The costs associated with asylum accommodation in the UK have soared dramatically, primarily driven by the heavy reliance on expensive contingency measures, particularly the use of hotels. Here is a discussion of the asylum accommodation costs based on the sources: 1. Escalation of Overall Costs The entire asylum system has seen exponential cost growth in recent years. • Overall System Cost: The total cost of the asylum system is expected to rise from £739 million in 2019/20 to an anticipated £4.7 billion in 2023/24. • Cost Per Person: The average annual cost of housing and supporting an asylum seeker has more than doubled, increasing from £17,000 per person in 2019/20 (adjusted for inflation) to approximately £41,000 in 2023/24. 2. High Cost of Hotel Accommodation The primary factor driving these soaring costs is the extensive use of hotels as contingency accommodation. • Daily Hotel Costs: Hotel accommodation costs around £145 per night per person. • Disparity with Traditional Housing: This is staggeringly more expensive than using traditional dispersal accommodation (such as flats or shared housing), which costs an average of only £14 per night per person (or £14.41 per person per night). • Cost Share: In the 2024/5 financial year, hotel accommodation accounted for 76% of the total annual cost of asylum contracts, despite housing only 35% of the people in asylum accommodation supported by the Home Office. 3. Contract Overruns and Financial Oversight The initial financial projections for the asylum accommodation contracts have been vastly exceeded. • Contract Inflation: Contracts signed in 2019 with three private providers (Clearsprings, Mears, and Serco), initially estimated to cost £4.5 billion over a decade, are now forecast to cost £15.3 billion over the 10-year period. This represents an expected cost three times the original estimate. • Provider Profits: Between September 2019 and August 2024, the three private contractors made a total profit of £383 million on these contracts. A Mears spokesperson noted that their operating margins of 5%-6% are capped and are below those in other sectors. • Oversight Issues: The Home Office has been criticised for its management of these contracts, having deducted less than 1% from contractors for breaches. • Root Cause of Increase: Much of this cost increase has been caused by the slow processing of asylum claims and the growing backlog, forcing the government to rely on expensive contingency measures like hotels. 4. Proposed Cost-Effective Alternatives The high costs of the current system highlight the viability of alternative models that offer both support and cost savings. • IPPR Recommendations: The Institute for Public Policy Research (IPPR) recommends ending national outsourcing contracts and decentralising budgets and powers to regional bodies to find more affordable dispersal housing, thereby bringing down costs. • Alternative Project Costs: The NRPF Housing First Project provides housing and support, including help with immigration status and English lessons, for an estimated average cost of £6,870 per person per year. • Savings Comparison: This cost is significantly lower than the estimated £41,000 per person annually spent on asylum accommodation, meaning the Housing First project supports roughly six people for the cost the government pays to house one asylum seeker in a hotel. The government has acknowledged the financial challenge and has pledged to end the use of hotels, forecasting a saving of £4 billion by the end of 2026 by speeding up decision-making and restoring "grip on the system".
