Asylum hotel cost 'triples to £4 million a day' as EU rejects UK's call for help in tackling small boats

8 May 2025, 00:51 | Updated: 8 May 2025, 02:52

The cost of asylum hotels has been revealed - as EU rejects UK's call for help in combatting small boat traffickers.

The cost of accommodation for migrants has tripled to £4 million a day - with Channel crossings continuing to rise.

Hotel and other asylum accommodation originally set to cost £4.5 billion between 2019 and 2029 is now forecast to reach £15.3 billion, according to official data.

Last year, the cost was £1.67 billion - this is roughly equivalent to £4.6 million a day or £3,172 a minute.

Sir Keir Starmer faces increased pressure regarding Labour's immigration policy and the surging popularity of Reform UK.

The £15.3 billion is triple the size of Labour’s proposed benefits cut.

Read more: New German government to station more police at border and turn away asylum seekers in anti-migration drive

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There are fears that disillusioned voters may believe that money spent on asylum hotels has resulted in the government's most controversial cuts, including to the policies on winter fuel allowance for pensioners and disability benefits, reported The Telegraph.

It has also been reported that migrants applying for work visas would need to meet higher standards of English language proficiency than previously required.

The standard of English will be raised from GCSE to A Level equivalent in an attempt to improve integration, reported The Times.

According to figures from the National Audit Office (NAO), companies holding the contracts for asylum hotels may be making more profit than other types of housing.

Since September 2019, Clearsprings Ready Homes, Mears Group, and Serco - the three companies awarded the decade-long accommodation contracts - are believed to have collectively earned nearly £400 million in profit over five years.

The contractors are tasked with securing private rental housing for asylum seekers relocated throughout the UK, as well as arranging hotel accommodations - via subcontractors - for migrants arriving by small boats across the Channel.

There were 38,000 migrants living in hotels since December 2024, while a further 66,000 asylum seekers were placed in "dispersed accommodation" such as flats and self-catering homes.

Last year, Home Secretary Yvette Cooper announced plans to launch the Border Security Command as part of the Labour government's plan to crack down on gangs smuggling migrants across the English Channel.

Yet Labour's plan has been hampered by the European Commission, which is preventing the UK from accessing key intelligence on people smugglers - The Telegraph reported.

Ministers are weighing plans to extend the period migrants must wait to apply for permanent residency from five to ten years, unless they meet specific criteria such as passing more rigorous English language exams.

The cost of asylum hotels has reportedly used up much of the Home Office budget.

An impending spending review will set day-to-day budgets for the next three years.

According to NAO, the contractor Clearsprings is now reportedly set to be paid £7.3 billion from 2019 to 2029.

Meanwhile, Serco is expected to get £5.5 billion, while Mears will receive £2.5 billion.

The total number of asylum seekers housed in Home Office accommodation has increased by £134% between December 2019 and 2024 - from 47,000 to 110,000.

According to the spending watchdog, this increase was due to people arriving in the UK by crossing the English Channel and an increase in people claiming asylum who were detained under the previous Conservative government's Illegal Migration Act 2023.

Labour pledged to end the use of hotels for people seeking asylum during its general election campaign.

Referring to the NAO report, a Home Office spokesman said: “As this report shows, we inherited an asylum system in chaos with tens of thousands stuck in a backlog, claims not being processed and disastrous contracts that were wasting millions in taxpayer money.

“We’ve taken immediate action to fix it – increasing asylum decision-making by 52 per cent and removing 24,000 people with no right to be here, meaning there are now fewer asylum hotels open than since the election.

“By restoring grip on the system and speeding up decision making, we will end the use of hotels and are forecast to save the taxpayer £4 billion by the end of 2026.”