The cost of housing asylum seekers in Britain is expected to be more than triple what the Home Office had estimated, the public spending watchdog has warned.
Housing people from abroad seeking refuge in the UK was expected to cost about £4.5billion between 2019 and 2029, but that is now estimated to rise to £15.3billion, according to the National Audit Office (NAO).
It suggests that on average the taxpayer will foot an over £4million-a-day bill for asylum seeker housing.
The NAO published a briefing into the Home Office’s contracts for housing asylum seekers on Wednesday to support an inquiry into the issue by the Commons’ Home Affairs Committee.
Original Government estimates for the accommodation, which includes hotels, and support contracts totalled £4.5billion over the 10-year period, the report said.
However in 2024/2025, the current expected total stands at £15.3billion over the same period, it said.
“The Home Office’s total spend on asylum accommodation is more than planned and it has few levers to control costs,” the report states.
It added that the numbers seeking asylum housed in Home Office accommodation was up from 47,000 individuals in 2019 to 110,000 last year - an increase of 134%.
The watchdog said this was because of the rising number of people arriving in Britain in small boats across the English Channel.
There has also been an increase in the people claiming asylum who were previously detained under the Conservative government’s Illegal Migration Act 2023.
So far this year, more than 11,500 migrants have arrived in the UK after crossing the Channel, a record number for the first five months of the year.
The report also detailed that those temporarily living in hotels accounted for 35% of all people in asylum accommodation, and for about 76% of the annual cost of contracts – £1.3 billion of an estimated £1.7 billion in 2024-25.
The findings come ahead of MPs preparing to question contractors Clearsprings Ready Homes, Serco and Mears about their role sourcing and managing asylum seeker housing next week.
Reacting to the report, Home Affairs Committee chairwoman Dame Karen Bradley said: “Dealing with the cost of the asylum accommodation system remains a huge challenge for the Government.
“The NAO report reveals that the cost of these contracts is likely to be over three times what was envisaged when they were drawn up.”
She added: “We want to see why costs have risen so dramatically, but will also be looking at the quality of support that is provided, and will be challenging providers on failures to meet key performance indicators in recent years.”
The NAO’s report also said data from suppliers “suggests that hotels may be more profitable than other forms of accommodation”.
The watchdog also reported as of the end of March, the Home Office has taken £4million off suppliers’ revenues for reported underperformance since 2019.
It comes as the Home Office ended the use of supplier Stay Belvedere Hotels (SBHL), subcontracted by Clearsprings, after its performance and behaviour “fell short” of expectations.
Home Office minister Dame Angela Eagle has told MPs a full audit is being conducted of the supply chain.
Since the Labour Government came to power in July last year, 23 hotels have been closed while contracts were discontinued at three large sites, such as the Bibby Stockholm barge.
Napier Barracks in Folkestone, Kent, is also due to shut and be returned to the Ministry of Defence in September.
A Home Office spokesperson said: “As this report shows we inherited an asylum system in chaos with tens of thousands stuck in a backlog, claims not being processed and disastrous contracts that were wasting millions in taxpayer money.
“We’ve taken immediate action to fix it – increasing asylum decision-making by 52% and removing 24,000 people with no right to be here, meaning there are now fewer asylum hotels open than since the election.
“By restoring grip on the system and speeding up decision making we will end the use of hotels and are forecast to save the taxpayer £4 billion by the end of 2026.”
It comes as the Government prepares to publish its Immigration White Paper next week, which will lay out the details of Sir Keir Starmer’s plan to reduce immigration.
As part of the crackdown, visa applications from nationalities considered most likely to overstay and claim asylum in Britain could be restricted.
Work and study visas for people from countries such as Pakistan, Nigeria and Sri Lanka are among those that could reportedly be curbed by the Home Office.
UK visa applications have significantly fallen in recent months, particularly from those coming for jobs in the NHS and social care, after tough new restrictions on eligibility were introduced in early 2024 under the previous Government.
But asylum applications have rocketed.
Home Office figures show a total of 108,138 people applied for asylum in Britain in 2024, the highest number for any 12-month period since current records began in 2001.
