Watchdog blames ‘woeful budgeting’ for asylum overspend by Home Office
“Woeful budgeting” by the Home Office has led to years of overspend on asylum, a watchdog has claimed.
For the past three years, the department has set £110m aside for asylum operations. But a new report from the Institute for Fiscal Studies (IFS) said the actual spend had averaged £2.6bn a year in that time.
Research economist for the watchdog Max Warner said going over budget was “entirely understandable” when there was “a one-off unexpected spike in costs or demand”.
But, he added: “When it is happening year after year, something is going wrong with the budgeting process.”
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The IFS accused the Home Office of getting into the “bad habit” of submitting its initial budgets to parliament at the start of the year knowing full well the funds wouldn’t cover what was needed, instead relying on additional money from the Treasury’s reserve fund – a top-up that last year amounted to an extra £4bn.
And it claimed the new government was making the same mistakes again, saying it was submitting figures it “knows to be insufficient”, and was already writing in a Treasury top-up of £1.5bn – with another of £4bn judged by the watchdog to be “all but inevitable”.
The IFS put the budgeting issues at the heart of the disagreement between former Tory chancellor Jeremy Hunt and his Labour successor Rachel Reeves shortly after she took office.
Ms Reeves accused Mr Hunt of lying over the state of the UK’s finances, saying there was a £22bn “black hole” in funding – including the need to spend £6.4bn on asylum and illegal migration in 2024/25.
He rejected that claim, saying it contradicted the budgets he had presented to parliament and that were signed off by civil servants, and insisting the figures were there to see before she became chancellor.
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‘Hunt lied over state of public finances’
The watchdog said both politicians had a point, but only because the Home Office and the Treasury were continuing “poor budgeting practice” that “leaves a lot to be desired”.
It said Ms Reeves was right to point out the lack of budgeting for asylum pressures by the previous government – though she “perhaps overstates the extent to which this was unforeseeable and unexpected”.
And while Mr Hunt had a right to question the budget estimates presented to parliament by Labour and if they were enough, it was the same case when he was chancellor the previous year.
Responding to the report, a Labour spokesperson reiterated their attack on the previous Tory administration, saying they had “covered up the true extent of the crisis and its spending implications, leaving behind an unforgivable inheritance with nothing to show for it except record high small boat crossings in the first half of the year”.
The spokesperson added: “Every time the Conservatives faced a difficult problem, they failed to be honest. They knowingly overspent on departmental budgets, covered it up, called an election and ran away from the problem, leaving a £22bn black hole in the country’s finances for Labour to clean up.
“The Labour government has already begun the difficult work to clean up this mess and deliver an asylum system that is controlled, managed, and works for Britain.”
Shadow home secretary James Cleverly said: “Border control has never been free.
“By scrapping our deterrent on day one of a Labour government, the asylum bill will soar for taxpayers under Keir Starmer’s government.
“The government must urgently come forward with a plan to stop illegal boat crossings and end the use of expensive hotels to manage down costs within the asylum system.”
The report comes amid growing speculation around tax rises when Ms Reeves delivers her first budget on 30 October.
Speaking on Tuesday, Prime Minister Sir Keir Starmer warned of “painful” decisions to come in order to “fix the foundations” of the UK economy.
It is not yet clear where the axe may fall, but speaking to reporters on Wednesday, the chancellor refused to rule out rises to inheritance or capital gains taxes.
Dame Judi Dench, Malala and Stanley Tucci are among another 100 famous names who have added their signatures to a letter urging Sir Keir Starmer to “end the UK’s complicity” in Gaza.
Sky News can exclusively reveal the Bond actress, Nobel Peace Prize winner and Conclave actor are among a host of public figures who have added their names to the letter.
At the end of May, Sky News revealed about 300 actors, bands, singers, activists and sportspeople signed the letter, organised by refugee charity Choose Love, calling on Sir Keir to suspend all UK arms sales and licences to Israel.
Dua Lipa, Benedict Cumberbatch and Gary Lineker were among the celebrities to also urge the PM to use all available means to ensure full humanitarian access and broker an immediate and permanent ceasefire.
Celebrities and activists also read out all the names of children killed in Gaza in front of parliament.
But three weeks later, they say nothing has changed.
Dua Lipa, Gary Lineker and Benedict Cumberbatch signed the letter in May. Pics: PA
Other new signatories include actors Florence Pugh and Russell Tovey, Dr Who star Ncuti Gatwa, singer Paolo Nutini, author Michael Rosen, musician Paul Weller, Little Mix members Leigh-Anne Pinnock and Jade Thirlwall, broadcaster Fearne Cotton, Game of Thrones actress Carice van Houten, Harry Potter actress Bonnie Wright and ex-England rugby captain Chris Robshaw.
The letter urges Sir Keir to “take immediate action to end the UK’s complicity in the horrors of Gaza”, and says children are starving “while food and medicine sit just minutes away”, in reference to Israel blocking aid into the territory.
It says 71,000 children under four are “acutely malnourished” and those who survive starvation “wake up to bombs falling on them”, with more than 15,000 children killed in the conflict so far.
Read more:
Israeli tanks kill 51 people waiting for aid in Gaza
Bodies of Israeli couple taken into Gaza by Hamas recovered
Ncuti Gatwa, who plays Dr Who, has signed the letter. Pic: Reuters
Actress Florence Pugh has also signed the letter. Pic: Reuters
Actor Russell Tovey is a signatory too. Pic: Reuters
“Violence stamped with UK inaction – flown with parts shipped from British factories to Israel – could be obliterating families in seconds,” the letter adds.
“You can’t call it ‘intolerable’, yet do nothing.
“Every moment this continues, is another moment children die on our watch.
“History is written in moments of moral clarity. This is one. The world is watching and history will not forget. The children of Gaza cannot wait another minute.
“Prime minister, what will you choose? Complicity in war crimes, or the courage to act?”
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Steve Coogan: It has to stop
What has Starmer said and done about Gaza?
In September, the UK suspended about 30 arms export licences to Israel, but government export licensing figures from May show the UK approved licences for £127.6m worth of military equipment from October to December 2024 – more than the total between 2020 and 2023.
Since the first letter was sent, Sir Keir has called Israel’s actions in Gaza – both the blockade of aid and strikes – “appalling and intolerable”.
Some of his own MPs are pressuring him to take further action against Israel and call the 20-month war – which started when Hamas killed 1,195 people in Israel and took 250 hostage – a genocide, but he has not used those words.
On 10 June, the UK, Australia, Canada, New Zealand and Norway sanctioned far-right Israeli ministers Itamar Ben-Gvir and Bezalel Smotrich over “repeated incitements of violence against Palestinian civilians”.
They are banned from entering the UK and are now subject to a freeze on UK assets and director disqualifications.
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Gaza crisis ‘acute’ and continuing
Last week, Sir Keir said more RAF jets, including Typhoons and air-to-air refuelers, were being sent to the Middle East after Israel and Iran attacked each other.
On Tuesday, Sir Keir told Sky News’ political editor Beth Rigby he is “worried about the impact” escalation between the two countries will have on Gaza.
Josie Naughton, co-founder and CEO of Choose Love, said: “Since we urged the government to end its complicity in the horrors of Gaza, more people have added their voice to our call. We cannot be silent while children are being killed and families are being starved.
“It took us 18 hours to read the 15,613 names of children known to be killed in Gaza. Every single one of them was someone’s whole universe. Every one of them deserved better.
“The situation is changing by the second, but until the UK government has halted all arms sales and licences to Israel, ensured that humanitarian aid can reach people starving inside Gaza and stopped the killing, they will not have done enough.
“History will remember how we acted in this moment. We beg Keir Starmer to end the UK’s complicity in these horrors.”
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A government spokesperson said: “We strongly oppose the expansion of military operations in Gaza and call on the Israeli government to cease its offensive and immediately allow for unfettered access to humanitarian aid.
“The denial of essential humanitarian assistance to the civilian population in Gaza is unacceptable and risks breaching international humanitarian law.”
The spokesperson added: “Last year, we suspended export licences to Israel for items used in military operations in Gaza and continue to refuse licences for military goods that could be used by Israel in the current conflict.
“We urge all parties to urgently agree a ceasefire agreement and work towards a permanent and sustainable peace.”
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