The Home Office has squandered billions of pounds on asylum accommodation through incompetent management and poorly designed contracts, according to a scathing parliamentary report.
The Commons home affairs select committee found that what began as £4.5 billion contracts in 2019 will now cost taxpayers £15.3 billion by 2029 – a staggering threefold increase driven by chaotic handling of the Channel migrant crisis.
MPs accused the department of presiding over a “failed, chaotic and expensive” system that has allowed private contractors to make “excessive profits” while local communities face unsustainable pressure. Committee chair Dame Karen Bradley said there had been a “manifest failure” to control costs and hold providers accountable.
Currently, 103,000 migrants are housed at taxpayer expense, including 32,000 in hotels costing an average £145 per person per night – more than six times the £23 cost of standard dispersal accommodation in flats and houses.
Three companies – Serco, Clearsprings, and Mears – won decade-long contracts in 2019 to provide asylum housing across the UK. While initially focused on self-catering properties, the arrangements rapidly expanded to include hotels during the pandemic as small boat arrivals surged.
The report identified catastrophic failures in contract design, noting that the Home Office cannot impose financial penalties on companies for poor performance at hotels or accommodation centres like Napier Barracks and Wethersfield. MPs called this an “inexplicable and unacceptable failure of accountability.”
Committee members were particularly critical of the department’s failure to assess local impact before opening migrant hotels, which has damaged community cohesion and fuelled misinformation. The rushed response to rising demand demonstrated that officials were “not up to this challenge,” they concluded.
The blame was pinned on “failures of leadership at a senior level.” The contracts were signed under permanent secretary Sir Philip Rutnam, who resigned in 2020 after clashes with then-Home Secretary Priti Patel, securing a £340,000 settlement. His successor, Sir Matthew Rycroft, oversaw the hotel expansion before leaving in March with a £455,000 annual package, including a £20,000 performance bonus despite the spiralling crisis.
However, a former Home Office source claimed ministers were denied access to contract details on commercial sensitivity grounds, preventing political oversight. “These failures are entirely the responsibility of civil servants,” they told the Daily Mail.
The report urged urgent action as contracts reach break clauses next year, calling for fundamental reforms to prevent repeating the same mistakes when deals expire in 2029.
The Labour government has pledged to close all asylum hotels by 2029, with a spokesman saying they are “furious” about the situation and have already begun shutting hotels while exploring alternatives including military bases.
A Serco spokesman welcomed ending hotel use and said the company has “viable solutions” to work toward long-term improvements.
The damning report represents one of the most severe criticisms ever levelled at the dysfunctional department, with MPs demanding major changes to restore accountability and value for taxpayers.
