Government recovers £74m from asylum hotel firms

The government has recovered £74m from excessive profits made by companies running asylum accommodation, the BBC can reveal.

The Home Office said it had recouped the money following a review of contracts after Labour came to power last year.

Ministers had faced criticism from MPs for neglecting day-to-day management of the contracts.

But the amount recouped remains a small percentage of the overall cost of asylum accommodation.

Home Office figures show the overall cost was £2.1bn in 24/25 - an average of about £5.77m per day.

That makes the sum recovered less than the cost for the government of accommodation every fortnight.

Accommodation providers had previously told parliament they would be returning some profits to the government, under the terms of their contracts.

The cost to the taxpayer of the contracts has increased significant since they were signed.

Dame Karen Bradley, the Conservative chair of the home affairs select committee, said the recovery was "welcome" but only a "first step".

She added: "This is only a small part of the many billions that the contracts have and will cost.

"The government must now set out its long term plan for how it will deliver a resilient and cost effective asylum accommodation system."

Ministers have promised to end the use of asylum hotels before the next general election - and the prime minister has said he would like to bring that deadline forward.

But the Home Office has also sought to bring down the immediate costs of hotels and other types of accommodation, like private flats.

The costs for 2024/25 were a reduction from the previous year - when accommodation cost £3bn - or £8.3m per day.

Much of that was down to reducing the average nightly cost per person, as a result of room sharing and cheaper accommodation being used.

Ministers are also planning to use alternative accommodation- such as military sites - to house asylum seekers.

Home Secretary Shabana Mahmood said: "This government inherited asylum hotel contracts that were not delivering good value for taxpayers' money.

"We have already saved £700m in hotel costs. Now we are recouping millions more in excess profits. And by the end of this parliament, we will have closed every asylum hotel."

Last month, the Home Office was strongly criticised by the home affairs committee for its handling of asylum accommodation.

MPs on the committee said the government had "squandered" billions of pounds of taxpayer money.

They also accused the Home Office of under-utilising mechanisms to reclaim excess profits made by accommodation providers.

There are break clauses in some contracts that would allow ministers to end use of some accommodation in 2026.

The home secretary told the BBC last week that all options were on the table - and that she would study the legal arrangements "carefully".

Conservative Shadow Home Secretary Chris Philp said: "The only way to end this crisis is to end the use of hotels altogether.

"The Home office is spending £5.77m per day on asylum hotels, meaning these savings will disappear in just 12 days.

"The truth is the Labour government is accommodating more illegal immigrants in hotels than at the election, and the first nine months of this year have been the worst in history for illegal immigrants crossing the Channel.

"Only the Conservative Party has a serious, hard-edged plan to take control of our borders."