Labour Moves Asylum Seekers from Hotels to Residential Areas

Labour wants voters to believe it has finally brought order to Britain’s asylum system, which has seen more than 200,000 people illegally cross the English Channel since 2018 to claim protection.

Ministers proudly point to falling numbers of migrants housed in hotels, one of the most potent symbols of Britain’s border crisis under the Conservatives. The expensive hotel bills are shrinking and ministers can claim progress.

But the reality is less straightforward. Rather than solving the accommodation problem, the government has redistributed it. Increasing numbers of asylum seekers are now being placed in houses in multiple occupation (HMOs), which are old houses converted into flats, while former military barracks are also being prepared as accommodation. The political controversy has not disappeared. It has shifted from city-center hotels to residential streets and rural communities.

At the same time, Labour’s immigration policy is becoming the subject of an internal power struggle. Home Secretary Shabana Mahmood’s efforts to project a tougher approach are increasingly colliding with the growing influence of Andy Burnham, who is widely seen as the next prime minister and who is being pressured by his allies to water down restrictions.

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Burnham's Growing Influence

The latest flashpoint concerns Labour's planned overhaul of indefinite leave to remain, which is what permanent residency is called in the UK. Ministers had proposed increasing the residency requirement from five to 10 years, in an effort to reduce the incentives driving lower-skilled migration and tackle some of the issues caused by Boris Johnson's post-Brexit loosening of the immigration system, which dramatically expanded legal migration through sectors such as social care. Failure to do so will mean that migrants who arrived between 2021 and 2024 will soon be able to access the welfare state.

That position now appears less certain. According to reports, Burnham is considering whether these reforms should be scrapped or watered down. The junior immigration minister Mike Tapp subsequently briefed that such an exemption was under consideration for care workers, even though they are one of the groups who are thought likeliest to use the welfare state. That led to a spat with Mahmood, who was angry that one of her ministers had spoken out in public on the plans without her permission.

Nonetheless, current Prime Minister Keir Starmer refused to act against Tapp.

Whatever happens with the reforms, this episode demonstrates that immigration policy is now not just the preserve of the Home Office. Instead it is up for debate as part of the wider contest over what policy direction Labour should take under Burnham.

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Moving the Numbers Rather Than Solving the Problem

The same tension is visible in Labour's accommodation policy. Closing the asylum hotels may improve the government's headline statistics, but it does not remove the underlying pressures.

Former military barracks present a different challenge. Many are located close to small towns and villages whose populations may suddenly find themselves living alongside hundreds of asylum seekers. Since the sites are not detention centers, the new residents are free to leave while their asylum claims are processed.

Recent events in Stoke Heath, Shropshire, illustrate the difficulties. Residents reacted angrily after learning that 83 asylum seekers would be housed in 21 newly built homes that many locals believed were intended for affordable or social housing.

Villagers said they felt misled, while local leaders warned that the small rural community lacked the infrastructure to absorb such a large influx, with only two primary schools nearby. Shropshire Council, the local MP and the West Mercia Police and Crime Commissioner have all formally objected to the plans, despite the Home Office arguing that the move forms part of its strategy to reduce reliance on asylum hotels.

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The Fiscal Challenge

Accommodation is only one part of the challenge posed by high numbers of asylum seekers. A new Home Office research document estimates that the asylum seekers who won asylum under Article 8 of the European Convention on Human Rights in 2025 alone will cost taxpayers around £4.9bn ($6.6bn) over their lifetimes.

Using the government-funded Migration Advisory Committee's lifetime fiscal model, the officials estimate that each successful applicant represents a net fiscal cost of approximately £141,000 ($190,000) after accounting for the taxes they pay and the amount of public money they receive.

The figure excludes any dependents who might join successful asylum seekers, such as their spouses or children. Since migrants arriving through the family route are themselves estimated to cost around £112,000 ($151,000) over their lifetimes, a successful applicant who was joined by a spouse and two children could ultimately represent a lifetime fiscal cost to the taxpayer that approaches £500,000 ($675,000).

The estimates reflect broader trends identified in the government's recent Refugee Integration Outcomes study, which examined the outcomes of refugees who had come since 2015. It found that refugees are more likely to be unemployed and, when they were employed, to be in low-paid jobs. This was driven by poor standards of English and a lack of qualifications.

To put that overall figure into perspective, £4.9bn ($6.6bn) is roughly equivalent to the black hole in the current Defense Investment Plan, which has been repeatedly delayed due to the inability of the government to find funding for it.

In addition, the government has announced plans to force some asylum seekers to pay up to £10,000 ($13,245) as a way to reimburse the taxpayer. However, this would only apply to the minority who got jobs, and as the overall cost of an asylum seeker is so high, the vast majority of the fiscal burden would remain.

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An Immigration Strategy at War with Itself

At the same time as it is failing to stop illegal arrivals or to block migrants who will be long-term costs from settling, the government has announced plans for a community sponsorship scheme.

It would allow local organizations to bring refugees to Britain through legal routes. Critics argue that charities, faith groups and campaign organizations could significantly increase arrivals while the central government distances itself from the political consequences.

Taken together, these policies suggest Labour is attempting to reconcile two increasingly difficult objectives: convincing voters that immigration is under control while not alienating their activists and politicians who want much laxer controls on immigration.

The question is whether voters will judge success by the number of asylum hotels that close or by whether overall pressures on communities and public finances actually diminish. If asylum seekers move from hotels to HMOs and barracks while the long-term fiscal burden continues to grow, Labour may discover that changing the location of the problem is not the same as solving it.

The increasingly visible clash between Mahmood and those around Burnham suggests that the fiercest battle over immigration is no longer taking place between Labour and the opposition. It is unfolding inside the governing party itself.