Ending Asylum Hotels by 2029: A £1 Billion Save or a Political Dream?

In a significant policy shift, the UK government has announced plans to end the use of hotels for holding asylum seekers by 2029, aiming to save £1 billion annually. Chancellor Rachel Reeves unveiled this plan during her Spending Review, accompanied by a pledge of £200 million to tackle the asylum backlog, expedite appeal cases, and repatriate individuals lacking legal right to remain in the UK. This announcement coincides with the National Audit Office’s projection that asylum housing costs could escalate to £15.3 billion over the next decade, which is threefold the budgeted amount by the Home Office.

The government’s strategy includes phasing out hotels by reducing small boat crossings and developing new, government-owned accommodations for asylum seekers. Comments from Conservative shadow home secretary Chris Philp highlighted skepticism towards this initiative, questioning the feasibility of the plans and labeling them as reliant on an assumption that hotels would self-empty. Conversely, Home Office minister Dame Angela Eagle revealed the government is considering acquiring tower blocks and former student halls as alternatives to hotel accommodations.

While Labour previously stated its aim to eliminate asylum hotels, the new announcement sets a clear deadline, with Reeves assuring that the objective will be met within the current parliamentary term. To expedite the reforms, an additional £150 million will be allocated in 2026-27, with another £50 million earmarked for 2027-28, drawn from the £3.25 billion Transformation Fund designed to enhance public services. The government anticipates that these reforms will cut asylum expenses by at least £1 billion by 2028-29, when compared to prices from 2024-25.

Currently, hotels are designated as contingency accommodations, utilized solely when other housing is unattainable. Since 2020, the reliance on hotels has surged due to rising asylum backlogs, housing shortages, and soaring rental costs, alongside the rising expenses faced due to this practice—£1.3 billion was spent in the current year alone on hotel accommodations, which accounted for 76% of overall asylum accommodation costs. Recent statistics indicated around 32,000 asylum seekers are currently residing in hotels, a slight decrease from the 34,530 recorded the previous year.

Chair of the home affairs committee, Dame Karen Bradley, expressed concerns about the rising costs associated with asylum hotels, emphasizing the necessity for a short-term accommodation stock to manage irregular migration levels. She stressed that without securing these savings, broader objectives linked to policing, immigration, and counter-terrorism improvements could be undermined. As part of this review, additional funding of up to £280 million yearly was announced for the Border Security Command, enhancing the UK’s approach to combatting people smuggling and illegal crossings via small boats.