UK: Chancellor Rachel Reeves has pledged to end the use of asylum hotels by 2029 and is looking at alternative options such as student accommodation.
In its general election manifesto, Labour pledged to end the use of asylum hotels but had not provided a date when it would do so.
Outlining her spending review plans, Reeves told MPs an increase in investment to speed up the asylum system would save taxpayers £1 billion. The £200 million funding would be used to “cut the asylum backlog, hear more appeal cases, and return people who have no right to be here”.
Reeves added that the party is looking to former student accommodation and other “medium-sized sites” such as tower blocks to house migrants instead of hotels.
It comes as findings from the National Audit Office revealed that the cost of asylum accommodation is expected to triple to £15.3 billion over 10 years. Around 110,000 people seeking asylum were housed by the Home Office in December 2024, with around one-third (38,000) living in hotels.
In 2024-25, hotel accommodation accounted for 76 per cent of the annual cost of contracts – roughly £1.3 billion of an estimated £1.7 billion.
Additional key points announced in the review included a £1.2 billion investment each year in training and up-skilling young people.
Kate Nicholls, chair of UKHospitality, said: “Significant investment into skills, development and apprenticeships should be accessible to hospitality businesses and we’re encouraged by the potential for improvements to regional transport to benefit venues, consumers and workers alike.
“However, it remains the case that the overwhelming challenge holding back hospitality from meeting its potential is the current tax burden imposed upon it.
“As we look towards the Budget and the rest of the Parliament, it must be a priority to bring down the cost of doing business. The business rates reform being finalised this autumn will be a critical element of that, and there needs to be the maximum level of discount applied to hospitality businesses.
“With the Industrial Strategy set to be published imminently, hospitality’s ability to deliver socially productive growth must be recognised and harnessed to deliver economic growth, jobs and regeneration in towns and cities right across the UK,” she added.
