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The recovery of £74 million from companies running asylum accommodation has been a recent development, according to the BBC’s political correspondent Nick Eardley. The Home Office announced that this sum was recouped after contracts were reviewed following Labour coming into power last year. The government had been receiving criticism for not adequately managing these contracts, but the retrieved amount still only makes up a small portion of the overall accommodation cost.
Data from the Home Office reveals that the total cost for asylum accommodation was £2.1 billion in 24/25, averaging around £5.77 million per day. Despite the significant amount recovered, it is less than what the government spends on accommodation every two weeks. Accommodation providers had previously indicated that they would be returning some profits to the government as per their contract terms. The expenses for these contracts have noticeably escalated since their initiation.
Conservative chair of the home affairs select committee, Dame Karen Bradley, expressed approval for the recovery but emphasized that it is merely a starting point. She highlighted the need for a comprehensive plan from the government to ensure a sustainable and cost-effective asylum accommodation system in the long run. Ministers have committed to discontinuing the use of asylum hotels before the upcoming general election, with efforts to reduce immediate costs through methods like room sharing and exploring alternative accommodation options.
Home Secretary Shabana Mahmood stated that the government inherited inefficient asylum hotel contracts, leading to significant financial savings and further recouping of excess profits. Plans are in place to close down all asylum hotels by the end of the current parliament. Criticism from the home affairs committee has pointed out mismanagement of taxpayer money and under-utilization of mechanisms to reclaim excessive profits by accommodation providers. Options to terminate certain accommodation contracts in 2026 are being considered, highlighting the ongoing efforts to improve asylum accommodation systems
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