The UK Government has recovered £74m from companies that ran asylum accommodation, following a review of contracts, the Home Office says. The sum was identified after ministers examined arrangements inherited when Labour came to power last year.
How the funds were recovered
The Home Office says the amount was reclaimed as providers returned excess profits under the terms of their contracts. Ministers faced criticism from MPs over the day-to-day management of the arrangements, and the department has been reviewing contract terms and enforcement mechanisms.
What the Home Office reported
Home Office figures show spending on asylum accommodation was about £2.1bn in 2024/25 -- an average of roughly £5.77m per day. By comparison, the previous year's bill was recorded at about £3bn, or £8.3m per day.
Officials say the reduction in costs between the two years was driven in part by measures such as room sharing and the use of lower-cost accommodation instead of more expensive hotel space.
Political reactions
Dame Karen Bradley, chair of the home affairs select committee, welcomed the recovery but stressed more action was required. She said the move was "welcome" but only a "first step".
She added: "This is only a small part of the many billions that the contracts have and will cost.
Statements from the Home Secretary
Home Secretary Shabana Mahmood said: "This government inherited asylum hotel contracts that were not delivering good value for taxpayers' money.
"We have already saved £700m in hotel costs. Now we are recouping millions more in excess profits. And by the end of this parliament, we will have closed every asylum hotel."
Opposition comment
Conservative Shadow Home Secretary Chris Philp said: "The only way to end this crisis is to end the use of hotels altogether.
"The Home office is spending £5.77m per day on asylum hotels, meaning these savings will disappear in just 12 days.
"The truth is the Labour government is accommodating more illegal immigrants in hotels than at the election, and the first nine months of this year have been the worst in history for illegal immigrants crossing the Channel.
"Only the Conservative Party has a serious, hard-edged plan to take control of our borders."
Parliamentary scrutiny and contract terms
Last month the Home Office was criticised by the home affairs committee, whose MPs said the department had "squandered" billions of pounds of taxpayer money and had not used all available mechanisms to reclaim surplus profits from accommodation providers.
Some contracts contain break clauses that could allow ministers to end the use of certain accommodation as early as 2026. The home secretary has said she will examine the legal arrangements "carefully" as the department considers its options.
Next steps and alternatives
Ministers have committed to ending the use of asylum hotels before the next UK general election and have indicated a desire to bring that deadline forward. In the meantime, the Home Office is seeking ways to reduce immediate costs, including shifting people into different types of accommodation such as private flats or alternative sites, including proposals for military locations.
Context for the recovered amount
While the £74m recovery is a notable sum, it represents a small fraction of the total spending on asylum accommodation and -- by the Home Office's own averages -- is less than the cost of housing asylum seekers for about two weeks. Accommodation providers had previously told parliament they would return some profits to the government under their contract terms.