The Home Affairs Committee has called for a major overhaul of the ‘failed, chaotic and expensive’ asylum accommodation system after finding that poor oversight by the Home Office has led to soaring costs and growing pressure on local services.

According to the report, the expected cost of asylum accommodation contracts between 2019 and 2029 has more than tripled—from £4.5bn to £15.3bn—due largely to the continued reliance on hotels. Despite a fall since the 2023 peak, over 32,000 asylum seekers were still being housed in hotels as of June 2025.

MPs said the Home Office had failed to manage its contracts effectively, allowing providers to profit while standards slipped. The report also warns that accommodation remains unevenly distributed across the country, creating significant strain on councils and fuelling community tensions.

It added that the Home Office had not done enough to engage with local authorities or local communities, undermining trust and the ability of local partners to respond to the placement of asylum seekers.

The Committee is calling for a locally led but centrally coordinated system, where the Home Office works in partnership with the Ministry of Housing, Communities and Local Government and local authorities.

With the current contracts up for review in 2026, MPs say this is a critical opportunity to design a fairer, more efficient, and community-focused approach.

Responding to the report, a Home Office spokesperson said: ‘The Government is furious about the number of illegal migrants in this country and in hotels. That is why we will close every single asylum hotel – saving the taxpayer billions of pounds.

‘We have already taken action – closing hotels, slashing asylum costs by nearly a billion pounds and exploring the use of military bases and disused properties.’