Migrant hotels and accommodation will cost £15 billion over 10 years, the spending watchdog has revealed.

Taxpayers will shell out £4,191,780 a day on housing asylum seekers over the life of the 10-year contracts awarded to Serco, Clearsprings Ready Homes and Mears Group in 2019.

This is triple what the Home Office predicted and the average yearly cost of asylum accommodation is now expected to be higher than the amount ministers hope to save from cutting the winter fuel payment.

Fears are intensifying the bill will rise further, with a record number of migrants crossing the Channel this year heaping even more pressure on the creaking asylum system.

Shadow Home Secretary Chris Philp said: “Labour has lost control of our borders – record ever numbers of illegal immigrants have crossed the channel so far this year.

“The consequence of this is increasing numbers in hotels at vast cost to the hard-working UK taxpayer.

“The only way to end this madness is to remove every illegal immigrant as soon as they arrive either back to their country of origin or a third country like Rwanda.

“It was a shameful decision by Keir Starmer to cancel the Rwanda removals scheme before it even started – and now taxpayers are paying the price from their own pockets.

“Keir Starmer is a weak human rights lawyer who is letting Britain down.”

Mr Philp added: “Keir Starmer pledged to end the use of asylum hotels, yet their use has soared under his watch.

“Now Labour want private landlords to carry the burden of housing the consequences of Starmer’s broken borders. This plan comes with 5-year guarantees for landlords, at exorbitant costs, and certainly won’t help Labour’s unachievable promise on housing targets.”

Tory MP Neil O’Brien added: “This shocking report shows the Home Office is spending three times more than they expected, is paying for vast numbers to stay in hotels, keeps no record of safeguarding and security incidents, and has been played by firms who are making serious profits from all this.

“Normally someone would resign over a ten billion overspend but no one will.

“Record numbers are now crossing the Channel under Starmer and this won’t get fixed until we leave the thicket of human rights law which lawyers like Starmer have created, rules which always put the interests of British people behind those of illegal immigrants.”

Commenting on the latest asylum figures, new Reform UK MP Sarah Pochin said: “This Labour government continues to abandon the interests of the British people. Let me be clear: the United Kingdom is not a charity — it exists to serve hardworking Britons above all else.”

“The population explosion is making us all poorer, fuelling crime, and putting local communities at risk.

“I can say with confidence that Reform UK–controlled councils will vigorously oppose this. We will use every legal tool available including injunctions, judicial reviews, and planning laws to block the housing of asylum seekers in hotels in the areas we govern.

“When Reform UK takes office, we will deport all those who have entered the country illegally. We will take back control of our borders and decide who has the right to live here — and they must respect our culture, assimilate into our way of life, and contribute meaningfully to our society.”

The Home Office had predicted asylum accommodation contracts would cost £4.5bn between 2019 and 2029.

But they are now set to cost taxpayers a staggering £15.3 billion, the National Audit Office said.

The NAO said: “The Home Office’s total spend on asylum accommodation is more than planned and it has few levers to control costs.”

It added that the number of people seeking asylum housed in Home Office accommodation rose by 134% between December 2019 and 2024, from 47,000 to 110,000.

So far this year, more than 11,500 people have arrived in the UK after crossing the English Channel, a record number for the first five months of the year.

The NAO report – sent to the Home Affairs Select Committee inquiry on asylum accommodation – also detailed that those temporarily living in hotels accounted for 35% of all people in asylum accommodation, and for about 76% of the annual cost of contracts – £1.3 billion of an estimated £1.7 billion in 2024-25.

Some 110,000 asylum seekers were living in taxpayer-funded accommodation, as of December, the watchdog revealed.

Around 42,000 were in Home Office ‘contingency accommodation’, including 38,000 in hotels.

The National Audit Office admitted asylum hotels “may be more profitable” for companies holding the contracts than other types of housing.

They are responsible for finding a range of self-catering accommodation for asylum seekers who are dispersed across the country, and for sub-contracting hotels for tens of thousands of migrants coming across the Channel by small boat.

Reacting to the report, Home Affairs Committee chairwoman Dame Karen Bradley said: “Dealing with the cost of the asylum accommodation system remains a huge challenge for the Government.

“The NAO report reveals that the cost of these contracts is likely to be over three times what was envisaged when they were drawn up.”

On questioning providers, Dame Karen added: “We want to see why costs have risen so dramatically, but will also be looking at the quality of support that is provided, and will be challenging providers on failures to meet key performance indicators in recent years.”

The profit margins for contractors average 7% – which is within the Home Office’s original estimate of between 5-13%.

The NAO said the Home Office has taken just £4 million off suppliers’ revenues for reported underperformance since 2019.

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Since the Labour Government came to power in July last year, 23 hotels have been closed while contracts were discontinued at three large sites, such as the Bibby Stockholm barge.

Napier Barracks in Folkestone, Kent, is also due to close and be returned to the Ministry of Defence in September.

Responding to the NAO’s findings, a Home Office spokesperson said: “As this report shows we inherited an asylum system in chaos with tens of thousands stuck in a backlog, claims not being processed and disastrous contracts that were wasting millions in taxpayer money.

“We’ve taken immediate action to fix it – increasing asylum decision-making by 52% and removing 24,000 people with no right to be here, meaning there are now fewer asylum hotels open than since the election.

“By restoring grip on the system and speeding up decision making we will end the use of hotels and are forecast to save the taxpayer £4 billion by the end of 2026.”