Asylum hotel costs push foreign aid to lowest in 50 years

Telegraph

15-07-2025

The UK is spending so much money on housing asylum seekers that the amount of foreign aid for poorer countries will fall to its lowest level for 50 years, a watchdog has revealed.
About a fifth of the foreign aid budget is being used to put up asylum seekers in hotels and other accommodation and give them financial support, according to the Independent Commission for Aid Impact (ICAI).
Sir Keir Starmer has also committed Labour to reducing foreign aid from 0.5 per cent of national income to 0.3 per cent, to pay for increased defence spending.
These two factors mean the money left for poorer countries will hit its 'lowest level relative to national income in more than 50 years', according to the ICAI.
The watchdog calculated it would amount to just 0.24 per cent of the UK's gross national income, less than the previous record low of 0.3 per cent in 1999.
The cost of asylum accommodation and support is projected to be £1.8 billion in 2027/28, down from £2.2 billion in 2026/27 as ministers seek to scale back the use of hotels.
Sir Keir Starmer has pledged to stop using them by the end of the Parliament in 2029. The most recent Home Office figures show that there were about 32,000 asylum seekers in hotels at the end of March, down from a high of more than 50,000 at a cost of £6 million a day in June 2023.
Under the international rules, some of the costs involved in supporting refugees and asylum seekers during their first year in a donor country can count towards a country's foreign aid budget.
The amount spent from the foreign aid budget on asylum costs has ballooned from £628 million (4.3 per cent of total) in 2020 to £4.3 billion (27.9 per cent) in 2023. It is expected to be £2.8 billion (20.1 per cent) in 2024.
The ICAI blamed large refugee visa schemes such as those for Ukrainians and Afghans and the small boats crisis that has seen more than 140,000 migrants arrive in the UK after crossing the Channel.
'However, the biggest factor was the widespread and long-term use of hotels to house asylum seekers and Afghan refugees,' the ICAI said.
'Before the Covid-19 pandemic, hotels were used only occasionally, as short-term bridging accommodation. By October 2022, lengthy stays in over 400 hotels were costing £6.8 million per day.'
The watchdog noted that while other European countries had seen large rises in their use of foreign aid for housing asylum seekers, the UK was double the average of 33 OECD donor countries.
In 2023, the UK's use of foreign aid money on asylum seekers was triple that of other European donors such as France, Germany and Sweden, due mainly to the high cost of hotel accommodation.
Harold Freeman, the ICAI commissioner, said: 'The UK's development programme is at a turning point, with budget reductions coming against a backdrop of increasing global conflicts, climate threats and rising humanitarian needs.
'At the same time, UK asylum costs are likely to continue to absorb a significant proportion of our aid funding.
'The Government has already taken steps to address some of the flaws in the system for managing aid identified by past ICAI work.
'But further changes will likely be needed to maximise the impact and value for money of the remaining development budget.'