A scathing report by MPs found a failure of leadership while the Tories were in power saw private firms make huge profits housing asylum seekers in hotels as the backlog ballooned
A series of serious failures under the Tories led to taxpayers ploughing billions into asylum hotels, a damning report has found.
Failures of leadership meant the Home Office was not up to the challenge as ministers looked for quick fixes while the asylum backlog swelled. The “chaotic” response meant contractors were able to rake in a fortune as more and more hotels were brought into use.
The cross-party Home Affairs Select Committee said there was a “manifest failure” to get a grip of expensive contracts under Boris Johnson, Liz Truss and Rishi Sunak.
Epic scale of Tory failure unearthed
A “series of failures” under the Tory-led Home Office meant hotels became a “widespread and embedded” part of the asylum system rather than a short term fix.
The scathing report said the Home Office has “presided over an increasingly expensive” system in the past six years. Due to this ineptitude, the expected cost of asylum accommodation between 2019 and 2029 rocketed from £4.5billion to £15.3 billion.
Three companies – Serco in the North West and Midlands and in the East of England, Clearsprings in the South and Wales, and Mears in the North East, Yorkshire and the Humber, Scotland and Northern Ireland – have contracts with the Home Office to provide accommodation.
The damning document said of the rising cost: “This is the result of a series of failures by the Home Office in the design of the original contracts, and a manifest failure by the Home Office to grip the contracts and respond to increasing demand.
“The evidence we have examined leads us to conclude that providers can reap greater profits by prioritising the use of hotels over procuring other, more suitable forms of accommodation.”
Failures of leadership and rush for quick solutions
In the last Parliament – while the Tories were in charge – the Home Office was “focused on pursuing high-risk, poorly planned policy solutions”. This meant it lost sight of the day-to-day work needed to manage asylum contracts, the report found.
On top of that, the Government paused processing asylum applications while it pursued the Rwanda plan. This meant the backlog grew as tens of thousands of people arrived by small boat.
Due diligence was not carried out in the rush for quick solution. The report states: “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.”
It said the department “failed to undertake basic due diligence”, and added: “The Home Office was undoubtedly operating in an extremely challenging environment, but its chaotic response demonstrated that it was not up to this challenge.”
Number living in hotels swelled under Sunak
Latest figures show that 32,059 people were in asylum hotels in June. This compares to compared to 56,042 in September 2023 under Rishi Sunak.
At the end of 2018 around 47,500 asylum seekers were being accommodated by the Home Office. However by June this year, this figure had reached around 103,000.
Huge excess profits not claimed back
Another damning conclusion was that the Government failed to claw back tens of millions of pounds from providers.
Despite a profit share clause in the contracts, work to claim money did not start until last year. The committee described this as “extremely disappointing”.
The report said: “Accommodation providers told us they had tens of millions waiting to be returned to the Home Office. This money should be supporting the delivery of public services, not sitting in the bank accounts of private businesses.”
No way of stopping firms making ‘excessive profits’
The rise in contract values meant private companies were able to rake in huge profits with no way of getting it back.
MPs found negotiation flaws meant providers were able to make “significantly higher cash profits” than initially expected. And incredibly there was no process for clawing this money back.
The committee wrote: “We are frustrated that the Home Office has left itself without a mechanism to prevent providers making excessive profits as the contract value has increased, largely due to the ongoing use of hotels.”
Warnings were ignored
The Home Office failed to learn lessons over its ability to manage contracts – meaning it was “unprepared” to deal with a growing backlog.
Early failings were “unacceptable”, MPs ruled. The report states: “The Home Office was warned repeatedly that it needed to ensure it had adequate commercial and contract management capacity, but did not learn this lesson.
“Failure to do so left it unprepared to respond to the surge in demand for asylum accommodation. The department’s failure to recognise early on that the rapidly expanding value and complexity of the contracts would require additional resource and active management is unacceptable.”
Failure to monitor contracts was a disaster
The Government failed to properly oversee multi-billion pound contracts, and was weak in fining contractors for poor performance.
The report said the Home Office “neglected the oversight and assurance of performance” that was needed. To make matters worse it said: “The Home Office has not taken a sufficiently robust approach to applying financial penalties for poor performance by providers.”
And MPs continued: “This is an inexplicable and unacceptable failure of accountability.” They found that failings in performance management mean officials are not able to hold providers to account properly.
Too much accommodation is ‘unacceptable’
MPs voiced alarm about the standard of accommodation – saying it was “unacceptable” that taxpayers’ cash was being used to fund sub-standard hotels.
The report said: “While there is clearly accommodation of an acceptable standard, too many asylum seekers continue to be placed in accommodation that is inadequate or deeply unsuitable.
“The accommodation asylum seekers are housed in should be adequate, and it is unacceptable that significant amounts of taxpayers’ money is being used to house often vulnerable people in sub-standard accommodation.”
Deprived areas have more hotels
The report raised concerns that asylum hotels were not fairly distributed across the country.
And it said deprived areas were likely to have the highest number. MPs found that many local authorities do not have faith that the Government will act fairly.
The document states: “Asylum accommodation is still heavily concentrated in particular areas, often areas of high deprivation. Many local authorities do not have faith that the department will achieve a fair and equitable distribution of accommodation.”
Failure to determine impact on local areas
MPs said it was “inexplicable” that providers did not have so assess the impact on local areas before asylum hotels opened.
This led to some local services experiencing “unsustainable pressure”, the report said. The committee wrote: “The Home Office has failed to properly consider the impacts of its approach to the delivery of asylum accommodation on local areas and to engage early with local partners to understand what these impacts might be.
“It is inexplicable that the Home Office has placed no obligation on providers to assess impacts on local areas. Failures to identify and mitigate impacts, compounded by the disproportionate distribution of accommodation, has led to some local services experiencing unsustainable pressures.”
Vulnerable people left at risk of harm
Too many people have been left at risk because of safeguarding failings, the report found.
It said that attitudes were “inconsistent and often inadequate”, leaving vulnerable people at risk of harm. Poor safeguarding procedures do not lead to financial penalties, MPs reported.
Their findings stated: “We are particularly concerned that the Home Office does not currently have adequate understanding and oversight of vulnerabilities and potential safeguarding issues among asylum seekers it accommodates.”
Impact on community cohesion ignored
The Home Office failed to prioritise community cohesion – meaning misinformation and mistrust was allowed to fester.
A lack of engagement means that tensions have risen, the report states. MPs wrote: “The lack of engagement and transparency has left space for misinformation and mistrust to grow, which in too many areas has led to tensions and undermined the ability of local partners to promote social cohesion.”
No clear plan for closing asylum hotels
Although the Government has said it will close asylum hotels by 2029, it is still unclear how it will do that.
The report called on ministers to be honest about the challenges they face to avoid undermining public confidence. But MPs said it would be unwise of the Government to “box itself in” by ruling out options.
The committee said: “The Government has committed to ending the use of hotels to house asylum seekers by the end of this Parliament. Ministers have yet to set out a fully articulated plan with clear milestones for how the Government will deliver a significant reduction in the use of hotels while maintaining flexible capacity in the system.”
Which hotels should be emptied first?
MPs called on the Home Office to prioritise shutting hotels in remote areas and places where tensions are highest.
The committee said officials should focus on closing “manifestly unsuitable” venues. It said: “When planning the closure of the hotels, the Home Office should prioritise the closure of manifestly unsuitable hotels— such as those in remote areas and near limited infrastructure – that cause the most harm to their residents and place the most pressure on local services, and also the closure of hotels in areas that have experienced significant community cohesion issues.”
Sub-contractor failure took years to uncover
Failings at a major subcontractor took years to uncover before it was removed, the report states.
Despite significant “behaviour and performance”, Stay Belvedere Hotels was not stripped of its contracts until this year. This was despite it being used to provide rooms since 2019.
The report says: “Stay Belvedere Hotels Ltd was operating as a major subcontractor from 2019 onwards, but the Home Office only became aware of issues with the company within the last year. It was only after these issues came to light that the Home Office identified that Clearsprings had not been providing an appropriate level of information about their major subcontractors.”