The Treasury has quietly confirmed what many feared: taxpayer-funded migrant hotel stays are here to stay—at least for the foreseeable future. With costs now topping £41,000 per asylum seeker and private contractors reporting record profits, questions are mounting over value for money and government accountability.
Despite repeated pledges to end the controversial use of hotels to house asylum seekers, the UK Treasury has now conceded the arrangement will persist for years to come. In newly published documents from the Office for Value for Money (OVfM), officials cite “global instability” and housing shortages as key reasons the costly stopgap will remain entrenched—potentially until the end of the current Parliament.
The admission marks a policy reversal and also exposes a growing financial strain on the public purse, with each migrant now costing taxpayers over £41,000 annually—up sharply from £17,000 just five years ago.
More than 38,000 asylum seekers are currently housed in hotels across the UK, costing the Home Office an estimated £5.5 million per day. This figure excludes the 65,707 migrants in lower-cost “dispersal accommodation,” such as flats and shared housing.
Cost per night (hotel): £145
Cost per night (dispersal): £14
While the Government continues to stress its ambition to phase out hotels, the reality is that demand for short-term housing far exceeds supply. The OVfM noted that, “given other pressures on housing supply, and risks presented by global instability,” this approach would likely remain necessary over the coming years.
Labour’s election manifesto promised to “end asylum hotels, saving the taxpayer billions.” Yet, since Sir Keir Starmer took office, the number of migrants in hotels has actually increased by 8,000.
The Government now pins its hopes on a long-term solution: building 1.5 million homes by 2029. Until then, officials concede that the country remains locked into costly interim arrangements.
Home Office Permanent Secretary Sir Matthew Rycroft admitted the department’s “overarching aim” is to “exit hotels by the end of the Parliament”—a deadline stretching as far as August 2029.
A major source of public frustration lies not just in the cost—but who’s benefitting. Three companies—Serco, Clearsprings Ready Homes, and Mears—hold the long-term contracts to procure hotel accommodation, initially signed in 2019.
Despite caps on per-head profits (reportedly around £12), the sheer volume of arrivals has transformed these firms into pandemic-era profiteers, according to critics.
Serco profits (2023): £249 million
Clearsprings and Mears: Both surpassed £50 million
While the companies claim these earnings stem from wider operations, not solely Home Office contracts, the optics have fuelled accusations of “profiteering” off the back of crisis management.
Chancellor Rachel Reeves has made clear the £4.6 billion overspend on migrant accommodation forms part of the £22 billion budget shortfall inherited from the previous administration. A government source blamed legacy contracts hastily expanded during the COVID-19 pandemic and “not designed for this level of spend.”
Officials say they are now considering “long-term arrangements” with stricter oversight on spend and contractor performance. The newly formed OVfM is expected to work alongside departments and the private sector to deliver “better value for the taxpayer.”
As asylum claim processing slowly resumes and border enforcement efforts are ramped up—including the creation of a new Border Security Command—the Government insists it remains committed to reducing reliance on hotels. But the structural factors driving the crisis—housing shortages, global conflict, outdated procurement models—remain daunting.
For now, the Treasury’s quiet admission marks a stark reality: the hotel-era is far from over. The political cost may be high. The financial cost, higher still.
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