The head of the Home Affairs Committee has told the government to “get a grip” on the UK’s asylum accommodation system after a report found the Home Office repeatedly cut corners in its “chaotic” response to pressures.

The government has promised to end the housing of asylum seekers in hotels by 2029 amid mounting pressure over rising costs and a backlash in local communities.

But a damning report published by the Home Affairs Committee on Monday warns a promise to appeal to popular opinion without a clear plan for alternative accommodation risks “under-delivery and consequently undermining public trust still further”.

The report says: “The Home Office has undoubtedly been operating in an extremely challenging environment, but its chaotic response has demonstrated that it has not been up to the challenge.

“The 2026 break clause and end of the contracts in 2029 represent opportunities to draw a line under the current failed, chaotic and expensive system and move to a model that is more effective and offers value for money.”

Dame Karen Bradley, chairwoman of the Home Affairs Committee, called for the government to “get a grip” on the system and learn from its mistakes, or it is “doomed to repeat them”.

She said: “The Home Office has not proved able to develop a long-term strategy for the delivery of asylum accommodation. It has instead focused on short-term, reactive responses.”

Expected costs of Home Office accommodation contracts for 2019-2029 have recently tripled from £4.5bn to £15.3bn, after a “dramatic increase” in demand following the COVID pandemic and rising numbers of those arriving by small boat among the factors.

The committee’s report also noted the Home Office failed to engage with communities and local residents who have “genuine concerns” over asylum hotels in their area, as well as people travelling from other areas “to promote divisive agendas or instigate disorder”.

MPs have pressed for the Home Office to prioritise closing hotels where there have been “significant community cohesion issues” – including in Epping, Essex, where demonstrations outside the Bell Hotel were held after migrant Hadush Kebatu was charged and later jailed for sexual assault.

The report added: “The lack of engagement and transparency has left space for misinformation and mistrust to grow, which in too many areas has led to tensions and undermined the ability of local partners to promote social cohesion.”

It also says the government has mismanaged contracts handed to hotels used to house asylum seekers. This includes a lack of fines for hotels that have poor performance and not claiming tens of millions of pounds in excess profits.

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The committee has instead called for a future accommodation system to be based on fairness rather than cost alone, to improve communication with local communities and be flexible to meet unpredictable demands.

A Home Office spokesperson said: “The government is furious about the number of illegal migrants in this country and in hotels.

“That is why we will close every single asylum hotel – saving the taxpayer billions of pounds.

“We have already taken action – closing hotels, slashing asylum costs by nearly £1bn and exploring the use of military bases and disused properties.”

The prime minister has said the migrant who was mistakenly released from prison and found again will be deported following an error that Reform UK likened to a “Monty Python sketch”.

Sir Keir Starmer said police officers had worked “quickly and diligently to bring him back into custody” and that the government had “ordered an investigation to establish what went wrong”.

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Hadush Kebatu, who was found guilty in September of sexually assaulting a 14-year-old girl and a woman in Epping, was freed in error from HMP Chelmsford in Essex on Friday instead of being handed over to immigration officials for deportation.

His accidental release sparked widespread alarm and a manhunt that resulted in him being found and arrested by the Metropolitan Police in the Finsbury Park area of London at around 8.30am on Sunday.

The incident has sparked questions over how the man – whose crimes sparked protests in Epping over the use of asylum hotels – was able to be freed.

Opposition parties have said the government has “serious questions” to answer over the incident.

Speaking on Sunday Morning with Trevor Phillips, Zia Yusuf, Reform’s head of policy, said that while he was “relieved” Kebatu had been re-arrested, the case was a sign of Britain’s “descent into a Monty Python sketch”.

He referred to a Sky News report detailing how the wanted migrant spoke to a delivery driver at Chelmsford prison and appeared “confused” at why he had been released.

“This is a man who the eyewitnesses said was actively trying to go back into prison after being accidentally let go,” Mr Yusuf said.

He said the case was “absolutely shocking” and questioned how victims of sexual assault could have confidence in the government.

Chris Philp, the shadow home secretary, said Kebatu should “never have been released in the first place” and called on the home secretary and justice secretary to apologise.

Pressed on the state of the prison system during the Conservatives’ 14 years in power, Mr Philp said: “They’ve been in charge now for almost a year and a half, so I think they do have to take responsibility for the system.

“This failing with the release of this man by accident happened under the Labour government and, as I say, I think the justice secretary and home secretary should apologise.”

Their concerns were echoed by Marie Goldman, the Liberal Democrat MP for Chelmsford, who told Sky News the incident was a sign of “systemic failure”.

She said she had spoken to the prison service and had been told to expect the initial findings into what went wrong “pretty quickly”.

“We had figures from His Majesty’s Prison Probation Service saying that 262 prisoners were released in error in the year leading to March of this year,” she said.

“That shows that it’s a systemic failure. This is happening all over the country.”

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Commander James Conway praised the “diligent and fast paced investigation” that led to Kebatu’s arrest and revealed it was information from the public that led officers to Finsbury Park, where he was discovered.

Speaking on Sky News before Kebatu was found, Health Secretary Wes Streeting told Trevor Phillips that Justice Secretary David Lammy had commissioned an investigation into what had gone wrong.

“We know that one prison officer has been suspended already, but there does need to be accountability for such an egregious failure,” he added.

A former Bank of England governor has criticised potential proposals for a mansion tax, saying the government lacks a “coherent strategy” on the economy.

Chancellor Rachel Reeves is reportedly considering a mansion tax in next month’s budget to help fill the multi-billion pound black hole in the public finances.

But Lord King told Sunday Morning With Trevor Phillips that he could not identify an economic plan from the government and that adding another wealth tax would not solve the problem with the country’s finances.

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“There’s plenty of scope for reforming the tax system,” he said.

“It hasn’t, we haven’t, seen a chancellor take a strategic look at the tax system for almost 40 years.

“It’s been one kind of tinkering after another and that’s created a mess – an excessively complex one.”

Last week, Ms Reeves admitted in an interview with Sky News that she was looking at both tax rises and spending cuts in the budget.

The Mail On Sunday reported that one proposal being considered was a mansion tax which would hit owners of properties with an annual charge of 1% of the amount by which its value exceeds £2m – meaning a £10,000-a-year levy for homes worth £3m.

But Lord King said: “Property taxes are an interaction between stamp duty, council tax, capital gains tax, inheritance tax.

“You don’t solve that problem by just adding another wealth tax to it.”

The former Bank of England governor said the chancellor needed to look at “all aspects” of tax, not just on property, “to come up with a coherent view to what it should look like”.

He said this currently did not happen and that instead ministers tried to match a figure produced by the Office for Budget Responsibility (OBR), the fiscal and economic forecaster, just before the budget.

“What happens is the OBR produces just before the budget, a number, one number, and then they look round for ideas – almost written on the back of a fag packet – about how you can raise an extra few billion or a few billion there,” Lord King said.

“That is not a coherent tax strategy. And you could do a great deal by thinking it through first.”

Economists have indicated Ms Reeves will need to find between £20bn and £50bn to meet her goal of balancing day-to-day spending with tax receipts in 2029/30, and at least maintaining her current buffer of around £10bn against that target.

The chancellor has hinted this will be more difficult to achieve due to the OBR downgrading its assessment of productivity growth.

Another measure the chancellor is reportedly considering to accumulate extra revenue is a 2p hike to income tax – as reported by The Sun On Sunday.

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The move would breach Labour’s manifesto pledge not to increase national insurance, VAT and income tax.

Asked whether Labour was unwise to stick with those general election promises on tax, Lord King said: “Very unwise.

“I think the previous government was irresponsible to cut national insurance contributions when that was only remotely feasible, given unrealistic projections for public spending.

“And I think the Opposition didn’t need to make a commitment not to reverse that.

“And honestly, I think that would be much better now just to say to people, ‘this is where we are’.

“Be completely straight with people say, ‘yeah, we made that pledge in the heat of an electoral battle, it was a mistake, we regret it, and we’re going to unwind that’.”

In her Sky News interview, Ms Reeves said multiple challenges meant there was a fresh need to balance the books.

She added: “Of course, we’re looking at tax and spending as well, but the numbers will always add up with me as chancellor because we saw just three years ago what happens when a government, where the Conservatives, lost control of the public finances: inflation and interest rates went through the roof.”

The Treasury has been approached for comment.