a long-term solution.
- Refugee Advocacy Groups: Groups like Refugee Action and the Refugee Council agree with ICAI, saying hotel stays harm asylum seekers’ well-being and make it harder for them to settle in the UK. They call for more investment in community-based housing.
- Local Authorities: Many councils are frustrated by the lack of consultation and resources, especially in areas with many hotels used for asylum accommodation.
Future Outlook and Pending Changes
Hotel Phase-Out
Unless there is a big drop in the backlog or a rapid increase in dispersal accommodation, hotels are likely to be used for several more years. The Labour government has promised to end hotel use but has not set a clear timeline.
ODA Policy Review
ICAI’s 2025 report has increased pressure for a review of the rules on using ODA for domestic asylum costs. However, as of July 2025, the government has not announced any formal changes or a timeline for reform.
Backlog Reduction
The removal of the Illegal Migration Act’s retrospective application has sped up decision-making, but the backlog and appeals caseload remain high.
Practical Guidance for Pending Applications
- Check Your Status: If you have a pending asylum application, especially one that was paused under the Illegal Migration Act, check for updates from the Home Office or your legal adviser.
- Monitor Accommodation Changes: Be aware that your accommodation may change if the government moves away from hotel use. Stay in touch with your support provider.
- Seek Support: If you are struggling with your accommodation or support payments, contact organizations like Refugee Action or the Home Office Asylum Support Helpline (0808 8000 630) for help.
Official Resources
- Home Office Asylum Support: For the latest information on support and accommodation, visit the official government page.
- ICAI: For detailed reports and reviews, see icai.independent.gov.uk.
- Refugee Action: For advice and support, go to refugee-action.org.uk.
- Parliamentary Inquiries: For policy updates, visit parliament.uk.
Expert Analysis
Analysis from VisaVerge.com suggests that the current approach to funding asylum accommodation with UK foreign aid is unsustainable. It creates the wrong incentives, delivers poor value for money, and damages the UK’s reputation as a leader in international development. Experts in the refugee sector are calling for urgent investment in caseworker capacity, more community-based housing, and better integration programs to break the cycle of hotel dependency.
Multiple Perspectives
- Government: Tries to balance humanitarian needs and budget limits but faces criticism for not planning long-term solutions.
- ICAI and Parliament: Demand urgent reform, more transparency, and a clear plan to end hotel use and ODA diversion.
- NGOs and Local Authorities: Want more community-based housing, better funding, and a bigger say in how asylum accommodation is managed.
Implications for Pending Applications
If you have a pending asylum application, the recent policy changes may mean your case moves forward more quickly. However, the ongoing accommodation crisis means you may still face long waits in hotels or other temporary housing. It’s important to stay informed, seek support, and be ready for possible changes in where you are housed.
Conclusion and Next Steps
As of July 22, 2025, the use of UK foreign aid to fund asylum accommodation remains a major issue. ICAI’s latest warnings have increased calls for change, but the government has not yet made big policy shifts. The accommodation crisis continues, affecting thousands of asylum seekers and putting pressure on public finances and the UK’s global reputation.
Immediate next steps for affected individuals and stakeholders:
- Asylum seekers: Stay informed about your case and support options.
- Local authorities and NGOs: Prepare for possible changes in accommodation policy and continue to push for better solutions.
- Policy makers: Consider urgent reforms to end hotel dependency and stop using ODA for domestic costs.
For more information or to check your support status, visit the Home Office’s official asylum support page. If you need help, contact the Home Office Asylum Support Helpline or reach out to organizations like Refugee Action. The situation is evolving, so staying updated and seeking advice is key.
Learn Today
Official Development Assistance (ODA) → Government funds designated for international aid and development projects in poorer countries.
Asylum Accommodation → Housing provided to asylum seekers while their immigration applications are processed.
Independent Commission for Aid Impact (ICAI) → UK body reviewing effectiveness and impact of foreign aid spending.
Dispersal Accommodation → Long-term community housing for asylum seekers after initial temporary stay.
Illegal Migration Act 2023 → UK law affecting asylum processes, including pausing and resuming certain claims.
This Article in a Nutshell
The UK controversially uses foreign aid to fund asylum hotels, raising ICAI warnings. Although hotel stays declined, the crisis persists. Critics call for better community housing solutions and transparency to protect aid budgets and improve asylum seekers’ wellbeing amid rising costs and systemic pressure.
— By VisaVerge.com
