Billions of pounds are being wasted by the Home Office on asylum hotels, a committee of MPs say.

A damning report by the Home Affairs Committee says the expected cost of housing asylum seekers has tripled from £4.5bn to £15.3bn.

This follows a “dramatic increase” in demand following the COVID pandemic and rising numbers of those arriving by small boat.

The report, referring to accommodation contracts for 2019-2029, criticises the Home Office for failing to reclaim excess profits from asylum accommodation providers totalling tens of millions of pounds owed to the department.

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

Communities Secretary Steve Reed told Sky News the government was “working at pace to fix the problems we inherited” including expanding the number of caseworkers examining asylum cases.

“The Home Secretary… has been involved in conversations about how you can look at using disused military bases, for instance, instead of hotels, to accommodate people far more cheaply.

“But it takes time to get your hands on those sites, construct the accommodation and then move people into it. But we’ve already saved £1 billion. So it’s starting to go down.”

The report said that, without a clear plan for alternative accommodation, the government risks “under-delivery and consequently undermining public trust still further”.

It added that the Home Office repeatedly cut corners in its “chaotic” response to pressures.

Committee chair Dame Karen Bradley called for the government to “get a grip” on the system “in order to bring costs down” and learn from its mistakes, or it is “doomed to repeat them”.

She added: “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.”

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 said: “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.

“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 said 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.”

It’s not the start to the week that Ed Miliband, the energy secretary, would have been hoping for: more than 2,000 private sector jobs in Scotland at risk from the collapse of Petrofac, the London-listed oilfield services group.

Its slide into insolvency was triggered by last week’s cancellation of a major contract by its biggest customer, but the failure of a company once valued at more than £6bn has been a long time coming.

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Administrators at Teneo will now attempt to salvage what they can from Petrofac’s wreckage.

“The group’s operations will continue to trade, and options for alternative Restructuring and [sale] solutions are being actively explored with its key creditors,” Petrofac said on Monday morning.

“When appointed, administrators will work alongside Executive Management to preserve value, operational capability and ongoing delivery across the Group’s operating and trading entities.”

For thousands of employees, the future is now uncertain, although people close to the company say they are hopeful that a buyer can be found swiftly for its North Sea operations, with one suggesting that it could even happen in the coming days.

That would be a relief to Mr Miliband, whose energy policy has come under growing scrutiny in recent months amid dire warnings about the future of Britain’s offshore oil industry.