UK: Rachel Reeves is the new Chancellor pledged to end the use of asylum hotels by 2029 in a move which will save £1 billion a year.
Labour’s general election manifesto pledged that it would end the use asylum hotels, but did not specify a specific date.
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”.
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. Home Office was housing around 110,00 asylum seekers in December 2024. Around one third (38,000) of them lived 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.
Reeves said that the party was looking at former student housing and other “medium sized sites” like tower blocks for migrants to be housed instead of hotels.
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“We are encouraged by improvements in regional transport that will benefit both venues and consumers.
The current tax burden on hospitality is still the biggest obstacle to it reaching its full potential.
As we consider the Budget and other parts of the Parliament, reducing the cost of business must be our top priority. This will require the business rates reform to be finalised in this autumn. There must also be a maximum discount for hospitality businesses.
She said that with the Industrial Strategy due to be published soon, the hospitality sector’s ability of delivering socially productive development must be recognised. This will help to drive economic growth and jobs in cities and towns across the UK.
