Billions of pounds have been squandered on asylum hotels under both Labour and Conservative governments, according to a damning new report by Parliament’s Home Affairs Committee.
The committee found that the cost of housing asylum seekers has spiralled from an estimated £4.15 billion to £15.3 billion between 2019 and the end of the current contracts — nearly triple the original projection. It blamed the Home Office for “chaotic management” and a failure to heed repeated warnings that the system would be overwhelmed.
As of June 2025, more than 103,000 people were being housed by the Home Office, including 32,000 in hotels. That figure represents an 8% increase on the previous year, though still below the September 2023 peak of 56,000. The surge in small boat arrivals across the Channel has sharply increased demand for housing.
Since 2012, asylum accommodation has been delivered through large regional contracts with a small number of private providers. The current Asylum Accommodation and Support Contracts (AASC) began in 2019 and run until 2029. Each contract includes a break clause allowing the Home Office to change or terminate agreements without penalty from March 2026 onward.
The committee accused the Home Office of overseeing “flawed and poorly managed” contracts that produced excessive profits for providers — money that was never recovered. It called the use of hotels “a failed system born of mismanagement,” and urged ministers to use the 2026 break clauses to overhaul the approach.
The government has pledged to stop using hotels to house asylum seekers by 2029, but MPs warned that without a coherent long-term strategy, the same costly mistakes risk being repeated.
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