The UK government has reduced its spending on hotel accommodation for asylum seekers by nearly a third, from £3 billion to £2.1 billion, between April 2024 and March 2025, according to the Home Office’s annual accounts. This translates to a daily cost drop from £8.3 million to approximately £5.77 million. The savings stem primarily from lowering the average nightly cost per person from £162.16 in March 2023 to £118.87 by March 2025, driven by increased room-sharing and a shift to cheaper alternatives like houses in multiple occupation (HMOs) and local housing, as reported by BBC Verify through Freedom of Information data.

The Home Office prioritized moving families and children out of hotels into more stable housing, with contracts managed by providers like Serco facilitating the transition. The number of hotels used for asylum seekers decreased from 273 in March 2024 to 202 by March 2025. Renegotiated contracts, originally set by the previous Conservative government, also contributed to the cost reduction. However, the number of asylum seekers in hotels rose to 32,345 by March 2025, up from 29,585 in June 2024, though down from a 2023 peak of over 50,000.

Dr. Peter Walsh from the Migration Observatory at Oxford University cautioned that a recent surge in small boat crossings could increase reliance on hotels, stating, “I don’t think hotels are going away anytime soon based on current trends.” The government aims to phase out asylum hotels by 2029, as pledged in Labour’s manifesto, but rising asylum claims—109,343 by March 2025, a 17% increase year-on-year—pose challenges.

The Home Office also reported a £48.5 million loss after scrapping plans to use RAF Scampton for asylum accommodation, a decision deemed more cost-effective than continuing the project. Additionally, £270 million paid to Rwanda for a now-canceled migration scheme was not refunded, with only four voluntary removals achieved under the plan.

Despite the savings, concerns remain about the asylum system’s efficiency. The Home Office is under pressure to clear a record-high backlog of 51,000 court appeals and has allocated £200 million to accelerate asylum processing and deportations, aiming to save £1 billion annually by 2028–29.