Migrant hotels scandal as 'incompetent' Home Office wastes billions of tax-payer cash

A "failed" Home Office system has resulted in billions of pounds of taxpayers' money being spent on migrant hotels, a new report has found. Asylum accommodation providers made "excessive" profits at the expense of the hardworking Brit, according to a committee of MPs, due to ministers "neglecting" the contractors. This comes as the 10-year contracts tripled in cost from £4.5bn to £15.3bn, the home affairs report states.

Prime Minister Sir Keir Starmer has vowed to end the use of asylum seeker hotels by 2029 due to the soaring costs and ongoing protests in communities. However, the committee also warned that appealing to "popular opinion" without a clear plan in place to house asylum seekers could risk "under-delivery and consequently undermining public trust still further".

The committee of MPs said the scheduled end of the contracts and some break clauses next year offers the Home Office the opportunity "to draw a line under the current failed, chaotic and expensive system and move to a model that is more effective and offers value for money".

The report said: "Without a clear long-term plan and the institutional capability to deliver a model that is more effective and offers value for money, past failures risk being repeated."

Some 200 migrant hotels are housing more than 32,000 asylum seekers, which is currently costing £2.1bn a year - £145 per migrant, per night.

The committee said that the government did not penalise migrant hotel providers for poor performance, and large asylum sites such as the former RAF base in Wethersfield faced no penalties for underperforming either.

The report added that the Home Office missed the chance to renegotiate the asylum accommodation contracts during the pandemic when the government had to sharply increase the use of hotels.

As a result, contractors were able to increase their profits six-fold when the number of migrant hotels reached 400 at its peak.

The MPs said: "Profit share clauses failed to account for the large expansion of hotel accommodation, generating vast profits for providers.

"The Home Office should ensure future contracts take into account overall cash value of profits to prevent providers generating excessive returns from increased demand."

Firms reportedly held onto tens of millions of pounds which was due to be returned to the Home Office as the department failed to proactively retrieve the "excess" profits until 2024, the committee said.

A Home Office spokesman 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 a billion pounds and exploring the use of military bases and disused properties."