Asylum seekers could get £100 a week to move out of hotels

Home Office officials believe the money - which would be provided on top of the £49.15 a week they currently receive for living costs - could be used to encourage asylum seekers to live with a family or individual they know.

Downing Street believes this payment plan, which would be rolled out in 2026, could cut the cost of housing asylum seekers to a seventh of what is currently spent accommodating them in hotels.

Read more: Another 503 migrants cross Channel in small boats in single day

Read more: UK to announce shake-up of immigration rules inspired by Danish system - as Labour MPs brand plans 'undeniably racist'

To be eligible, asylum seekers would have to provide proof of appropriate accommodation and would remain subject to normal regular reporting to the Home Office.

A Home Office source said: "It’s important that officials provide advice to ministers that sets out a range of options but it doesn’t mean ministers will pursue every option. Nothing is off the table.

"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."

More than 32,000 migrants were housed in 200 hotels in June 2025, costing an average of £145 per night - or £1,015 a week.

In comparison, other forms of “dispersal” accommodation in communities totals an average of £23.25 a night.

The total asylum hotel bill stands at £5.5 million a day, or £2.1 billion a year.

Sir Keir Starmer is reportedly looking to end the use of these hotels within a year, having originally pledged to scrap them by 2029.

As part of the closure plan, two former military barracks in Inverness, Scotland and Crowborough, East Sussex, have been set aside to house 900 migrants from the end of November.

It was revealed last week that asylum seekers from countries whose applications are routinely rejected were being offered up to £3,000 by Home Office officials.

Those who agree to abandon their asylum claims can get financial support of up to £3,000 through a Government voluntary returns scheme to help “find somewhere to live, find a job or start a business” in their home country.

Albanians, Bangladeshis, Brazilians, Chinese, Indians, Nigerians and Pakistanis are among the nationalities being targeted for the scheme.

The move was called a "disgrace" by shadow home secretary Chris Philp.

"The idea of handing out taxpayers’ hard-earned money to people who illegally entered the country is morally repugnant,” he said.

"We should leave the European Convention on Human Rights, which will enable all illegal immigrants to be deported within a week of arrival."

The Home Office said the voluntary returns service played a “vital” role in reducing the number of illegal migrants in the UK.

"We make no apology for saving taxpayers millions of pounds by removing individuals who have no legal right to remain in the United Kingdom, or who are seeking to leave voluntarily,” the spokesman said.

These proposals will all form a part of the government's major overhaul of the asylum system, which will be announced by Shabana Mahmood later this month.

The Home Secretary is expected to announce a shake up to immigration rules modelled on the Danish system, which has driven down the number of successful asylum claims to a 40-year low.

The measures being considered include limiting refugees to a temporary stay so they return home once a conflict ends.

Sir Keir has also hinted that refugees will have to earn the right to bring their family to Britain and scrap their automatic entitlement to citizenship after five years.

Those who are granted indefinite leave to remain in the UK must have proof of work, not claim benefits, speak English to a high standard and have no criminal record.

They will also be made to wait two years to bring their families to the UK once granted asylum, alongside showing proof they have the funds to support them.