The UK government has clawed back £74 million from companies accused of making excessive profits from asylum accommodation contracts, the BBC has revealed.
The Home Office confirmed the recovery followed a review of contracts launched after Labour took office last year, amid widespread criticism that previous ministers had failed to properly oversee multibillion-pound asylum housing deals.
However, the recovered amount represents only a fraction of total spending. The overall cost of asylum accommodation in 2024/25 was £2.1 billion — around £5.77 million per day — meaning the money recouped equals less than a fortnight’s expenditure.
Dame Karen Bradley, Conservative chair of the Home Affairs Select Committee, called the recovery “welcome” but only a “first step”. She urged ministers to outline a long-term strategy for a “resilient and cost-effective” asylum system.
Home Secretary Shabana Mahmood said the government had already saved £700 million in hotel costs and pledged to close every asylum hotel by the end of the current parliament.
“We inherited asylum hotel contracts that were not delivering good value for taxpayers’ money,” Mahmood said. “Now we are recouping millions more in excess profits.”
The Home Office has faced strong criticism from MPs, who accused it of “squandering billions” on poorly managed contracts and failing to use mechanisms allowing the government to reclaim excess profits.
The government has since cut costs by encouraging room sharing, using cheaper accommodation, and exploring military sites for housing asylum seekers.
Shadow Home Secretary Chris Philp dismissed the recovery as “too little, too late,” arguing the savings would “disappear in just 12 days.”
“The truth is the Labour government is housing more illegal immigrants in hotels than at the election,” he said. “Only the Conservatives have a serious plan to take control of our borders.”
Break clauses in several asylum housing contracts could allow ministers to end some hotel use by 2026, as part of efforts to reduce dependence on temporary accommodation.