More than 11,000 people have crossed the English Channel into the UK so far this year, setting a new record for the first five months of the year since tracking began in 2018.
According to the National Audit Office (NAO), housing these asylum seekers is becoming extremely expensive. Over the next ten years, it’s expected to cost British taxpayers around £15.3 billion. That’s a huge increase from the original £4.5 billion estimated when contracts were signed in 2019 with companies like Serco, Clearsprings Ready Homes, and Mears Group. On average, this means about £4.2 million is being spent every single day on asylum housing.
The spending watchdog explained that the Home Office has little control over the rising costs. Since December 2019, the number of asylum seekers needing accommodation has jumped from 47,000 to 110,000—a 134% increase.
A big part of the cost is coming from hotels. Right now, about 42,000 asylum seekers are staying in temporary accommodation, and around 38,000 of them are living in hotels. Even though only about a third of asylum seekers are in hotels, this makes up around 76% of the annual cost—roughly £1.3 billion out of £1.7 billion expected in 2024-2025.
The report pointed out that housing asylum seekers in hotels is often more profitable for contractors than placing them in rented homes or shared flats. These companies are responsible for finding suitable homes across the UK and booking hotels when needed.
MPs are planning to question the major contractors next week to find out why costs have gotten so high and whether they’re meeting performance standards. Dame Karen Bradley, who chairs the Home Affairs Committee, said they want to understand the reasons behind the rising costs and how well asylum seekers are being supported.
The NAO report also revealed that contractors are making profit margins of about 7%, which is in line with expectations. However, since 2019, the Home Office has only reduced payments to contractors by £4 million due to poor performance, suggesting not much is being done when services fall short.
One hotel provider, Stay Belvedere Hotels (SBHL), had its contract ended by the Home Office after its service was found to be below expectations. The Home Office said a full investigation of the supply chain is underway.
Since the Labour Government came into power in July last year, they’ve shut down 23 hotels and ended contracts at three major sites, including the Bibby Stockholm barge. Napier Barracks in Kent is also set to close later this year.
A Home Office spokesperson responded by saying the current system was inherited in a chaotic state. They’ve since increased the rate of processing asylum claims by 52%, removed 24,000 people who were not allowed to stay in the UK, and closed down many hotel accommodations. They aim to fully end the use of hotels by speeding up decision-making and fixing the system, which they say could save £4 billion by the end of 2026.
