Billions of pounds wasted on migrant hotels, say MPs
Flawed contract design and incompetent delivery left the Home Office unable to cope with the surge in demand for asylum accommodation, a report by Parliament’s Home Affairs Committee has found.
Hotels went from a temporary stopgap to the go-to solution for asylum accommodation, leading to a failed system that is expensive, unpopular with local communities, and unsuitable for asylum seekers.
As the cost of asylum accommodation contracts more than tripled, inadequate oversight meant failings went unnoticed and unaddressed. The Home Office failed to keep costs down and underutilised mechanisms to penalise providers for poor performance and reclaim excess profits.
The report forund that no performance penalties are applied for poor performance at Napier, Wethersfield or asylum hotels – despite hotels accounting for over 75% of spending on asylum accommodation.
Break clauses in 2026 and the end of the contracts in 2029 offer the Home Office an opportunity to end the failed system. However, without a clear long-term plan and the institutional capability to deliver a model that is more effective and offers value for money, past failures risk being repeated, the Committee warns.
“The Home Office has presided over a failing asylum accommodation system that has cost taxpayers billions of pounds. Its response to increasing demand has been rushed and chaotic, and the department has neglected the day-to-day management of these contracts,” said Chair of the Home Affairs Committee, Dame Karen Bradley.
“The Government needs to get a grip on the asylum accommodation system in order to bring costs down and hold providers to account for poor performance.”
Bradley noted that urgent action is needed to lower the cost of asylum accommodation and address the concerns of local communities.
“While reducing hotel use is rightly a Government priority, there will always be a need for flexibility within the system, and the Home Office risks boxing itself in by making undeliverable promises to appeal to popular sentiment. It shouldn’t set itself up for more failure,” she said.
