Source · Select Committees · Home Affairs Committee
Recommendation 2
2
Deferred
Set out plans for a flexible, cost-minimising asylum accommodation system, incentivising hotel exits.
Recommendation
We recommend that the Home Office sets out plans for an asylum accommodation system that can flexibly respond to changing demand, whilst minimising potential costs to the taxpayer. In the short term, the Home Office should identify and implement any possible action it can take to direct and incentivise providers to identify alternative accommodation and exit hotels. The Home Office should also give urgent consideration to the practical implications of exercising the contractual break clauses, that become exercisable from March 2026. The Home Office should ensure that the design of future contracts from 2029 onwards is sufficiently flexible to respond to changing demand, while protecting value for money, and provides the necessary levers to ensure providers deliver appropriate accommodation. (Recommendation, Paragraph 32) 95 Contract management
Government response summary AI-generated
The government's response focuses on strengthening its internal contract management capabilities, including investing in capacity, training, and accountability frameworks, and commissioning an independent review of these arrangements, rather than setting out plans for a flexible asylum accommodation system, specific incentives for exiting hotels, or the implications of contractual break clauses.
Summary of the government's response below — read the verbatim text to verify.
Government Response
Deferred
HM Government · verbatim extract
Deferred
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
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