Home Office ‘squandered billions’ on asylum accommodation, MPs say

The Home Office has “squandered” billions of pounds of taxpayers’ money on asylum accommodation, according to a report by a committee of MPs.

The Home Affairs Committee said “flawed contracts” and “incompetent delivery” left the department unable to cope with a surge in demand and it relied on hotels as “go-to solutions” instead of temporary stop-gaps.

The MPs said expected costs had tripled to more than £15bn and not enough had been done to recoup excess profits.

Prime Minister Sir Keir Starmer said he was “determined” to close all asylum hotels adding: “I can’t tell you how frustrated and angry I am that we’ve been left with a mess as big as this by the last government.”

The prime minister said the Home Office was processing asylum claims “much more quickly” and removing those with no right to be in the country “at a higher rate than the best part of a decade”.

Just under 103,000 asylum seekers are being housed by the government, of which just over 32,000, around a third, are accommodated in 210 hotels.

Asylum accommodation is currently delivered through a series of large-scale, regional contracts agreed by the previous government with a number of private providers, which started in 2019 and will expire in 2029.

They allow for the use of “contingency accommodation” – usually hotels – when demand exceeds supply, but state that these should only be used on a short-term basis.

The report said the current system for housing people seeking asylum – with its reliance on hotels – was expensive, unpopular with local communities and unsuitable for the asylum seekers themselves.

The report said the contracts drawn up for accommodation providers under the Conservatives had been flawed and that “inadequate oversight” had meant failings went “unnoticed and unaddressed”.

Expected costs for hotel contracts from 2019-2029 have risen from £4.5bn to £15.3bn, while two accommodation providers still owe millions in excess profits that the Home Office has not recovered, the report found.

The report said the department neglected its day-to-day management of the contracts, and had not sufficiently ordered financial penalties for providers who have poor performance.

This includes no fines for failures at hotels and the larger accommodation sites, while excess profits from providers are yet to be reclaimed.

The committee said the money should be used on public services, “not sitting in the bank accounts of private businesses”.

There are few issues more sensitive for this government than its management of the asylum system.

While ministers have set a deadline for ending the use of asylum hotels by the next general election, most likely 2029, they want to show progress in reducing the numbers long before then.

Labour officials are especially anxious about how hotels can become a rallying point for frustration in different communities across the country.

The specific criticism of the Home Office is also the latest reminder of how many government controversies emanate from that department, following rows only in the last week over the grooming gangs inquiry, the collapse of the prosecution of two men accused of spying for China, and the return of a migrant deported to France under the ‘one in one out’ scheme.

External factors, including the pandemic and the “dramatic” increase in small boat arrivals, have meant the Home Office has had to accommodate “a growing number of people for longer periods of time” the MPs’ report said.

Choices made by the previous Conservative government, including to delay asylum decisions as it pursued the scheme to deport migrants to Rwanda, factored into this, MPs added.

While the report acknowledged the “challenging environment” in which the Home Office was operating, it said “its chaotic response has demonstrated that it has not been up to the challenge”.

Chair of the committee Dame Karen Bradley told BBC Radio 4’s Today programme: “We just ended up with more people than the contracts ever thought there could be and that’s meant that the costs have absolutely rocketed.”

“The government has only just started looking at claiming back those profits, auditing the accounts to see what is due back to the taxpayer,” Dame Karen said.

The said “failures of leadership at a senior level” were among reasons the Home Office was “incapable of getting a grip on the situation”.

Dame Karen said the department had “neglected the day-to-day management of these contracts” and has focused on “short term, reactive responses”.

“The skills needed to manage these contracts simply were not present in the Home Office when they were drawn up,” she added.

Housing Secretary Steve Reed accused the previous government of “pouring taxpayers’ money down the drain”.

He added that Labour ministers were continuing to look at housing asylum seekers on disused military bases, with an announcement “within weeks”.

He added that while the government was also looking at longer-term rental accommodation options, military sites represented the “least expensive option available” to house asylum seekers.

Two former military sites – MDP Wethersfield, a former RAF base in Essex, and Napier Barracks, a former military base in Kent – are already being used to house asylum seekers after being opened under the Conservatives.

Dame Karen welcomed the government’s pledge to shift away from asylum hotels and invest in larger sites like military bases.

But she said past failings, like moving people into accommodation too quickly, must not be repeated.

In response to the report, a Home Office spokesperson said: “We have already taken action – closing hotels, slashing asylum costs by nearly £1bn and exploring the use of military bases and disused properties.”

Several protests and counter-protests over asylum hotels have taken place across the UK this year, notably in Epping over the summer after an asylum seeker being housed at The Bell Hotel was charged with two sexual assaults.