Company has contract to house asylum seekers removed

The Home Office is ending a company’s contract to provide accommodation for asylum seekers after its performance “fell short” of expectations, a minister has said.

Stay Belvedere Hotels (SBHL) houses people waiting for asylum decisions in 51 hotels in England and Wales, as well as the Napier Barracks in Folkestone, Kent, which is due to close and be returned to the Ministry of Defence in September.

The decision to end the contract comes with immediate effect after a review of all contracts to provide asylum accommodation.

Asylum seekers currently living in SBHL sites will be moved to other housing across the asylum estate.

The review raised concerns about the company’s performance and behaviour, according to a Home Office statement, which said the safety and security of people staying and working in temporary accommodation was a Government priority, as well as ensuring value for money.

SBHL is a sub-contractor of a wider Home Office agreement with provider Clearsprings, which was awarded in 2019 and is worth around £2 billion a year.

Minister for border security and asylum Dame Angela Eagle told MPs on Tuesday the Government “will not hesitate” to take further action against companies contracted to provide accommodation for asylum seekers.

“Significant elements of one of Clearsprings Ready Homes subcontractors’ behaviour and performance fell short of what we’d expect from a Government supplier,” she told the Commons.

“We will not hesitate to take further action in respect of Clearsprings and its wider supply chain if this proves necessary.

“We are conducting a full audit of our supply chain.

“We expect the highest standards from those contractors to provide essential services, and this Government will always hold them to account for delivery, performance and value for money.”

The move comes as the minister said more oversight of asylum accommodation suppliers and improved contract management had taken place since July.

The Home Office, which is committed to ending the use of asylum hotels, said it was working to “put robust plans in place” to minimise disruption.

An SBHL spokeswoman said: “SBHL has been informed of the decision to end its contract to supply temporary accommodation to asylum seekers in the UK and is in the process of holding discussions with appropriate partners.”

The earliest point the Government can exit the main contracts without costs is in September 2026, and Dame Angela said ministers are looking at how to get better value for public money in the contracts.

The Times has also reported that the Home Office will bring in the company which managed the Bibby Stockholm, Corporate Travel Management.

Shadow home secretary Chris Philp hit out at the continued use of hotels for asylum seekers, saying it was “completely unacceptable that taxpayers are asked to foot a bill of this size”.

But Dame Angela said it was “pointless” to give a time frame for when hotels will stop being used, and instead that she wanted to “get out of hotels as quickly as is feasible”.

The minister also refused to comment on reports that the Government is considering an offshore processing scheme for asylum seekers.

Some 38,079 asylum seekers were being housed temporarily in UK hotels at the end of December 2024, according to the latest data from the Home Office.

This is up 2,428 from 35,651 at the end of September.

It is the second quarterly rise in a row although the total is still some way below the recent peak of 56,042 at the end of September 2023.

Earlier on Tuesday, housing minister Matthew Pennycook told Times Radio he would not provide “the specifics” of why the Home Office cancelled the SBHL contract but that “operational details are being worked out”.

He added: “We did need to review these disastrous contracts on asylum accommodation we inherited.

“We’re doing so to improve management and guarantee value for money for the taxpayer.”

Asked when the numbers would go down, Mr Pennycook would not say when using hotels will end, amid a “huge backlog” of asylum cases to process.

“If we are going to work through that backlog… then we have got to deal with that problem in the short term,” he said.