UK Taxpayers Face £15 Billion Bill Over Ten Years to House Asylum Seekers as Costs Soar

UK Taxpayers Face £15 Billion Bill Over Ten Years to House Asylum Seekers as Costs Soar

The cost of housing asylum seekers in the UK, including the use of hotels, has ballooned to an eye-watering £15 billion over the next decade, according to new findings from government watchdogs.

This is more than three times the Home Office’s original estimate, which was forecast at £4.5 billion for the same period.

The figures come from the National Audit Office (NAO) and highlight the escalating financial burden on taxpayers.

Original Forecast vs. Reality: A Huge Jump in Costs

When the contracts were first drawn up in 2019, the Home Office expected to spend £4.5 billion over ten years to house asylum seekers.

However, due to the increasing number of people crossing the English Channel and seeking asylum, the overall cost has soared to £15.3 billion. Th

is means taxpayers will now be shelling out an average of £4.2 million per day for the next decade just to accommodate asylum seekers.

The data from the NAO reveals that in the fiscal year 2024-25 alone, the cost will hit £1.67 billion, or roughly £4.57 million per day.

It’s a massive jump, and much of this expense is being driven by the use of hotels to house thousands of migrants arriving in the UK by small boat.

Hotel Accommodation: A More Profitable Option for Contractors?

Interestingly, the report suggests that hotels may actually be more profitable for the companies managing the contracts than other types of accommodation.

The government awarded 10-year contracts in 2019 to Clearsprings Ready Homes, Mears Group, and Serco, each responsible for finding housing and subcontracting hotels for asylum seekers.

Clearsprings is now set to receive £7.3 billion over the ten-year period, while Serco will get £5.5 billion and Mears will earn £2.5 billion.

In total, suppliers have made £383 million in reported profits between 2019 and 2024.

The NAO notes that while profits have varied, they’ve ranged from a loss of 2% to a profit margin of 17%—with an overall average profit of 7% across the entire service.

The Strain of Rising Numbers

The growing number of people seeking asylum has added pressure to the system.

The report states that the number of asylum seekers housed by the Home Office has increased dramatically from around 47,000 in December 2019 to approximately 110,000 in December 2024.

This surge in demand has contributed to the rising costs, as hotels have become a necessary fallback option to house the overflow.

Government Scrutiny: A Closer Look at the Providers

Next week, the Home Affairs Select Committee will question Steve Lakey of Clearsprings Ready Homes and Claudia Sturt from Serco UK and Europe to get more details about the rising costs and the role these companies play in sourcing and managing accommodation for asylum seekers.

The committee’s chair, Dame Karen Bradley, has emphasized the challenges the government faces in controlling the costs of the asylum accommodation system.

The NAO report’s findings show that the cost of these contracts has significantly exceeded initial expectations, raising questions about how the money is being spent.

The committee plans to probe into why the costs have increased so dramatically and to examine whether the quality of support being provided to asylum seekers has kept up with the rising costs.

In the coming weeks, the Home Office and contractors will be under intense scrutiny to explain their roles in the asylum housing system, and the government is facing increasing pressure to tackle the spiraling costs.