More than 11,000 migrants have already crossed the English Channel into the UK so far this year, and this is putting a lot of pressure on the country’s asylum system. A government spending report has revealed that providing housing for these migrants—especially in hotels is costing the UK far more than expected. Over the next ten years, this housing is expected to cost around £15 billion.
That means every single day, taxpayers are spending over £4 million just to house asylum seekers. This money is going to companies like Serco, Clearsprings Ready Homes, and Mears Group, who were given contracts in 2019 to handle accommodation for migrants.
Originally, the government thought the total cost of housing asylum seekers would be around £4.5 billion between 2019 and 2029. But the latest figures show it will actually cost over £15 billion—more than three times the original estimate. The government watchdog, called the National Audit Office, said the Home Office doesn’t have many ways to control these rising costs.
The number of people needing accommodation has also shot up. Back in December 2019, about 47,000 people were living in government-provided housing. That number has now more than doubled to 110,000 in 2024. In just the first five months of this year, over 11,500 people crossed the Channel—this is the highest number ever recorded during that time period since records began in 2018.
Many of these asylum seekers are living in hotels. In fact, hotels now make up 35% of all asylum housing, but they take up around 76% of the yearly spending. That’s about £1.3 billion expected to be spent on hotel accommodation alone during the 2024–2025 period. Of the 110,000 people in accommodation, about 42,000 are in temporary housing known as “contingency accommodation,” and 38,000 of those are in hotels.
The report also said that using hotels might be more profitable for the companies running them than providing regular housing. These companies are responsible for finding different types of accommodation for asylum seekers across the UK, but many rely heavily on using hotels—especially for the large number of people arriving by small boats.
Next week, Members of Parliament will question the companies in charge of asylum housing—Serco, Clearsprings, and Mears—about why the costs have increased so much and whether they are doing their job properly. Dame Karen Bradley, who leads the Home Affairs Committee, said she wants to understand not just why prices have gone up, but also whether the quality of housing and support is good enough. She mentioned that some of these companies have failed to meet the required standards in the past.
The report also found that companies are making an average profit of 7%, which is within what the Home Office expected when they first signed the contracts. However, despite some companies underperforming, the government has only recovered £4 million from them since 2019.
One company, Stay Belvedere Hotels, which was subcontracted by Clearsprings, was recently dropped after its services and behavior were not up to standard. A government minister said a full audit is now being carried out on all parts of the supply chain to make sure everyone involved is doing their job properly.
Since the Labour Party came into power in July last year, the government has closed 23 hotels that were being used to house asylum seekers. Contracts have also been ended at three large sites, including the Bibby Stockholm barge. Napier Barracks in Kent, which was also used to house migrants, is set to close and be handed back to the Ministry of Defence later this year.
In response to the report, a spokesperson from the Home Office said they inherited a broken asylum system with a huge backlog of people waiting for decisions and poorly managed contracts wasting taxpayer money. They said they’ve taken steps to fix the system by speeding up the decision process by 52% and removing 24,000 people who had no legal right to stay in the UK. The spokesperson added that there are now fewer asylum hotels open than there were before the last election and that, by continuing to improve the system, they expect to save taxpayers £4 billion by the end of 2026.
