Newly appointed Home Secretary Shabana Mahmood has been challenged to come clean about how the cash is allocated amid fears councils are being “short-changed”.

Shadow communities minister David Simmonds warns her in a letter: “This lack of transparency is deeply concerning. Local authorities are facing acute financial pressures as a direct result of asylum accommodation costs, while illegal migration across the Channel continues to get to record levels due to the Labour Government’s failure to tackle illegal migration.

“Without clarity on how grant funding is being allocated, taxpayers cannot be confident they are receiving fair treatment. My own [Hillingdon] council estimates it is being short-changed by around £17million, costs which ultimately fall on residents through higher council tax bills.”

Shadow Home Secretary Chris Philp warned: “Labour are turning every corner of Britain into a dumping ground for their asylum crisis. People who have lived in the same street for decades now wake up to find their community overwhelmed overnight, with services stretched and safety put at risk.

“Local voices are ignored, objections brushed aside, and families left powerless. This is an immigration crisis, and the feeble Labour government is making it worse”.

Mr Philp said the Conservatives would “fix this by deporting every single illegal arrival”, adding: “Without deportations there is no deterrence, without deterrence the boats will never stop.”

Mr Simmonds added: “Labour are trying to bury the truth about how much councils are really getting to cover the cost of asylum accommodation. If ministers continue to hide this information, it will only raise further questions about what they are trying to conceal.

“Across the country, communities are being short-changed, council budgets are buckling, and residents are being hammered with higher council tax bills to plug the gap. The public have a right to know where this money has gone and whether their communities are being treated fairly.”

In June 2004 – just before Labour took power – there were 29,585 people in hotels receiving asylum support. But at the end of June this year the number was 32,059. During this time the overall number of people receiving asylum support climbed from 100,995 to 106,075.

Use of hotel accommodation peaked at 56,042 at the end of September 2023.

A Government spokesperson said: “This Government inherited an asylum system in chaos, with tens of thousands of individuals in hotels waiting for their claims to be heard. We have taken urgent action to fix this. This year, the rate of asylum decision-making has doubled. We have reduced spending on hotels by almost £1billion. And we will close every hotel by the end of this Parliament.”