Asylum accommodation – including hotels – will cost the taxpayer £15billion over 10 years, spending watchdogs have revealed.
The overall cost is more than triple the Home Office’s original estimate, data from the National Audit Office (NAO) showed.
Contracts were originally forecast to cost £4.5billion over a decade from 2019 but are now expected to run to £15.3bn over same period, after the Channel crisis exploded.
It means that on average the taxpayer will spend £4,191,780 a day on housing asylum seekers over the life of the contracts.
A separate breakdown from the NAO showed overall costs in 2024-25 were £1.67billion, or £4,567,123 a day on average.
Asylum hotels ‘may be more profitable’ for companies holding the contracts than other types of housing, the government’s official auditors said.
The Home Office awarded the 10-year contracts to three suppliers in 2019 – Clearsprings Ready Homes, Mears Group and Serco – which each operate two or three UK regions each.
They are responsible for finding a range of self-catering accommodation for asylum seekers who are dispersed across the country, and for sub-contracting hotels for tens of thousands of migrants coming across the Channel by small boat.
Migrants at a hotel in Cheshire earlier this year, with properties paid for by the Home Office through contracts with private suppliers which have now been scrutinised by the National Audit Office
Asylum accommodation – including hotels – will cost the taxpayer £15billion over 10 years. Clearsprings is now set to be paid £7.3billion over the 10 years from 2019 to 2029
The report found Clearsprings is now set to be paid £7.3billion over the 10 years from 2019 to 2029, the NAO said, while Serco is expected to get £5.5billion and Mears will receive £2.5billion.
Its study said: ‘The total reported profit of suppliers was £383million between September 2019 and August 2024.
‘In the first five years of the contract, available data from suppliers show annual profit margins ranging from a loss of 2 per cent to a profit of 17 per cent.
‘This is equivalent to an overall 7 per cent profit margin across the whole service.’
The report went on: ‘People accommodated in hotels account for 76 per cent of the annual cost of the contracts (£1.3billion out of an estimated £1.7billion in 2024-25).
‘Data reported by suppliers suggests that hotels may be more profitable than other forms of accommodation.’
It said the Home Office ‘originally estimated that the total contract cost would be £4.5billion over 10 years’.
‘However, the current estimated total is £15.3billion over the same period.
‘The number of people seeking asylum who are accommodated by the Home Office increased from around 47,000 in December 2019 to around 110,000 in December 2024,’ it added.
The Commons’ home affairs select committee is due to question Steve Lakey, managing director of Clearsprings Ready Homes, and Claudia Sturt, prisons and immigration director of Serco UK and Europe, next week.
Committee chairman Dame Karen Bradley said: ‘Dealing with the cost of the asylum accommodation system remains a huge challenge for the Government.
‘The NAO report reveals that the cost of these contracts is likely to be over three times what was envisaged when they were drawn up.
‘Next week we’ll be speaking to providers to understand their role in sourcing and managing accommodation for asylum seekers.
‘We want to see why costs have risen so dramatically, but will also be looking at the quality of support that is provided, and will be challenging providers on failures to meet key performance indicators in recent years.’
The NAO report said the Home Office has imposed only £4million in penalties against the companies holding the contracts since they began in 2019.
‘As of 31 March 2025, the Home Office has deducted £4million from suppliers’ revenue since 2019-20 for underperformance,’ it said.
Migrants relax outside the hotel in Cheshire earlier this year
At the end of December there were 110,000 asylum seekers in taxpayer-funded accommodation, the watchdog revealed.
Of those, 42,000 asylum seekers were in Home Office ‘contingency accommodation’, including 38,000 in hotels.
The figure also included 735 people in large accommodation sites built by the previous Conservative government, including former RAF base Wethersfield, in Essex, and Napier former barracks in Kent.
Separately, there were 66,000 asylum seekers in ‘dispersed accommodation’, which is mainly self-catering houses and flats.
In addition, 2,000 asylum seekers were in ‘initial accommodation’.
The NAO’s breakdown also showed that at the end of last year 4,000 failed asylum seekers were still being provided with taxpayer-funded accommodation because they had shown they were ‘destitute’.
Asylum claims have surged under Labour to hit more than 108,000 last year – the highest number since records began in 1979, figures published in February showed.
Earlier this week it emerged the Home Office is poised to unveil plans to scale back the number of work and study permits handed to nationals who are more likely to go on to claim they are a refugee.
The measures will feature in an immigration white paper due to be published next week.
The Mail revealed last April how tens of thousands of foreign nationals were entering Britain on temporary visas and then lodging asylum claims in a bid to stay here permanently.
Leaked documents exposed how foreign students, workers and visitors were exploiting the hidden ‘back door to Britain’.
We revealed the existence of a secret Home Office database – called the ‘Visa-Asylum Switching Tables’ or VAST – which keeps track of huge numbers of asylum claims lodged by visa-holding foreign nationals.
The Home Office is now working with the National Crime Agency to build a model that would reject visa claims from migrants who are more likely to claim asylum, sources said.
But Professor Jonathan Portes, a senior fellow at the academic think-tank UK in a Changing Europe, said the impact that restricting visas would have on the number of asylum applications was ‘likely to be quite small’.
