The Home Office has been ordered to find cheaper accommodation for migrants in a bid to stop private firms from ‘profiteering’ from small boat crossings.
A Treasury acknowledged that in the face of ‘global instability’ migrants are likely to need to be put up in hotels for years to come, The Sunday Times reported.
At present the Home Office houses more than 38,000 migrants in hotels at a cost of £5.5million per day, with a further 65,000-plus migrants staying in ‘dispersal accommodation’.
Dispersal accommodation refers to longer-term, temporary housing for asylum seekers in the UK where they can stay until their claim is processed – the term encompasses everything from shared houses to bedsits and flats.
The difference in cost to the UK taxpayer is considerable, with a hotel stay costing £145 per night on average, compared to only £14 for dispersal accommodation.
The new document, published by the Treasury’s new Office for Value for Money (OVfM), makes clear that, if achieved, Sir Keir Starmer’s plan to build 1.5million homes in England by 2029 would help reduce the need for asylum seekers to be funneled into hotels.
Labour pledged during the election campaign in June last year to ‘end asylum hotels, saving the taxpayer billions of pounds’.
But earlier this month it was revealed that he number of migrants living in hotels at the expense of taxpayers has actually risen by 8,500 since Sir Keir took power.
However, the document also reaches less than flattering conclusions about the private outsourcing companies contracted to find hotels for migrants, which it says have ‘made record profits in recent years,’ leading to ‘accusations of profiteering’.
Back in 2019 the Home Office agreed ten-year contracts with three private contractors who were tasked with procuring accommodation for migrants on UK shores at a total cost of around £4.6billion.
The three firms – Serco, Clearsprings Ready Homes, and Mears – pay hotel owners, who in turn make a profit of their own.
Each of the three private firms have a limit of approximately £12 on the profit they can make per person but the influx of small boats has led to a sharp spike in migrants for them to accommodate.
According to their most recent accounts, Serco registered a 5 per cent spike in profits in 2023 to £249million.
Meanwhile both Clearsprings and Mears made a profit of more than £50million – a record for the former.
Serco and Mears told the The Sunday Times that their profits resulted from performance across their companies and were not solely the consequence of Home Office contracts, while Clearsprings did not respond to a request for comment.
Mears said: ‘The provision of asylum accommodation and support is one part of our activities and our publicly declared profits relate to performance across the group.
‘Profits on the provision of the asylum accommodation and support contracts are capped and open book arrangements exist with the Home Office.’
A government spokesperson accepted that the cost of temporary accommodation for migrants had ‘skyrocketed’ but said that was partly because they had ‘inherited an asylum system under unprecedented strain.’
They added: ‘We are absolutely committed to ending the use of hotels, and since coming into government have taken immediate action to restart asylum processing to begin closing hotels, have surged the number of returns, removing more than 19,000 people with no right to be in the UK, and established the Border Security Command to dismantle the gangs driving this trade.
‘The Office of Value for Money will work with departments, local government and the private sector to tackle these problems, ensuring a more strategic, co-ordinated approach that delivers better value for the taxpayer.’