The UK government is facing mounting criticism as it continues to allocate billions in foreign aid to fund accommodation for asylum seekers in hotels, despite pledges to phase out the practice.
New data reveals the UK foreign aid asylum hotels expenditure is set to reach £2.2 billion in the current financial year — just slightly below the £2.3 billion spent in 2024/25.
The funds, drawn from the Official Development Assistance (ODA) budget, are largely being used to house approximately 32,000 asylum seekers in hotels across the UK. Although international rules permit some aid spending on asylum support during the first year after arrival, critics argue the scale of this domestic allocation is harming global humanitarian and development work.
Spending Cuts Abroad as Costs at Home Persist
The Home Office insists it is committed to ending the use of asylum hotels and is taking action to accelerate asylum decisions and increase deportations. However, critics say reforms remain insufficient, and there is little financial incentive for the department to reduce costs, since ODA funding does not come from its own budget.
Gideon Rabinowitz, policy director at Bond, a network of UK development organizations, described the £2.2bn allocation as “poor value for money” and “unsustainable,” warning it undermines aid efforts targeting poverty and displacement worldwide.
Meanwhile, Labour’s promised crackdown on asylum hotel use appears slow to materialise. Shadow Home Secretary Chris Philp accused the party of breaking a key manifesto pledge, pointing out that hotel accommodation for migrants has expanded under Labour’s leadership.
Rising Costs Trigger Aid Budget Concerns
The total value of government contracts signed in 2019 to provide accommodation for asylum seekers was originally expected to cost £4.5bn over ten years. However, the National Audit Office (NAO) now estimates the cost has ballooned to £15.3bn.
Sarah Champion, Chair of the International Development Committee, called the continued aid redirection “a raid on the aid budget” that jeopardises the UK’s global commitments and reputation. She urged the government to “get a grip” on spending and re-prioritise foreign aid for its intended global purposes.
Labour has also announced plans to cut the total UK aid budget from 0.5% to 0.3% of gross national income by 2027 — a reduction of £5 billion — further straining international humanitarian initiatives.
Home Office Defends Strategy Amid Backlash
In a statement, the Home Office defended its handling of the asylum system, blaming previous Conservative administrations for its current challenges. It confirmed ongoing reforms, including reducing the appeal time for asylum rejections and tightening financial eligibility rules for accommodation, aiming to save taxpayers £4bn by 2026.
But development groups, MPs, and watchdogs remain unconvinced, warning that the UK’s reputation as a leader in global aid is at risk as foreign assistance is increasingly diverted to domestic policies under the guise of asylum support.
