Government struggles to slash foreign aid spent on asylum hotels

The government is struggling to cut the billions of pounds of foreign aid partly used to house asylum seekers in hotels, according to new figures.

The £2.2bn Home Office estimate to spend £2.2bn of overseas development assistance (ODA) in this financial year is only slightly less than the £2.3bn spent in 2024/25. The vast majority is used for the accommodation for asylum seekers who have arrived in the UK, with recent figures showing more than 32,000 were being housed in hotels at the end of March.

Labour has pledged "to end the use of asylum hotels" and the government says it has reduced the overall asylum support costs by half a billion pounds, including £200m in ODA savings, which had been passed back to the Treasury. Prime Minister Sir Keir Starmer has said he will cut the overall ODA from its current level of 0.5% of gross national income (GNI) to 0.3% in 2027.

Foreign aid is supposed to be spent on providing humanitarian and development assistance in other countries, but the UK is allowed to count refugee-hosting costs as ODA under internationally agreed rules. Labour MP Sarah Champion previously said a "scandalously large amount" of ODA has been diverted to the Home Office and has called for a cap on how much can be spent supporting asylum seekers and refugees in the UK.

Asylum seekers and their families are housed in temporary accommodation if they are waiting for the outcome of a claim or an appeal and have been assessed as not being able to support themselves independently. They are housed in hotels if there is not enough space in accommodation provided by local authorities or other organisations.

A Home Office spokesperson said: "We inherited an asylum system under exceptional pressure, and are urgently taking action to restore order, and reduce costs. "This will ultimately reduce the amount of Official Development Assistance spent to support asylum seekers and refugees in the UK.

"We are immediately speeding up decisions and increasing returns so that we can end the use of hotels and save the taxpayer £4bn by 2026.".