A company running dozens of asylum hotels will have its contract ended by the Home Office and be replaced in part by the firm behind the beleaguered Bibby Stockholm barge.
Stay Belvedere Hotels (SBHL) is responsible for running 51 hotels for asylum seekers waiting on their decisions in England and Wales.
The company also runs Napier Barracks in Folkestone, Kent, which is due to close and be returned to the Ministry of Defence in September.
The Home Office said on Tuesday that it would remove SBHL from government operations following an examination of its contract, which found “concerns about its performance and behaviour as a government supplier”.
The contract, which was awarded in 2019, will end at the earliest opportunity in September 2026. The management of the hotels will be taken over by accommodation providers Mears, Serco and Corporate Travel Management (CTM).
CTM is an Australian travel firm that was previously awarded a contract to provide asylum ships and other accommodation, which covered the Bibby Stockholm barge. Labour decided in July last year to close down the Bibby Stockholm and announced it would not renew its contract beyond January 2025 in a push to make savings.
The controversial barge, which was based in Portland in Dorset, was used to house asylum seekers from 2023-2024. Asylum seekers had to be temporarily moved off the barge when legionella bacteria was discovered in the water.
An asylum seeker, Leonard Farruku, also took his own life on the barge in 2023, and other residents warned the site was unsafe and overcrowded.
As of last October, there were 220 asylum hotels in use by the Home Office.
Minister for border security and asylum, Angela Eagle, said: “Since July, we have improved contract management and added more oversight of our suppliers of asylum accommodation.
“We have made the decision to remove Stay Belvedere Hotels from the Home Office supply chain and will not hesitate to take further action to ensure Home Office contracts deliver for the UK.”
The Home Office, which is committed to ending the use of asylum hotels, said it was working to “put robust plans in place” to minimise disruption.
Speaking to broadcasters on Tuesday morning, housing minister Matthew Pennycook said he would not provide “the specifics” of the Home Office’s decision to cancel the company’s contract, saying “operational details are being worked out”.
Asked whether the government would get money back if the company had failed in its duty, he said: “The whole purpose of reviewing asylum contracts is to improve the management of them to guarantee value for money for the taxpayer… the operational details are being worked out.
“I’ll leave it to Home Office ministers to come back with the finer points of detail on the decision they’ve made, but work is underway to ensure the asylum services continue to operate as normal, to deal with the management problems.”
He added: “We did need to review these disastrous contracts on asylum accommodation we inherited. We’re doing so to improve management and guarantee value for money for the taxpayer.”
When pushed on Times Radio, Mr Pennycook said he was unable to give a date for when hotel use for asylum seekers would end.
The Home Office has previously said that hotels will be used for at least four more years.
Government data from December 2024 shows that there were 38,079 asylum seekers in hotel accommodation, and over 70,000 in other forms of accommodation such as temporary homes or large sites.
On their website, SBHL describe themselves as a “leading provider” of temporary accommodation for asylum seekers.
They say staff “strive every day to ensure each guest is welcomed, supported and serviced in a way that connects them with communities, is sensitive to their culture and delivers an experience that is both compassionate and caring”.
A spokesperson for SBHL said: “SBHL has been informed of the decision to end its contract to supply temporary accommodation to asylum seekers in the UK and is in the process of holding discussions with appropriate partners.”