Andy Burnham would cancel multibillion-pound asylum accommodation contracts if he became prime minister, according to allies of the Labour leadership hopeful.
The Home Office has had the opportunity since March to trigger a break clause in ten-year contracts signed with three private companies responsible for sourcing accommodation.
The clause allows the department to negotiate or cancel the contracts at any point between now and 2029, when they are due to expire.
Allies of Burnham told The Times he is “very committed” to ending the use of private companies to source asylum accommodation and would activate the break clause if he replaced Starmer at No 10.
Burnham would instead devolve responsibility for sourcing accommodation to local authorities, with asylum seekers housed in dispersal accommodation such as bedsits and multi-occupancy homes.
It remains unclear whether the Makerfield by-election candidate would continue home secretary Shabana Mahmood’s policy of moving migrants into large sites such as military barracks.
Mahmood is not reportedly considering triggering the break clauses despite being said to have agreed they are “terrible”, citing a lack of alternative options and a belief hotels can be phased out within the current contracts.
Ending the use of hotels is a Labour manifesto commitment that the party has pledged to fulfil by 2029.
A spokesperson for Burnham told The Times that he believed “hugely profitable outsourced contracts” was “not the basis for a fair asylum system.”
The spokesperson added that Burnham “stands by his view” and has been clear the current situation is “not fair on communities here and need to change.”
Last year, Burnham called the use of hotels “not acceptable” and argued that “real change” was necessary, also describing the Home Office’s dismissal of public concerns near migrant hotels as “scandalous.”
A source involved in asylum accommodation provision questioned whether Burnham’s approach would work, pointing to councils already struggling to find temporary accommodation for the homeless and newly released prisoners.
The contracts at the centre of the dispute were signed in 2019 with Serco, Mears and Clearsprings Ready Homes, at a time when almost all asylum seekers were housed in dispersal accommodation.
A home affairs committee report said the “flawed contract design” allowed contractors to house increasing numbers of asylum seekers in hotels rather than the cheaper dispersal alternative.
Hotel use became permanent following the Covid pandemic and peaked in 2023, with 56,042 asylum seekers housed in hotel rooms, though numbers have since more than halved to 20,885 at the end of March.
The Home Office said it had no plans to trigger the break clauses but remained firmly committed to ending the use of hotels before 2029.