UK Wasted Billions on Asylum Accommodation, MPs Say in Report

(UNITED KINGDOM) The Home Office has been accused by MPs of wasting billions on asylum accommodation after a cross-party report found hotel contract costs have tripled from £4.5 billion to more than £15.3 billion, driven by flawed deals and bungled delivery. In findings published on October 27, 2025, the House of Commons Home Affairs Committee said

“rushed and chaotic management” meant the department failed to reclaim “tens of millions of pounds in excess profits” owed under the terms of outsourcing agreements.

The report portrays an asylum accommodation system overwhelmed by demand and poorly governed, as the number of people housed at public expense rose from 47,500 at the end of 2018 to 103,000 in June 2025. MPs concluded that the Home Office treated hotels as a default rather than a stop-gap, driving up costs and triggering public anger. The committee said reliance on hotels as a “go-to solution” invited protests across the country and left taxpayers carrying the bill as contractors’ costs spiralled. It found that expected spending on 10-year asylum accommodation contracts has jumped from £4.5 billion to over £15.3 billion, a tripling that MPs linked to failures in planning, oversight and enforcement of existing agreements.

Henry Zeman, the BBC’s chief political correspondent, summed up the report as

“utterly damning,”

saying it showed the Home Office was

“incapable of getting a grip on the situation”

because of leadership failures at senior levels stretching across multiple governments. The committee’s analysis points to long-standing weaknesses in the department that predate the recent surge in arrivals. It references former Labour Home Secretary John Reid’s 2006 assessment of the department as

“unfit for purpose”

to underscore how deep-seated problems have persisted despite repeated reform pledges.

Central to the MPs’ critique is the cost and management of asylum accommodation, with hotels dominating the government’s response as numbers rose. The committee says hurried contracting and poor governance allowed outsourcers to retain money that should have been clawed back, including

“tens of millions of pounds in excess profits.”

It describes incomplete due diligence, missed contractual safeguards and weak performance monitoring that left the public sector paying for expensive, long-term hotel use that had been sold as temporary. Those errors, MPs argue, funneled large sums to suppliers while putting pressure on local services and inflaming political tensions in communities hosting large sites.

The Home Office defended its position in a brief statement, arguing ministers share public frustration about the hotel bill and the numbers of people in taxpayer-funded rooms.

“The government is furious about the number of illegal migrants in this country and in hotels,”

a spokesperson said, reiterating a pledge to end the use of asylum hotels by 2029. The committee notes that ministers from both major parties have promised to bring down costs and reduce use of hotels, but says targets have not been backed by credible plans for alternative accommodation or by stronger contract controls that would prevent budget blowouts.

Labour has set an ambition to end hotel use before the next general election, which is likely to be in 2029, while Conservative and Reform UK politicians have focused their criticism on the government’s failure to reduce irregular Channel crossings. The committee’s report threads a line between these political positions, arguing that even as ministers debated deterrence policies, the operational backbone of the asylum system—procurement, site planning, and contractor oversight—was allowed to drift. It points out that costs soared as the Home Office leaned on hotels as its primary fix, creating a rapid expansion that Treasury and Parliament could not easily challenge once contracts were signed.

The scale of the shift since 2018 is stark. According to the committee, the number of asylum seekers in government-paid accommodation more than doubled to 103,000 by June 2025. As occupancy climbed, the Home Office extended its reliance on hotels that were never intended to be long-term solutions, a move that both drove up expenses and set local councils scrambling to adapt. Officials told the committee that existing housing stock could not meet demand quickly enough, but MPs said the department’s planning failures and slow procurement of alternative sites compounded the crisis and left few options besides hotel rooms at premium rates.

What animates the report is not just the price tag but the missed chances to limit it. By the committee’s account, the Home Office left money on the table, failing to enforce provisions designed to reduce bills or recover profits above agreed margins. The language is unflinching:

“rushed and chaotic management”

is how MPs describe a system that failed to match contract terms with the reality on the ground, allowing suppliers to benefit from demand spikes without commensurate accountability. The result, the report says, is an asylum accommodation regime that cost the public purse far more than it should have, even allowing for the extraordinary pressures of recent years.

Henry Zeman’s assessment—“utterly damning” and “incapable of getting a grip on the situation”—reflects how the report has landed in Westminster: as a rebuke not only to the current leadership but to a management culture that has weathered changes in ministers without fixing basic problems. By invoking John Reid’s “unfit for purpose” verdict from 2006, the committee places current failings in a longer arc of reform attempts that have not delivered a resilient system. That continuity matters, MPs suggest, because expensive emergency measures become permanent habits if officials assume that fixes can come later.

The financial exposure is clearest in the headline figure: a rise in expected 10-year contract costs from £4.5 billion to over £15.3 billion. MPs say that jump reflects both the volume of people in the system and the premium placed on hotel rooms instead of purpose-built or repurposed sites. The committee also highlights how protests and political backlash accompanied hotel placements, creating a feedback loop that made the Home Office more cautious about alternative proposals and more likely to fall back on hotel capacity it could activate quickly. That approach, while expedient, meant the department paid heavily for flexibility and ceded leverage to large outsourcing firms.

In its brief response, the Home Office pointed to its plan to end hotel use by 2029 and its focus on reducing arrivals as the key to bringing down the accommodation bill. But the committee emphasizes contract discipline and operational reform alongside broader policy changes. It calls for clearer procurement rules, stronger oversight of suppliers, and thorough enforcement of profit caps and clawback clauses. Without that, it argues, the public will continue to pay too much even if the number of new arrivals falls. The report stops short of prescribing specific sites or models but urges ministers to move away from hotels as the default and to build a pipeline of alternatives that can be scaled without emergency pricing.

For people inside the system, the consequences are practical and immediate. Placement decisions have scattered asylum seekers across the country, often far from legal support and community networks, while local services contend with sudden pressure on schools, health care and transport. The committee does not dwell on individual cases, but its accounting of costs and contract failures points to a system that strains everyone involved—residents who see hotels repurposed overnight, councils juggling budgets, and asylum seekers living in temporary spaces for months at a time. MPs say that had the Home Office pursued stronger planning and enforcement, it could have reduced both the bill and the disruption.

The political fallout is likely to continue as parties sharpen their messages ahead of the next election. Conservative and Reform UK figures are set to seize on the report’s depiction of financial waste, arguing it stems from weak border control and the expanded use of hotels. Labour will point to the committee’s cross-party findings on mismanagement and leadership failures that span administrations, while reiterating its aim to end hotel use before voters go to the polls. The committee, for its part, places responsibility squarely on operational leadership inside the Home Office and urges Parliament to keep scrutiny tight to prevent further overruns.

Pressure will now fall on officials to demonstrate that contract management can be tightened quickly. MPs want evidence of recovered funds where

“tens of millions of pounds in excess profits”

are identified and a timetable for phasing out hotel use that is backed by signed, value-for-money agreements for alternative accommodation. They also want transparency on how projected costs fell so far out of line with the original £4.5 billion estimate, and why risk controls failed to protect the public purse as occupancy surged. The report makes clear that accounting for every pound spent on asylum accommodation is not only a fiscal test but a test of credibility for a department confronting long-standing doubts about its competence.

The full report is available via the Home Affairs Committee, which said scrutiny will continue as the Home Office implements changes. While ministers insist they will end hotel use by 2029, the committee warns that promises are not plans and says urgent reform is needed now to stop costs rising further. With more than 100,000 people in accommodation funded by the state and contracts running into the billions, Parliament will watch closely whether officials can move from rhetoric to results—and whether the Home Office, criticised for years as

“unfit for purpose,”

can finally build an asylum accommodation system that works.