Tens of millions of pounds in public money have been lost following costly mistakes linked to UK migrant and asylum schemes.
The Home Office’s annual report revealed that officials issued incorrect refunds worth at least £18.7 million to migrants who had paid the Immigration Health Surcharge, a fee intended to contribute towards NHS services.
Foreign nationals were repaid more than they should have been, and the department has indicated that much of the money is unlikely to be clawed back.
The report also disclosed a separate spending error, with the Home Office paying £22.9 million for an asylum hotel that ultimately never housed anyone.
Ministers agreed a nine-month contract for the Atrium Hotel in Hounslow, west London, in August 2025.
According to the department, the hotel was secured in anticipation of a rise in asylum accommodation demand, amid concerns that the Manston small boat migrant processing centre in Kent could breach its legal operating standards.
However, the expected pressure did not materialise. The Home Office said a mix of improved operational efficiency and lower-than-forecast demand meant the hotel was never needed.
The Immigration Health Surcharge refund errors are currently estimated at £18.7 million, although the report cautioned that the final figure has yet to be confirmed as further work continues.
The Home Office – under Home Secretary Shabana Mahmood – has been a series of bungles that has cost the taxpayer tens of millions of pounds
The IHS requires foreign workers to pay £1,035 annually for each year of their visa, while students and children are charged £776 annually.
However, a reimbursement scheme had ‘resulted in some reimbursements being paid to customers for periods not aligned with the underlying IHS payment’, the annual report said.
‘Recovery options are being explored however recoverability remains uncertain,’ it went on.
The document also set out a previously-known £14.9million loss on acquiring the ex-Ministry of Defence site at Northeye, Bexhill, East Sussex.
It was purchased to use as asylum seeker accommodation but never brought into operation ‘due to excessive costs to remediate the site’.
The Home Office ‘did not recoup any of the outlay on the site resulting in a constructive loss of £14.9million’.
The report showed £3.2million was also spent on scheduled deportation flights which did not take place.
Shadow Home Secretary Chris Philp said: ‘This is a catastrophic waste of taxpayers’ money by this inept Labour government.
‘Since the election 76,000 illegal immigrants have crossed the Channel, more than under any other prime minister.
‘The solution to this is not to put them up in hotel accommodation or anywhere else, which costs hard-pressed British taxpayers billions.
‘The solution is to leave the European Convention on Human Rights which will enable us to deport all illegal immigrants within a week of arrival.
‘Then, pretty quickly, the crossings will stop.’
He added: ‘At a time when families struggle to make ends meet and everyone faces ever higher taxes, it is galling that the Labour government is wasting so much of our money on failed projects designed for illegal immigrants.’
It comes after an official report last year found the Home Office had ‘squandered’ billions of pounds on asylum hotels.
MPs blasted the department’s ‘incompetence’ over its handling of a ‘failed, chaotic and expensive’ system.
There was ‘manifest failure’ by the Home Office to ‘get a grip’ of contracts with private companies it appointed to house asylum seekers, the damning report concluded, and the firms had been allowed to make ‘excessive profits’ from the Channel crisis.
In addition, the Home Office incurred a further loss of £35.2million over a scheme to improve the Police National Database.
The contract with CGI IT UK Ltd, approved in January 2024, was terminated ‘after repeated delays, escalating costs, and failure to provide a credible delivery plan’.
In a further startling revelation, Labour’s small boats supremo was paid £260,000 last year including more than £50,000 instead of working his notice period, it has emerged.
The department’s annual report showed Martin Hewitt’s annual salary was in the £260,000 to £265,000 bracket.
But the Border Security Commander’s package included £51,629 ‘in lieu of notice’ after being in the job for just 18 months.
His total package also included a ‘buy-out’ of annual leave at £6,754.
At the time of his departure at the end of March the Home Office refused to discuss why Mr Hewitt was leaving the role.
Sir Keir Starmer appointed former senior police officer Mr Hewitt shortly after becoming Prime Minister, tasking him with curbing the number of small boats crossing the Channel.
But last year saw the second-highest annual total of people crossing the Channel, with 41,500 arrivals.
This year’s arrivals are down by more than 40 per cent year-on-year.
In a further development, new data showed more small boat migrants have arrived in Britain than have left under Labour’s ‘one in, one out’ deal with France.
In the first 11 months of the scheme, 1,117 migrants came here under its reciprocal arrangements, compared with 1,087 who were deported back to France.
The Home Office was approached for comment.
