The Home Office has ‘squandered’ billions of pounds on asylum hotels, a damning report has found.
MPs blasted the department’s ‘incompetence’ over its handling of a ‘failed, chaotic and expensive’ system.
There was ‘manifest failure’ by the Home Office to ‘get a grip’ of contracts with private companies it appointed to house asylum seekers, they concluded.
As a result, the firms had been allowed make ‘excessive profits’ from the Channel crisis.
In one of the most damning reports ever published into the dysfunctional department, the MPs said the Home Office was ‘not up to this challenge’ and demanded a series of major changes.
The Commons’ home affairs select committee said it was ‘inexplicable’ the Home Office did not require accommodation providers to assess the impact on local areas before opening migrant hotels.
It had led to ‘some local services experiencing unsustainable pressures’, damaging community cohesion and allowing ‘misinformation and mistrust to grow’.
Committee chair Dame Karen Bradley MP said: ‘The Home Office has presided over a failing asylum accommodation system that has cost taxpayers billions of pounds.
The Home Office has ‘squandered’ billions of pounds on asylum hotels, a damning report has found (Pictured: A protest defending migrants at the Thistle City Barbican Hotel in London, August 2025)
The department has come under fire over its handling of migrant hotels by MPs (Pictured: Protestors at the Bell Hotel in Epping in August 2025)
Committee chair Dame Karen Bradley MP said the Home Office has ‘presided over a failing asylum accommodation’ (Pictured: Police outside the Bell Hotel in August 2025)
‘Its response to increasing demand has been rushed and chaotic, and the department has neglected the day-to-day management of these contracts.
‘The Government needs to get a grip on the asylum accommodation system in order to bring costs down and hold providers to account for poor performance.
‘Urgent action is needed to lower the cost of asylum accommodation and address the concerns of local communities.’
She added: ‘There is now an opportunity to draw a line under the current failed, chaotic and expensive system, but the Home Office must finally learn from its previous mistakes or it is doomed to repeat them.’
In 2019 the Home Office signed 10-year contracts with the three companies to provide asylum accommodation across the UK.
Serco holds the contracts for the North West, Midlands and the East of England, Clearsprings operates in the South and Wales; and Mears covers Yorkshire and the Humber, the North East, Scotland and Northern Ireland.
The contracts were initially focused on providing self-catering flats and houses – termed ‘dispersal accommodation’ by the Home Office – but expanded to hotels during the pandemic onwards, amid a surge in Channel crossings.
The companies also operate large-scale accommodation centres on ex-military sites at Wethersfield, Essex, and Napier Barracks, in Folkestone, Kent.
At the time they were signed, it was estimated the contracts would cost the taxpayer £4.5billion over a decade but officials now predict the final bill will be £15.3billion.
According to latest figures the Home Office is supporting 103,000 migrants at the taxpayers’ expense including just over 32,000 in hotels.
Migrant hotels cost the taxpayer an average of £144.98 per person per night compared with just £23.25 for dispersal accommodation.
The report, published today, identified a catalogue of errors.
According to latest figures the Home Office is supporting 103,000 migrants including just over 32,000 in hotels (Pictured: Protestors outside the Britannia Hotel in Bournemouth in September)
It said the Home Office had ‘repeatedly cut corners and wasted considerable amounts of taxpayers’ money’, adding that it amounted to ‘billions squandered’.
There had been a ‘series of failures by the Home Office in the design of the original contracts’ and, later, a ‘manifest failure … to grip the contracts and respond to increasing demand’.
‘The failure to plan for unanticipated developments, or to get a grip on the contracts as events arose, was chaotic, and led to significant costs to the taxpayer,’ it said.
‘We find this incompetence unacceptable.
‘Instead of acting as a short-term contingency measure, the use of hotels has become a widespread and embedded part of the asylum accommodation system, increasing the cost of the asylum accommodation contracts by billions of pounds beyond the original forecast.
‘Failures of leadership at a senior level, shifting priorities, and political and operational pressure for quick results meant that the department was incapable of getting a grip of the situation, and allowed costs to spiral.
‘The Home Office was undoubtedly operating in an extremely challenging environment, but its chaotic response demonstrated that it was not up to this challenge.’
The report found contracts drawn up by the department leave it unable to impose financial penalties on the companies for ‘performance failures’ at migrant hotels, Napier Barracks and Wethersfield.
‘This is an inexplicable and unacceptable failure of accountability,’ it said.
The blame for the fiasco was pinned on ‘failures of leadership at a senior level’.
At the time the contracts were originally signed the Home Office’s top civil servant was Sir Philip Rutnam, who resigned in February 2020 claiming constructive dismissal after clashes with then home secretary Dame Priti Patel. He later agreed a £340,000 settlement with the department.
He was succeeded as permanent secretary by Sir Matthew Rycroft who oversaw the expansion of migrant hotels as Channel crossings exploded.
Migrant hotels cost the taxpayer an average of £144.98 per person per night (Pictured: Protestors near the Britannia International Hotel in Canary Wharf in London in August 2025)
He left his job in March this year with an annual pay package of £455,000.
As small boat arrivals spiralled, Sir Matthew walked away with a £20,000 performance-related bonus on top of his £200,000 annual salary, plus a £50,000 ‘exit payment’ – of which £30,000 was tax-free – and £179,000 in pension benefits for the year.
Sajid Javid was Tory home secretary at the time the deals were signed in January 2019, and was followed in the job by Dame Priti, Suella Braverman and James Cleverly, until Labour’s Yvette Cooper took over after the summer 2024 general election.
But an ex-Home Office source told the Daily Mail: ‘Ministers were not given access to the contracts by the civil service on the grounds it was all commercially sensitive.
‘Politicians were not given an opportunity to challenge or change anything in these deals, and didn’t even know what was contained in them.
‘These failures are entirely the responsibility of civil servants.’
The committee urged the Government, which has pledged to close all migrant hotels by 2029, to give ‘urgent consideration’ to how the contracts could be improved when they reach break clauses next year.
And by the time the contracts end in 2029 the Home Office should come up with a plan to ‘avoid the same mistakes being repeated’.
A Serco spokesman said: ‘Serco wants to see an end to use of hotels and agree with both the Government and select committee that this should be a priority.
‘We have viable solutions to end hotel use and continue to work with the Home Office to deliver a long-term strategy which delivers for taxpayers.’
Mears and Clearsprings did not respond to requests for comment.
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, already slashing asylum costs by nearly a billion pounds and exploring the use of military bases and disused properties.’
