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.
Despite the ongoing market meltdown on US trade tariffs, executives at major cryptocurrency firms Messari and Sygnum are bullish on institutional Bitcoin adoption later in 2025.
Speaking on a panel at Paris Blockchain Week on April 8, Messari CEO Eric Turner and Sygnum Bank co-founder Thomas Eichenberger said they expect a significant shift in the banking sector’s involvement with crypto in the second half of the year.
According to the executives, the global banking push into Bitcoin (BTC) services has great potential to happen in the second half of 2025 as regulators embrace crypto, including stablecoins and crypto services by banks.
“I think we’re probably looking at a muted Q2, but I’m really excited for Q3 and Q4,” Messari’s Turner said during the panel discussion moderated by Cointelegraph CEO Yana Prikhodchenko, forecasting “really interesting” things coming to the crypto market in 2025.
Crypto adoption is not just about Trump
While some investors focus on the pro-crypto stance of US President Donald Trump, Turner emphasized that broader regulatory momentum is what matters most.
“When you look at the potential of having market structure regulation in the US, stablecoin regulation, and just the fact that across the board, not just President Trump himself, but the SEC and all these regulatory industries are really embracing crypto,” Turner said.
Paris Blockchain Week’s panel with Cointelegraph CEO Yana Prikhodchenko, Bancor co-founder Eyal Hertzog, Sygnum co-founder Thomas Eichenberger, Messari CEO Eric Turner, AWS fintech leader Alex Matsuo and Near chief operating officer Chris Donovan. Source: Cointelegraph
Sygnum co-founder Thomas Eichenberger said international banks with US branches are also poised to enter the market once the legal landscape becomes clearer:
“I think it’s a matter of fact that US banks are preparing to be able to offer crypto custody and at least crypto spot trading services anytime soon.”
“I think by then I would agree with you, Eric,” he continued, projecting a continued phase of market uncertainty until the US establishes a clear regulatory framework.
Related: Ripple acquires crypto-friendly prime broker Hidden Road for $1.25B
Banks are no longer afraid of Bitcoin regulators
With the establishment of clear crypto rules for banks in the US, there will be a rush for crypto services by large international banks that are incorporated outside of the US but have a US-based presence, Eichenberger said.
“Some of them may have had their strategic plans in their cupboard to offer crypto-related services, but have been afraid that at some point they will be gone after by any of the US regulatory authorities,” he said, adding:
“Now I think there’s no one to be afraid of anymore in terms of regulatory authorities worldwide. So I think many of the large international banks will launch this year.”
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Global trade tensions triggered by US President Donald Trump’s sweeping tariff measures may come to an end with a potential deal with China as investors remain concerned about escalation from both sides.
Trump’s April 2 announcement of reciprocal import tariffs sent shockwaves through global equity and crypto markets. The measures include a 10% baseline tariff on all imported goods, effective April 5, with higher levies — such as a 34% tariff on Chinese imports — set to begin on April 9.
However, the tariff negotiations may only be “posturing” for the US to reach an agreement with China, according to Raoul Pal, founder and CEO of Global Macro Investor.
“In the end, almost all the other tariff negotiations and rhetoric are all about getting China to agree a deal,” Pal wrote in an April 8 X post, adding:
“That is the big prize and both China and the US understand it and need it. Everything else is negotiation posturing. China needs a weaker $ and the US needs tariffs.”
Source: Raoul Pal
“Also, the US is trying to shut down China tariff arbitrage using other channels such as Mexico or Vietnam,” Pal said.
Related: Bitcoin price can hit $250K in 2025 if Fed shifts to QE: Arthur Hayes
China retaliates with new tariffs
Considering China’s latest retaliatory measures, a resolution remains unlikely in the short term.
In response to US tariffs, China imposed a 34% tariff on all US imports effective April 10, media outlet Xinhua News reported on April 4. China’s foreign ministry also vowed to “fight till the end” against Trump’s tariffs, which it called “bullying” by the world’s largest economy.
China overtakes the US in global trade. Source: Econovis
China overtook the US in 2012 to become the world’s largest trading nation by the total value of exports and imports, surpassing $4 trillion in goods trade that year, according to The Guardian.
Crypto markets watch trade outcome closely
As the trade dispute continues to evolve, analysts say a potential agreement between the two global superpowers could serve as a key catalyst for recovery in digital asset markets.
Crypto markets have a 70% chance to bottom by June 2025 before recovering, Nansen analysts predicted.
Related: Crypto market bottom likely by June despite tariff fears: Finance Redefined
Investor appetite for risk assets such as Bitcoin will depend on the global tariff responses from other countries, according to Nicolai Sondergaard, a research analyst at Nansen.
“We have reached somewhat of a local bottom in regard to tariffs and the impact on prices,” the analyst said during Cointelegraph’s Chainreaction live show on X, adding:
“Trump came out guns blazing, and we’ve mostly seen the worst from the US side, so we’ll see if other countries are willing to drop some of the tariffs because it’s very likely the US will do the same.”
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A Nigerian court has reportedly delayed the country’s tax evasion case against Binance until April 30 to give time for Nigeria’s tax authority to respond to a request from the crypto exchange.
Reuters reported on April 7 that a lawyer for Binance, Chukwuka Ikwuazom, asked a court the same day to invalidate an order allowing for court documents to be served to the company via email.
Binance doesn’t have an office in Nigeria and Ikwuazom claimed the Federal Inland Revenue Service (FIRS) didn’t get court permission to serve court documents to Binance outside the country.
“On the whole the order for the substituted service as granted by the court on February 11, 2025 on Binance who is … registered under the laws of Cayman Islands and resident in Cayman Islands is improper and should be set aside,” he said.
FIRS sued Binance in February, claiming the exchange owed $2 billion in back taxes and should be made to pay $79.5 billion for damages to the local economy as its its operations allegedly destabilized the country’s currency, the naira, which Binance denies.
It also reportedly alleged that Binance is liable to pay corporate income tax in Nigeria, as it has a “significant economic presence” there, with FIRS requesting a court order for the exchange to pay income taxes for 2022 and 2023, plus a 10% annual penalty on unpaid amounts along with a nearly a 27% interest rate on the unpaid taxes.
Nigeria’s legal history with Binance
In February 2024, Nigeria arrested and detained Binance executives Tigran Gambaryan and Nadeem Anjarwalla on tax fraud and money laundering charges. The country dropped the tax charges against both in June and the remaining charge against Gambaryan in October.
Tigran Gambaryan (right) was seen in a September video struggling to walk into a courtroom in the Nigerian capital of Abuja. Source: X
Anjarwalla managed to slip his guards and escape Nigerian custody to Kenya in March last year and is apparently still at large.
Related: Binance exec shares details about release from Nigerian detention
Gambaryan, a US citizen, returned home in October after reports suggested his health had deteriorated during his detainment with reported cases of pneumonia, malaria and a herniated spinal disc that may need surgery.
Binance stopped its naira currency deposits and withdrawals in March 2024, effectively leaving the Nigerian market.
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