Business
Home Office ‘squandered billions’ on asylum accommodation, MPs say
The Home Office has “squandered” billions of pounds of taxpayers’ money on asylum accommodation, according to a report by a committee of MPs.
The Home Affairs Committee said “flawed contracts” and “incompetent delivery” left the department unable to cope with a surge in demand and it relied on hotels as “go-to solutions” instead of temporary stop-gaps.
The MPs said expected costs had tripled to more than £15bn and not enough had been done to recoup excess profits.
A Home Office spokesperson said the government was “furious about the number of illegal migrants in this country and in hotels”, and reiterated its pledge to end the use of asylum hotels by 2029.
Around 32,000 asylum seekers are currently living in 210 hotels whilst their applications are processed, costing the government around £5.5m a day.
The report said the current system for housing people seeking asylum – with its reliance on hotels – was expensive, unpopular with local communities and unsuitable for the asylum seekers themselves.
The report said the contracts drawn up for accommodation providers under the Conservatives had been flawed and that “inadequate oversight” had meant failings went “unnoticed and unaddressed”.
Expected costs for hotel contracts from 2019-2029 have risen from £4.5bn to £15.3bn, while two accommodation providers still owe millions in excess profits that the Home Office has not recovered, the report found.
Chair of the committee Dame Karen Bradley told BBC Radio 4’s Today programme: “We just ended up with more people than the contracts ever thought there could be and that’s meant that the costs have absolutely rocketed.”
“The government has only just started looking at claiming back those profits, auditing the accounts to see what is due back to the taxpayer,” Dame Karen said.
The said “failures of leadership at a senior level” were among reasons the Home Office was “incapable of getting a grip on the situation”.
Dame Karen said the department had “neglected the day-to-day management of these contracts” and has focused on “short term, reactive responses”.
“The skills needed to manage these contracts simply were not present in the Home Office when they were drawn up,” she added.
External factors, including the pandemic and the “dramatic” increase in small boat arrivals, have meant the Home Office has had to accommodate “a growing number of people for longer periods of time” the report said.
Choices made by the previous Conservative government, including to delay asylum decisions as it pursued the scheme to deport migrants to Rwanda, factored into this, MPs added.
While the report acknowledged the “challenging environment” in which the Home Office was operating, it said “its chaotic response has demonstrated that it has not been up to the challenge”.
The MPs said they had heard too many cases of inadequate asylum accommodation and unaddressed safeguarding concerns for vulnerable people.
Housing Secretary Steve Reed accused the previous government of “pouring taxpayers’ money down the drain”.
He added that Labour ministers were continuing to look at housing asylum seekers on disused military bases, as they are the “least expensive option available”, alongside longer-term rental accommodation options.
Two former military sites – MDP Wethersfield, a former RAF base in Essex, and Napier Barracks, a former military base in Kent – are already being used to house asylum seekers after being opened under the Conservatives.
Dame Karen welcomed the government’s pledge to shift away from asylum hotels and invest in larger sites like military bases.
But she said past failings, like moving people into accommodation too quickly, must not be repeated.
“On large sites, once the lessons have been learned, facilities are much better, people are in much more suitable accommodation and it can be better for everybody,” she said.
In response to the report, a Home Office spokesperson said: “We have already taken action – closing hotels, slashing asylum costs by nearly £1 billion and exploring the use of military bases and disused properties.”
Several protests and counter-protests over asylum hotels have taken place across the UK this year, notably in Epping over the summer after an asylum seeker being housed at The Bell Hotel was charged with two sexual assaults.
Oil and gas services firm Petrofac has filed for administration, putting around 2,000 Scottish jobs at risk.
The company is tumbling into insolvency after recent restructuring plans collapsed in the wake of a failed renewables contract in the Netherlands.
On Monday, Petrofac told investors that it has applied to the High Court to appoint administrators.
The firm employs more than 7,000 workers globally.
This includes around 2,000 employees from its UK base in Aberdeen, with around 1,200 of these offshore and a further 800 onshore in training and operational roles.
Petrofac said it will now enter insolvency after Dutch electricity grid TenneT terminated a major contract to build windfarms.
The company stressed that the administration will affect the group’s main holding company.
It will continue to trade and assess options for an alternative restructuring, with different merger and acquisition options also being explored with its key creditors.
Advisers at corporate finance firm Teneo are expected to advise over the administration.
“When appointed, administrators will work alongside executive management to preserve value, operational capability and ongoing delivery across the group’s operating and trading entities,” the company said.
Petrofac’s UK business is based in Aberdeen and is involved in the operation of North Sea oil platforms for firms including BP and Shell.
It also has smaller offices in London, Woking and Great Yarmouth.
The Department for Energy Security and Net Zero (DESNZ) has stressed the Government will work with Petrofac after the oil and gas services group filed for administration.
A DESNZ spokeswoman said: “The UK arm of Petrofac has not entered administration and is continuing to operate as normal, as an in-demand business with a highly-skilled workforce and many successful contracts.
“Petrofac’s administration is a product of longstanding issues in their global business.
“The Government will continue to work with the UK company as it focuses on its long-term future.
“Ministers are working across all parts of government led by DESNZ in support of this.”
The company was worth around £6 billion at its peak in 2012 but has slumped in recent years.
It was worth around £20 million when its shares were suspended in May after being severely impacted by an investigation by the Serious Fraud Office and volatile energy prices.
Energy services firm Petrofac has filed for administration.
The company, which employs about 2,000 people in Scotland, said its North Sea business would continue to operate as normal.
In a statement, Petrofac said it had applied to appoint administrators for its holding company, but that alternative restructuring options were being explored.
It added that administrators would work to “preserve value, operational capability and ongoing delivery”.
The decision comes after Dutch grid operator TenneT terminated a major offshore wind contract with Petrofac, scuppering a planned financial restructuring.
The firm, which has UK offices in Aberdeen, London, Woking and Great Yarmouth, said further information on the administration process would be provided in due course.
Founded in Texas in 1981, Petrofac designs and builds facilities for oil, gas and renewables projects, as well as providing engineering, project management and logistical services.
It has been involved in the operation of North Sea oil platforms for firms including BP and Shell.
Once a FTSE 100 firm, the company was worth around £6bn at its peak in 2012 but it has slumped in recent years following a Serious Fraud Office investigation and a series of profit warnings.
Petrofac was worth around £20m when its shares were suspended in May. The firm has cited delays in contract payments and rising operating costs.
A spokesperson for the UK Department of Energy Security and Net Zero said: “The UK arm of Petrofac has not entered administration and is continuing to operate as normal, as an in-demand business with a highly skilled workforce and many successful contracts.”
They said the administration process was a result of “long-standing issues” in the firm’s worldwide operations.
The spokesperson added: “The government will continue to work with the UK company as it focuses on its long-term future.”
Business
‘Indian Economy Continues To Gain Momentum Despite Uncertain Global Outlook’: FinMin Report
Last Updated:
‘Demand conditions across rural and urban India strengthened with…GST reforms and the festive season,’ the finance ministry says in latest Monthly Economic Review.
The finance ministry said the combination of macroeconomic stability, regulatory reforms, and ongoing structural initiatives is expected to have a positive multiplier effect on economic activity.
Despite global economic uncertainties and trade disruptions, India’s economy has continued to gather strength, supported by robust domestic demand, strong manufacturing and services activity, and contained inflation, according to the finance ministry’s Monthly Economic Review for September 2025 released on October 27.
“Amidst…uncertain global outlook, India’s economy continues to gain momentum. Demand conditions across rural and urban India strengthened with the implementation of the GST reforms and the festive season, coinciding with industry reports signalling robust growth in sales, particularly in sectors such as automobiles. On the supply side, the manufacturing and services sectors expanded healthily. Taking into account the higher-than-anticipated growth in Q1 FY26 and steady upward trends visible in Q2 FY26, India’s growth forecasts for FY26 have been upgraded,” the finance ministry said in the report.
The report noted that economic activity worldwide has remained steady over the past few months, despite adverse trade policy disruptions. As a result, global economic growth this year is now expected to fare better than initially feared. This is reflected in the International Monetary Fund’s (IMF) upward revision of the global growth forecast for 2025 to 3.2 per cent in October 2025, compared with 3 per cent in July 2025 and 2.8 per cent in April 2025. Several transitory factors, such as a lower effective tariff rate in the US and frontloading of trade, have contributed to propping up growth. However, this resilience masks underlying structural weaknesses which are coming to the fore, leaving projections for global growth in 2026 broadly unchanged since July 2025.
The IMF now expects India’s real GDP to grow 6.6% in FY26, while the Reserve Bank of India’s (RBI) Monetary Policy Committee (MPC) projects an even higher 6.8% growth, reflecting upgrades of 20 and 30 basis points, respectively.
Inflation Under Control, Price Stability Expected to Continue
The report highlighted that inflation remains well within control, aided by continued deflation in food categories. Retail headline inflation eased to 1.54% in September 2025, bringing the Q2 FY26 average to 1.7%.
Core inflation (excluding food and fuel) stood at 4.6% in September, with prices of non-food items staying stable. The ministry said, barring any adverse weather events or supply chain shocks, price stability is likely to prevail.
The RBI expects inflation to average 1.8% in Q3 FY26, with a slight uptick in Q4 FY26 and Q1 FY27 as base effects fade.
RBI Measures Support Liquidity and Credit Flow
The finance ministry credited the RBI’s liquidity management for ensuring adequate credit availability to support growth. The transmission of monetary policy into money and credit markets remains effective, reflecting the central bank’s calibrated approach.
It added that the RBI’s recent regulatory and development policies demonstrate a “balanced response” to evolving macroeconomic conditions — combining prudence with reforms aimed at strengthening banks, boosting credit flow, simplifying forex management, and internationalising the Indian Rupee.
External Trade Remains Resilient
India’s external sector has also shown resilience despite a volatile global trade environment. Total exports of goods and services grew 4.4% year-on-year in the first half of FY26 to reach USD 413.3 billion.
While merchandise exports rose 3%, services exports expanded 6.1% during the same period. Core merchandise exports, excluding petroleum and gems & jewellery, grew a strong 7.5%, underscoring the competitiveness of India’s manufacturing base.
Labour Market, Reforms, and Innovation Drive Growth
The government’s emphasis on skill development and job creation has helped stabilise the labour market in H1 FY26, with rising labour force participation and employment growth in both industry and services.
The introduction of GST 2.0 is expected to further stimulate consumption and investment, creating a multiplier effect on employment and demand.
The report also highlighted the government’s focus on research and innovation to boost global competitiveness. The Promotion of Research & Innovation in Pharma-MedTech Sector (PRIP) scheme, launched by the Department of Pharmaceuticals, will provide around ₹11,000 crore in support for R&D projects. The initiative aims to transform India’s Pharma-MedTech sector into a globally competitive, innovation-driven ecosystem by funding early-stage research and promoting flexible collaborations focused on public health priorities.
Outlook: Growth Momentum to Sustain
The finance ministry said the combination of macroeconomic stability, regulatory reforms, and ongoing structural initiatives is expected to have a positive multiplier effect on economic activity. These efforts, it said, will support domestic demand, enhance resilience, and help sustain India’s growth momentum despite a challenging global environment.
“Looking ahead, the lower GST rate is expected to support a positive demand outlook by reducing the tax burden on consumers and businesses, stimulating consumption and investment across sectors and boosting employment generation in the economy. Moreover, a strong performance in the industries and services sector, along with a stable labour market, will further enhance domestic demand. Nevertheless, global uncertainties warrant caution and will continue to affect external demand, presenting downside risks to the growth outlook,” the ministry said.
The implementation of various growth-enhancing structural reforms and government initiatives, including GST 2.0, is expected to mitigate some of the negative impacts of these external challenges, it added.
Haris is Deputy News Editor (Business) at news18.com. He writes on various issues related to personal finance, markets, economy and companies. Having over a decade of experience in financial journalism, Haris h…Read More
Haris is Deputy News Editor (Business) at news18.com. He writes on various issues related to personal finance, markets, economy and companies. Having over a decade of experience in financial journalism, Haris h… Read More
October 27, 2025, 13:22 IST
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