Rachel Reeves has pledged to end the use of asylum hotels by 2029 as part of a spending review that saw the Home Office budget cut.
Speaking to MPs in the Commons on Wednesday, the chancellor said her plans to reform the asylum system would save £1bn a year. However, Treasury estimates show that the Home Office still expects the annual cost to be £2.5bn by the final year of this parliament.
Labour had already made a manifesto commitment to end the use of hotels for migrants, but Ms Reeves has now committed to doing this within four years.
Refugee charities welcomed the news, saying that hotels are “hugely expensive” and isolate asylum seekers from local communities, but urged ministers to move faster.
Where will the government put asylum seekers instead?
The Home Office has been exploring the use of medium-sized sites for asylum seekers instead of hotels, including former student accommodation. They are also working with local councils to try to house more people in flats and other accommodation within communities.
Home Office minister Dame Angela Eagle has said empty tower blocks, former teacher-training colleges and disused student accommodation are being considered as alternatives.
Joanna Rowland, a senior civil servant at the Home Office, told MPs on Tuesday that the government’s providers were clear “that we are exiting hotels and we need to do that rapidly due to cost”.
But she added: “We need to do the hotel exit and the alternative accommodation in a highly controlled way. If it was just an edict to close hotels, get dispersed, then we would end up with uneven concentration – and some local authorities, I know, are feeling that acutely right now.”
Labour has moved away from Conservative plans to repurpose former military bases for migrants, as these sites are expensive to run and very isolated, and are often not close to local services such as doctors’ surgeries and schools. The controversial Bibby Stockholm barge contract was ended, and officials axed plans to use the former RAF Scampton site in Lincolnshire.
But the Home Office is yet to provide further details on whether they would buy the new required sites or rent them, or to disclose which sites they are looking at.
What else is the government doing to reduce the need for hotels?
Ministers are also putting more resources into processing asylum claims and asylum appeals in an effort to clear the backlog of people waiting to have their cases processed.
The Home Office has recruited more staff to assess claims, which has resulted in an increase in asylum claims being rejected. Once their claims have been rejected, applicants no longer qualify for Home Office accommodation and must either support themselves or go to local councils for emergency housing support.
The number of asylum applications in the UK has hit a new high of 109,343 in the year to March 2025, up 17 per cent from 93,150 in the year ending March 2024.
But the backlog of cases waiting for a decision has fallen to its lowest level since 2021. Home Office figures show there were 109,536 people waiting for an initial decision at the end of March 2025 – down 12 per cent from 124,802 at the end of December 2024 and the lowest number since December 2021.
How much money will be saved, and how much do we currently spend on hotels?
Asylum seekers housed in hotels account for around 35 per cent of all people in asylum accommodation; however, the money spent on hotels makes up a much larger proportion of the overall spend. Around 76 per cent of asylum contract costs, or £1.3bn, was spent on hotels in 2024-25, the National Audit Office found.
Around 110,000 people seeking asylum were being housed by the Home Office in December 2024, with some 38,000 in hotels, the watchdog said.
New figures from March show that 32,345 asylum seekers were being housed in hotels at that time.
Under spending plans published by the Treasury on Wednesday, officials estimated that they would still have to spend £2.9bn on the asylum system in 2027-28, and £2.5bn in 2028-29. This year, asylum costs are expected to total £3.9bn.
Is 2029 a realistic target?
The Home Office’s top civil servant told MPs earlier this year that the department is aiming to bring hotel use down to “zero” but that this would depend on any “ups and downs”.
Sir Matthew Rycroft, who has now left the top job, said: “Ministers will want to keep the committee and parliament updated on the total numbers [of hotels], which have fallen from over 400 to 218, but I do not think you should expect a gradual decline of that number down to zero neatly by the end of this parliament. Our aim is to get to zero by the end of this parliament, but there will be ups and downs.”
Why are politicians so keen to clear migrant hotels?
Hotels are more costly than other forms of accommodation, and private companies are making significant profits from providing hotel rooms to the Home Office.
The day-to-day running of these hotels is often subcontracted, and in some cases, Home Office officials in charge of large hotel contracts have been unaware of who is providing vital services.
According to testimony provided to MPs, sexual assaults, threats, and prostitution have taken place inside hotels, and children have experienced malnutrition due to poor food.
Hotels can also be isolating for asylum seekers who are keen to get to know people in the community, with sites often located away from city centres.
Hotels have also been targeted by anti-migrant rioters and activists, with several being attacked during last summer’s rioting. YouTubers have also visited migrant hotels to film themselves intimidating residents.
What has been the reaction to the pledge?
Refugee charities have welcomed the news but urged the government to go further.
Enver Solomon, CEO of the Refugee Council, said: “Asylum hotels have become a flashpoint for community tensions and cost billions to the taxpayer, so ending their use is good for refugees, the taxpayer and communities. The deadline of 2029 feels far away, and we urge government to make it happen before then.”
He added that asylum seekers should be placed “within our communities not isolated in remote hotels”.
Charity Care4Calais said moving asylum seekers from hotels to accommodation within communities would be welcome and called for an end to the “for-profit asylum accommodation model that has created billionaires”.
Chief executive Steve Smith said: “Asylum accommodation should be provided based on the needs of people seeking asylum, not the profits of private owners and shareholders. Involving local authorities in the delivery of accommodation in their areas would be a first step in that direction.”
Shadow chancellor Mel Stride said the Home Office is still squandering money on asylum costs “because this government simply doesn’t have a plan on illegal migration”.
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