The Home Office has been accused of “woeful budgeting” after overspending on asylum seekers by an average of 23 times per year, according to a watchdog report. Despite setting aside £110m for “asylum operations” over the past three years, the actual spend averaged £2.6bn annually, the Institute for Fiscal Studies (IFS) revealed.
Asylum operations encompass various accommodations and resettlement schemes, leading to the overspend. Research economist Max Warner from the IFS noted that going over budget due to unexpected spikes in costs or demand is understandable, but when it becomes a recurring issue, there are problems with the budgeting process.
The IFS criticized the Home Office for relying on additional funds from the Treasury’s reserve fund each year, with last year’s top-up amounting to £4bn. The report highlighted ongoing budgeting issues between former Tory chancellor Jeremy Hunt and Labour successor Rachel Reeves, with Reeves accusing Hunt of lying about the state of UK finances.
The watchdog emphasized the need for improved budgeting practices by both the Home Office and the Treasury to avoid future overspending. The government pledged to reform the asylum system to operate more efficiently and cost-effectively, while Labour criticized the previous administration for leaving behind a financial mess.
As speculation grows around potential tax rises in Reeves’ upcoming budget, Prime Minister Sir Keir Starmer warned of “painful” decisions ahead to stabilize the UK economy. The chancellor did not rule out increases to inheritance or capital gains taxes, indicating tough choices may be on the horizon.