Damning asylum hotel report finds Tory failures cost taxpayer billions of pounds

Failures of leadership under the Tories saddled taxpayers with asylum hotel bills totalling billions of pounds, a damning report found.

Cross-party MPs said the Home Office focused on "high-risk, poorly planned policy solutions" to tackle a ballooning asylum backlog. A string of blunders meant private firms raked in massive profits as the government catastrophically failed to claw cash back.

In a long-awaited report on the asylum hotel crisis, the Home Affairs Select Committee said the "chaotic response" showed the Home Office was not up to the challenge it faced.

More than 32,000 people were being accommodated in hotels while their asylum applications were processed in June. This was down from over 56,000 when Rishi Sunak was PM and Robert Jenrick was Immigration Minister in 2023.

The blistering report, published today states: "Failures of leadership at a senior level, shifting priorities, and political and operational pressure for quick results meant that the department was incapable of getting a grip of the situation, and allowed costs to spiral."

It said the government "failed to undertake basic due diligence", and ruled: "The Home Office was undoubtedly operating in an extremely challenging environment, but its chaotic response demonstrated that it was not up to this challenge."

MPs pointed to a "manifest failure" - stating that the expected 10-year cost of asylum accommodation trebled from £4.5billion to £15.3billion since 2019. They blamed the Tories for pausing processing despite thousands of people arriving by small boat as the former government pursued its ill-fated Rwanda deportation plan.

The Government also failed to assess the impact on local services and community cohesion, the report said. Asylum hotels were disproportionately opened in deprived areas, leaving town halls with no faith they would be treated fairly.

And the committee said it was "frustrated" that contracts agreed under the Conservatives meant there was no mechanism to claw back "excessive profits". Labour MP Chris Murray, a member of the committee, said: “The findings of this inquiry boil the blood: the Tories turned the asylum system into a cash machine for private companies."

Keir Starmer has pledged to close asylum hotels by 2029 at the latest, but has yet to clarify how this will be achieved.

Tory MP Dame Karen Bradley, who chairs the committee, said: "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."

She urged the Government to "get a grip" on the system, saying it has an opportunity to "draw a line" under past failures.

Asylum hotels have been a flashpoint in recent months, with demonstrations outside venues across the country. Three companies - Serco in the North West and Midlands and in the East of England, Clearsprings in the South and Wales, and Mears in the North East,Yorkshire and the Humber, Scotland and Northern Ireland - have contracts with the Home Office to provide accommodation.

Despite a profit share clause in the contracts, work to claim money did not start until last year. The committee described this as "extremely disappointing".

The report said: "Accommodation providers told us they had tens of millions waiting to be returned to the Home Office. This money should be supporting the delivery of public services, not sitting in the bank accounts of private businesses."

MPs said warnings had been ignored and early failures were "unacceptable". The report said the Home Office "neglected the oversight and assurance of performance" that was needed.

To make matters worse it said: "The Home Office has not taken a sufficiently robust approach to applying financial penalties for poor performance by providers."

And MPs continued: "This is an inexplicable and unacceptable failure of accountability."

Human rights groups have demanded hotels are closed as fast as possible. Sile Reynolds, head of asylum advocacy at charity Freedom from Torture, said: "Everyday Freedom from Torture therapists see first-hand the devastating impact that hotels, military sites and shared bedrooms have on people who came to this country seeking safety. Living in fear, without privacy, stability, or access to proper healthcare, strips people of their dignity and undermines their recovery.

“The Government now has a crucial opportunity to once and for all transform our asylum accommodation system so that it is safe, dignified and based in our communities."

And Enver Solomon, chief executive at Refugee Council, said: “Hotels should never have become a long-term solution. Everyone agrees that the Home Office’s reliance on hotels is a serious failure: they cost the taxpayer billions, unfairly trap people in limbo and have become a lightning rod for division."

He called on the Home Office to speed up applications - saying hotels could close as soon as next year.

A Home Office spokesperson said: "The Government is furious about the number of illegal migrants in this country and in hotels. That is why we will close every single asylum hotel - saving the taxpayer billions of pounds.

"We have already taken action - closing hotels, slashing asylum costs by nearly £1 billion and exploring the use of military bases and disused properties."