Recommendation 31

We questioned the Home Office specifically on how it would use excess profit clauses within its cost-plus hotel contracts. The Home Office accepted that “in general”, cost-plus contracts do not represent good value for the taxpayer and acknowledged the risk that providers could earn higher margins under such models.81 However, when we raised concerns about the obscene profits earned by providers in recent years, particularly while large numbers of people remained in hotel accommodation, and suggested that the Home Office exercise its excess profit clauses either retrospectively or prospectively, it did not set out clear circumstances in which this would occur. Instead, the Home Office emphasised again that it was reviewing contractual options and arrangements across its asylum accommodation estate.82 76 Letter from the Second Permanent Secretary of the Home Office relating to the inquiry into the asylum system, dated 6 February 2026 77 Qq 111-113 78 Letter from the Second Permanent Secretary of the Home Office relating to the inquiry into the asylum system, dated 6 February 2026 79 Qq 21-33 80 Q 36 81 Qq 38-40 82 Qq 32-35 21