Companies receiving taxpayer’s money to house asylum seekers are set to make more than £750m in profits, The i Paper can reveal.
The huge sums made by the three firms Serco, Clearsprings and Mears will reignite outrage at the burgeoning cost to the taxpayer of the government’s asylum policy. Recent disclosures showed that the Home Office will spend £2.2bn of overseas aid money over the next year on housing asylum seekers in hotels.
Chancellor Rachel Reeves pledged at the spending review on Wednesday to end costly hotel usage by the end of the current parliament in 2029 as ministers try and use alternative asylum accommodation.
In 2019, the three companies were given contracts by the then Conservative government worth an expected £4.5bn to provide asylum accommodation across the UK over a 10-year period, in residential properties and hotels. But since these deals were signed the large increase in asylum seekers arriving in the country has seen the firms earn bumper profits.
Last month, Government watchdog the National Audit Office revealed the three companies are now set to be paid £15.3bn in revenue from the contracts, but it did not disclose the scale of the projected profits.
Using Home Office financial forecasts and analysis of public declared profit margins on these contracts, The i Paper has calculated the pure profit from these deals could exceed £750m.
The growth has even catapulted Clearsprings’ owner Graham King, dubbed the “Migrant hotel King” by critics, onto the Sunday Times Rich List with a net worth north of £1bn. In 2023, two executives at Mears Group earned more than £1m each, with board members also earning bonuses worth more than £1m combined.
Home Affairs Select Committee member Paul Kohler MP highlighted King’s place on the Rich List, and said the scale of private profits was “deeply concerning”.
He said: “The excessive profits made by the companies providing asylum accommodation are deeply concerning. Clearsprings profits, for example, rose from £6000 per employee in 2020 to £300,000 per employee in 2024 – that is not increased productivity but daylight robbery.
“Taxpayers’ money should be spent on providing safe, decent accommodation not in ensuring Clearsprings owner entered the Sunday Times Rich List. We need to reform the profit-sharing mechanism to cap excessive margins and ensure far stricter oversight. Every pound wasted on inflated profits is a pound not spent on fixing the system.”
The NAO report, which was commissioned by Parliament’s Home Affairs Select Committee, says the number of asylum seekers in paid-for accommodation increased from around 47,000 in December 2019 to 110,000 in December 2024.
The Cresta Court hotel in Altrincham (pictured) , leased by Serco, has been used to house asylum seekers. (Photo: Christopher Furlong/Getty Images)Asylum accommodation has frequently been criticised by MPs and campaigners to be in a poor state. Last year, The i Paper revealed the scale of rodents, mould and cockroaches in asylum housing run by Mears, after the company racked up £1bn in payments from the Home Office.
Asli Tatliadim, Head of Campaigns at Refugee Action, said: “This top-down, for-profit and segregated accommodation system has given companies free rein to rinse the public purse while people seeking asylum are put in poor housing. ”
As part of the contracts, the three companies are required to “share” profits over 5% with the Home Office, to prevent excessive financial gain for the providers but the details of the profit-sharing arrangements are opaque.
On Tuesday, ministers agreed to clarify the precise nature of the profit sharing agreement with the Home Affairs Select Committee as MPs raised concerns about how much money the Government would recoup via the clause. Clearsprings and Mears have said they have agreed to repay £32m and £13.8m respectively.
Sir Keir Starmer has revived the idea of off-shore processing of asylum seekers after ending the Conservative administration’s Rwanda deal, and is looking to move failed asylum seekers to “return hubs” abroad once claims fail.
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A Home Office spokesperson said: “This government inherited a broken asylum system with contracts that were not properly scrutinised – wasting millions in taxpayer money. We will not hesitate to take whatever action necessary to guarantee value for money for the taxpayer.”
A Mears spokesperson said: “Mears provides asylum accommodation under contract to the Home Office and operates on a capped-profit, open-book basis. Any profits above the agreed thresholds are returned to the Home Office in line with the terms of the contract. Mears operating margin on the contract of 5%-6% is in line with or below typical margins on large public sector service contracts and represents value for money to our client.
“All accommodation is approved by the Home Office and regularly inspected to ensure it meets contractual and regulatory standards. We have had over 1300 feedback surveys completed in the past year for properties and overall feedback is good.”
Serco and Clearsprings declined to comment.
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