Billions of pounds are being drained from the UK each year under a “failed, chaotic and expensive” asylum system, cross-party MPs have warned.
Pressure is mounting over the cost of asylum accommodation, with spending between 2019 and 2029 expected to triple from £4.5bn to £15.3bn.
A new report from the Home Affairs Committee found ministers now have a chance to end the “current failed system” – but they risk repeating past mistakes without a long-term plan to replace hotels.
It said “flawed contracts” and “incompetent delivery” had left the department unable to cope with a surge in demand, while the use of hotels was both costly and unpopular.
The Home Office has pledged to end the use of hotels by 2029 and said recent closures have already “saved the taxpayer billions”.
But the committee found little evidence of structural savings – and warned that hotels still account for half of total costs.
What has been saved — and what is still being spent
The Home Affairs Committee said the Home Office had “allowed costs to spiral”, with spending on accommodation contracts between 2019 and 2029 expected to triple from £4.5bn to £15.3bn.
MPs found total asylum support spending reached £4bn in 2024-25, up from £739m in 2019-20, and warned the department had “not achieved value for money”.
The committee said hotels had become a “widespread and embedded” part of the system, adding “billions of pounds beyond the original forecast”. They accounted for around three quarters of all accommodation costs in the first seven months of 2024-25.
Labour has seen a fall of about £900m in hotel spending since 2023-24, but the report said this reflected “short-term efficiencies” rather than lasting reform.
Hotel spending dropped from around £3bn to £2.1bn, mainly through renegotiated rates and higher occupancy.
Even after these changes, hotels still make up more than half of asylum-support spending, and total costs remain near £4bn a year – over five times higher than in 2019-20.
Why costs remain high
MPs found that a “large and persistent backlog” of asylum claims continues to drive demand for costly accommodation.
Figures show the number of people awaiting an initial decision peaked at about 125,000 in September 2023 and fell to just over 70,000 by June 2025.
It said around 96 per cent of those receiving asylum support – more than 100,000 people – were still waiting for an initial decision or appeal outcome, with the backlog placing “unsustainable pressure on the asylum accommodation system”.
While the number of long-term cases has fallen sharply, with those waiting more than a year down by around two thirds since 2023, tens of thousands remain in temporary or contingency housing.
The report said that “reducing the appeals backlog represents another key step to reducing the number of people in asylum accommodation” and that progress in 2024 had been hampered by the Illegal Migration Act, which prevented the Home Office from processing claims from people who arrived after March 2023.
MPs said this caused the backlog to grow again until the new Government resumed decision-making after the election.
The committee also said the asylum accommodation and support contracts, first signed in 2019, have also added to the problem by locking the Home Office into “rigid, long-term arrangements” that limit flexibility and make it costly to adjust capacity.
It said these contracts “failed to anticipate the scale of demand” and have “driven up expenditure while delivering poor value for money”.
MPs urged the department to use upcoming break points in 2026 to “reset” the system and avoid repeating what they called “the same expensive mistakes”.
Why is closing down asylum hotels so hard?
A key problem is capacity.
Even as arrivals have slowed, the backlog keeps tens of thousands in accommodation. The committee said the number of supported asylum seekers was 5 per cent higher in June 2025 than a year earlier.
Home Office data shows that while long-wait cases have fallen, new claims continue to enter the system each month. Around 10,000 older cases were resolved in the first half of 2025, but inflows have kept total caseloads above 100,000 when dependants are included.
Contract rigidity has also limited flexibility. The asylum accommodation and support contracts, signed in 2019, tie providers into long-term deals that restrict scaling down when demand drops.
Local resistance has been another factor.
The committee said the Home Office’s “failure to engage with communities” had allowed misinformation and tension to grow, especially in towns where asylum hotels have become political flashpoints.
MPs said the Home Office has yet to publish a long-term plan for alternative accommodation, despite repeated pledges to end the use of hotels by 2029.
They also found the department had failed to recover tens of millions of pounds in excess profits from accommodation providers or fine them for poor performance at hotels and large sites.
Dame Karen Bradley, who chairs the committee, said 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”.
She warned that without a credible plan, “the Home Office risks boxing itself in by making undeliverable promises to appeal to popular sentiment”.
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