Source · Select Committees · Home Affairs Committee
Recommendation 1
1
Accepted
Home Office failures led to costly, widespread hotel use in asylum accommodation.
Conclusion
Instead of acting as a short-term contingency measure, the use of hotels has become a widespread and embedded part of the asylum accommodation system, increasing the cost of the asylum accommodation contracts by billions of pounds beyond the original forecast. This is the result of a series of failures by the Home Office in the design of the original contracts, and a manifest failure by the Home Office to grip the contracts and respond to increasing demand. The evidence we have examined leads us to conclude that providers can reap greater profits by prioritising the use of hotels over procuring other, more suitable forms of accommodation. Going forward, the Government will need to design a system that can flexibly respond to fluctuating demand while setting appropriate incentives for providers to maintain value for money. (Conclusion, Paragraph 31)
Government Response Summary
The Home Office recognizes past failures and commits to exiting asylum hotels as soon as possible by progressing alternative accommodation, using sites like former military bases, and increasing Dispersal Accommodation, noting a significant reduction in hotel use already. They also commit to using lessons learned to design flexible, value-for-money contracts for future systems.
Government Response
Accepted
HM Government
Accepted
The Home Office recognises that hotels became a significant part of the asylum accommodation system due to unprecedented demand and limited contractual flexibility. As part of the Government’s ‘Restoring Order and Control’ programme, the Home Office will design a future asylum accommodation system that responds to fluctuations in demand, safeguards vulnerable asylum seekers and minimises the impact on local communities. In the near-term, this Government is committed to exiting the use of asylum hotels as soon as possible by progressing alternative accommodation initiatives and working collaboratively with other government departments to deliver a range of suitable alternative sites to hotels, including former military sites. We are working with providers to deliver more Dispersal Accommodation bedspaces and move away from their reliance on hotels as Contingency Accommodation. Hotel use has already reduced substantially – from over 400 at its peak, to 197 in use as of 5 January 2026 – but this government remains committed to exit all asylum hotels as soon as possible. In the longer term, the Government continues to explore options for stable and sustainable accommodation models. These models aim to reduce pressure on local housing markets, improve resilience in the asylum system, and ensure that accommodation solutions are fit for purpose and adaptable to future needs. The 2026 break clause pertains to the core contract that provides Initial and Dispersed Accommodation. Hotels can be exited without exercising these break clauses as they are contracted via a Contract Change Notice to the main contract. To exercise the break clause on the core contract, there needs to be sufficient alternative supply of accommodation in place to ensure service continuity. The break clause can be enacted at any point between 2026 and 2029. Lessons have been learned from the mistakes of the past. The Home Office will review these lessons and ensure they are used to design future contracts that are flexible and better able to respond to changing demand, while ensuring value for money for the taxpayer. Contract Management