Image source, PA MediaAlternative plans to house asylum seekers will end up costing millions more than the hotel rooms they will be moved from, the spending watchdog says.
The National Audit Office (NAO) said the expected bill for four sites will be £1.2bn in the next decade – £46m more than the estimated cost of hotels.
Only two of the sites are open so far.
The Home Office said continuing with the plan is "better value for money" than relying on hotels – once the upfront costs are discounted.
The NAO carried out an audit on the planned sites – the Bibby Stockholm barge in Dorset, former military sites at Scampton in Lincolnshire and Wethersfield in Essex, and ex-student accommodation in Huddersfield.
All were identified as alternative sites to house asylum seekers after the government committed to reducing the use of hotel rooms for people awaiting a decision on asylum applications.
However, by January this year, fewer than 900 people were housed at the two currently in use – the Bibby Stockholm barge and the ex-RAF base at Wethersfield. That is less than half the expected occupancy by that stage.
The NAO report welcomed the government's plans, but said the Home Office will need "to build in flexibility" because of the "difficulty" of predicting the number of people who might seek asylum, and should reflect on lessons from previous attempts to develop accommodation at large sites.
The analysis found that by 2034 the projected overall cost of the four sites will be higher than the estimated hotel bill over the same period.
It concluded that it appears "inevitable that, collectively, these early sites will now cost more than the alternative of using hotels".
The report acknowledged that by the end of January, the government had stopped using 60 of the approximately 400 hotels it was using to accommodate people in October, in its efforts to reduce taxpayer costs.
This was achieved by increasing the amount of room-sharing in hotels, increasing the amount of dispersal accommodation and the number of asylum decisions it is making, and by moving people into its new large sites.
But it said the Home Office still expects to spend £3.1bn on private accommodation in the year up to March 2024.
The Infrastructure and Projects Authority (IPA) has classed the Home Office's plans for the sites as high risk or undeliverable, the report noted.
It said the IPA has carried out three reviews of the Home Office's work on asylum accommodation since November 2022, which all marked the plans as "red" – meaning time, cost and quality goals appear to be "unachievable".
The Home Office has also rated its progress as "red" and has repeatedly revised targets for beds in large sites downwards, the report added.
Gareth Davies, the head of the NAO, said the Home Office received "repeated" assessments its plans for large accommodation sites "could not be delivered as planned".
The report also found:
- The four sites will have already cost the government £230m by this month
- Home Office officials rated their own plans to develop large accommodation sites as "high risk or undeliverable"
- The department is "resetting" its strategy and is now prioritising developing smaller-scale alternatives
- In December 2023, the Home Office spent £274m on 64,000 hotel beds, but only 45,800 of them were being used
- The government has lost "at least" £3.4m developing sites it will not use
Shadow home secretary Yvette Cooper called the findings "staggering" and accused the government of presiding over "chaos and failure in the asylum system".
A Home Office spokesperson said using hotels to house asylum seekers is "unacceptable" and people need to be deterred from travelling to the UK with the Rwanda plan to bring the bill down in the long-term.
They said: "While the NAO's figures include set-up costs, it is currently better value for money for the taxpayer to continue with these sites than to use hotels."
It said costs will fall as it was "closing dozens of asylum hotels every month".