UK will end use of asylum hotels by 2029, Reeves says

The government has set out plans to end the use of hotels to hold asylum seekers by 2029, a move Rachel Reeves says will save £1bn a year.

Unveiling her Spending Review on Wednesday, the chancellor pledged £200m to “cut the asylum backlog, hear more appeal cases and return people who have no right to be here”.

Ministers say hotels will be phased out by cutting small boat crossings and building new government-owned accommodation for asylum seekers.

The announcement comes after the National Audit Office (NAO) predicted asylum housing costs will hit £15.3bn over the next decade – triple the amount budgeted by the Home Office.

Conservative shadow home secretary Chris Philp claimed the plans are “built on an assumption that the hotels magically empty themselves”.

“They still have no plan for where these people will go,” he added.

On Tuesday, Home Office minister Dame Angela Eagle told a committee of MPs the government were looking to buy tower blocks and former student accommodation to house migrants as an alternative to asylum hotels.

Dame Angela Eagle said the government was exploring new ways to house asylum seekers ahead of break clauses in major accommodation contracts coming up next year.

Labour promised in its manifesto to “end asylum hotels, saving the taxpayer billions of pounds” but did not give a date when this would be achieved.

On Tuesday, Reeves told MPs the government now expects to hit its goal “in this Parliament”.

“Funding that I have provided today… will cut the asylum backlog, hear more appeal cases and return people who have no right to be here,” she said.

An extra £150m will be spent to speed up planned reforms of the asylum system in 2026-27 and an additional £50 m in 2027-28, with the money to come from the £3.25bn Transformation Fund, aimed at modernising public services.

Government estimates the reforms will reduce asylum costs by at least £1bn per year by 2028–29, compared to 2024–25 prices.

According to the Home Office, hotels are “contingency accommodation” and only meant to be used for asylum seekers when other housing cannot be sourced.

But since 2020 there has been a surge in their use – fuelled by asylum backlogs, housing shortages, and rising rental prices, according to Oxford University’s Migration Observatory.

The government spent £1.3bn this year to house asylum seekers in hotels, according to the NAO – covering 76% of all accommodation costs.

The most recent Home Office figures show there are about 32,000 asylum seekers in hotels in the UK. That is also 6% lower than the 34,530 at the same point a year earlier.

Responding to the announcement, home affairs committee chairwoman Dame Karen Bradley said the cost of asylum hotels has risen to a “staggering extent”.

Dame Karen, the Conservative MP for Staffordshire Moorlands, said: “If hotels disappear there will still need to be stock of short-term accommodation to deal with unpredictable levels of irregular migration.

“Targets on their own are not enough, they need to be delivered – and for that we need to have workable solutions”.

Dame Karen warned that without savings, broader goals to improve policing, cut immigration and strengthen counter-terrorism will be impacted.

In her spending review, the chancellor also announced up tp £280m per year extra for the Border Security Command, which leads on the UK’s strategy to crack down on people smuggling and small boat crossings. This follows an initial £150m to establish the unit last year.