Andy Burnham’s plan to rip up multi-billion-pound asylum hotel contracts and make councils house migrants is potentially unworkable, experts, insiders and Labour MPs have warned.
If he becomes prime minister, the Labour leadership contender is said to be planning to trigger break clauses in 10-year accommodation contracts that are due to expire in 2029, in order to end the use of hotels.
He plans to shift the responsibility for finding accommodation to local authorities, with asylum seekers to be placed in temporary housing such as bedsits and houses in multiple occupation (HMOs).
The policy proposal is the latest to be floated by allies of Burnham, who is currently Mayor of Greater Manchester. He is hoping he can win the Makerfield by-election on 18 June, to become an MP and use his victory as a springboard to toppling Sir Keir Starmer and replacing him.
A spokeswoman confirmed Burnham wants to end the use of private companies in sourcing asylum accommodation, and stressed the need to be “more ambitious” on how to deliver housing for migrants, while acknowledging there are no “easy solutions”. However she did not say whether Burnham would move to break contracts early.
Last year, he said the way hotels are used to house asylum seekers was “not acceptable”, and he called for “real change”, with the sites having become a flashpoint for community tensions.
Experts have warned breaking contracts early may be “difficult to implement” amid fears that councils do not have enough accommodation, nor the money or will to deliver it.
However, former Home Office insiders believe breaking contracts and making local authorities responsible for asylum accommodation would cause “massive rows with councils” over capacity and funding.
Home Secretary Shabana Mahmood is believed to be on track with a pledge to close asylum hotels by 2029 when the contracts end, but allies of Burnham have told The Times he wants to go faster.
The i Paper understands Mahmood is not planning any imminent moves to trigger break clauses. She is “laser focused” on moving asylum seekers into military sites, a source said. It is unclear if Burnham backs this plan.
Councils ‘lack capacity’
It has been reported that Home Office officials do not think local authorities have capacity to source the tens of thousands of beds required to close all asylum hotels more quickly.
Experts said it did not appear feasible, as little progress appears to have been made in a pilot scheme that would allow local authorities to build new council homes or refurbish derelict properties to house asylum seekers, with the aim that these properties could later revert to social housing stock.
While there is interest among some councils, little work has been done to ramp up their role in housing asylum seekers, according to Jacqueline Broadhead, director of the Global Exchange on Migration, at the University of Oxford.
She told The i Paper: “There has been little public information about these pilots since the beginning of the year, and it remains unclear whether they will proceed. As a result, an immediate move away from the current system may be difficult to implement.
“The Home Office is currently beginning the process of procuring accommodation contracts for the period after 2029. Without a significant change in political will, it may be that the system remains broadly the same model as we currently have in place.”
Andy Burnham hopes the Makerfield by-election will be a springboard for him to become PM (Photo: Hannah McKay/Reuters)Some in Labour were also sceptical about any plan to trigger break clauses, with one senior MP saying the Government was on track with its pledge to close all asylum hotels by 2029.
The MP suggested councils do not have the space to accommodate the 30,000 or so asylum seekers currently being housed in around 185 hotels, although this has fallen from a peak of 56,000 across 400 hotels in 2023 under the Conservatives.
The MP said: “The question about ripping up contacts sounds great – but where do you put the people in them, pending their applications being processed, and who pays the compensation?”
But they added that Burnham’s proposal may be about sending “a message to want to go faster”.
Earlier this month, the Local Government Association (LGA) said it wanted to work with ministers on a better plan but urged the Home Office to “engage with and obtain the consent of councils well in advance of any decisions”.
‘Councils already drowning’
Former Home Office insiders said councils that were already “drowning in statutory duties” were likely to push back against such plans, with one warning: “Frankly none of them want to take asylum seekers because they are so expensive – so the idea they are going to volunteer accommodation is laughable.”
The insider also pointed out that “some councils will not do this, others will”, resulting in concentrations of asylum seekers “shifting” around the country with unpredictable political impacts.
A second ex-Home Office insider said closing hotels would not neutralise the political pain Labour is feeling over the Channel crisis as long as small-boat crossings continue.
“If they think they can dodge blame by shifting to councils then they’ll be disappointed,” the insider said. “People will still just blame central government for a lack of border control. If you close the hotels the people are still here and people will still be angry about it”
However, a third former Home Office insider said Burnham’s plan would simply be an extension of what the Government is already doing. “You’re basically moving cost to councils as you still have the same amount of people requiring accommodation.”
Soaring cost of accommodation
The expected cost of Home Office asylum accommodation contracts for the 10 years from 2019-2029 has more than tripled, from £4.5bn to £15.3bn.
This is because growing a number of people has had to be housed – driven by the Covid pandemic, a dramatic increase in small-boat crossings, and decisions by the Tories such as pausing asylum claim decisions while it pursued the failed Rwanda deportation scheme, according to the Commons Home Affairs Committee.
MPs on the committee said in a report last October that the Home Office under the Conservatives had neglected the management of accommodation contracts while pursuing high-risk policies like the Rwanda scheme.
Their report pointed out that two hotel providers owe millions in excess profits to the Home Office but that the department only began the process for recouping these in 2024.
Calling for a system that is “more locally led but better centrally controlled”, the committee said: “The 2026 break clause and end of the contracts in 2029 represent opportunities to draw a line under the current failed, chaotic and expensive system.”
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