Prime Minister Keir Starmer has committed to clawing back what he describes as 'excess profits' made by private companies operating hotels for asylum seekers, following a damning financial expose.
The Sutton Coldfield Exposé
The pledge comes after BirminghamLive shared details of the huge profits generated by the former Ramada Hotel on Penns Lane in Sutton Coldfield. The hotel, also known as Penns Hall, has been housing asylum seekers since October 2021 under a contract with private firm Serco, acting on behalf of the Home Office.
An investigation revealed that the five owners of the hotel, all members of the Johal family aged between 68 and 79, paid themselves a total of £5.62 million in salaries and dividends over just three years, from 2022 to 2024. This included lump sum dividends of £4.35 million and fees totalling £1.27 million.
A 'Failed and Expensive' System
While there is no suggestion of illegal activity, the system that enabled such payouts has been heavily criticised. A cross-party committee of MPs lambasted the arrangements as a 'failed, chaotic and expensive' system, highlighting a 'manifest failure' by the Home Office to secure value for taxpayers' money.
Prime Minister Starmer told BirminghamLive: "We need to close all the asylum hotels and we know that what will be of concern to some of your readership is the money some are making in profit from these hotels. We will recover money that some of them are making."
Government Action and Local Reaction
Home Secretary Shabana Mahmood has stated that the government inherited asylum hotel contracts that were not delivering good value. She confirmed that £700 million has already been saved in hotel costs, with efforts now focused on recouping millions more in excess profits. The government aims to close every asylum hotel by the end of this parliament.
However, a Daily Mail investigation found that so far, only £74 million of excess profits has been recovered nationwide.
The situation in Sutton Coldfield has sparked significant local concern. The venue has been the scene of weekly protests, with residents citing issues of anti-social behaviour and the impact on the area. Sutton Coldfield's Conservative MP, Sir Andrew Mitchell, has tabled an urgent parliamentary question demanding to know how the arrangement represents 'value for money'.
Charity Refugee Action described the level of profits as 'obscene', while the local Walmley Action Group labelled the figures 'shocking'.
Serco, the contractor, responded by stating they negotiate the best rates possible with hotels, which are then approved by the Home Office, and that they share the government's aim to end hotel use.
