UK recovers £74m from asylum hotel contractors

The UK government has recovered £74 million from companies running asylum accommodation after a review found they had made excessive profits under previous contracts.

The Home Office said the money was reclaimed following a review of supplier contracts initiated after Labour took office last year.

The move follows criticism from MPs that successive governments had failed to properly oversee the multi-billion-pound asylum housing system.

Home Office figures show that asylum accommodation cost £2.1 billion in 2024/25 around £5.77 million a day meaning the recovered amount is equivalent to less than a fortnight’s spending.

Accommodation firms had previously agreed to return some profits to the government under contractual terms.

The cost to taxpayers has fallen from £3 billion the previous year, largely due to cheaper accommodation and room sharing arrangements.

Home Secretary Shabana Mahmood said the recovery was part of broader efforts to ensure “better value for taxpayers.”

She added: “We have already saved £700 million 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.”

Dame Karen Bradley, chair of the Home Affairs Select Committee, welcomed the move but called it only a first step, urging ministers to outline a long-term strategy for a “resilient and cost-effective asylum system.”

Shadow Home Secretary Chris Philp criticised the government, arguing that “savings will disappear in just 12 days” and that the number of asylum seekers housed in hotels remains too high.

Ministers have pledged to end the use of asylum hotels before the next general election and expand the use of military sites and alternative housing to cut costs.

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