Asylum accommodation – including hotels – will cost the taxpayer £15billion over 10 years, spending watchdogs have revealed.
The overall cost is more than triple the Home Office’s original estimate, data from the National Audit Office (NAO) showed.
Contracts were originally forecast to cost £4.5billion over a decade from 2019 but are now expected to run to £15.3bn over same period, after the Channel crisis exploded.
It means that on average the taxpayer will spend £4,191,780 a day on housing asylum seekers over the life of the contracts.
A separate breakdown from the NAO showed overall costs in 2024-25 were £1.67billion, or £4,567,123 a day on average.
Asylum hotels ‘may be more profitable’ for companies holding the contracts than other types of housing, the government’s official auditors said.
The Home Office awarded the 10-year contracts to three suppliers in 2019 – Clearsprings Ready Homes, Mears Group and Serco – which each operate two or three UK regions each.
They are responsible for finding a range of self-catering accommodation for asylum seekers who are dispersed across the country, and for sub-contracting hotels for tens of thousands of migrants coming across the Channel by small boat.
Migrants at a hotel in Cheshire earlier this year, with properties paid for by the Home Office through contracts with private suppliers which have now been scrutinised by the National Audit Office
Migrants relax outside the hotel in Cheshire earlier this year
The report found Clearsprings is now set to be paid £7.3billion over the 10 years from 2019 to 2029, the NAO said, while Serco is expected to get £5.5billion and Mears will receive £2.5billion.
Its study said: ‘The total reported profit of suppliers was £383million between September 2019 and August 2024.
‘In the first five years of the contract, available data from suppliers show annual profit margins ranging from a loss of 2 per cent to a profit of 17 per cent.
‘This is equivalent to an overall 7 per cent profit margin across the whole service.’
The report went on: ‘People accommodated in hotels account for 76 per cent of the annual cost of the contracts (£1.3billion out of an estimated £1.7billion in 2024-25).
‘Data reported by suppliers suggests that hotels may be more profitable than other forms of accommodation.’
It said the Home Office ‘originally estimated that the total contract cost would be £4.5billion over 10 years’.
‘However, the current estimated total is £15.3billion over the same period.
‘The number of people seeking asylum who are accommodated by the Home Office increased from around 47,000 in December 2019 to around 110,000 in December 2024,’ it added.
A sign at the Cheshire hotel showed it has been closed for public use
Dame Karen Bradley, the Conservative MP who chairs the Commons’ home affairs select committee, said asylum costs remained a ‘huge challenge’ for the Government
The Commons’ home affairs select committee is due to question Steve Lakey, managing director of Clearsprings Ready Homes, and Claudia Sturt, prisons and immigration director of Serco UK and Europe, next week.
Committee chairman 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.
‘Next week we’ll be speaking to providers to understand their role in sourcing and managing accommodation for asylum seekers.
‘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.’
