Tories 'woefully' understated the cost of asylum, claims thinktank

The Home Office has been accused of submitting "woeful" budget figures under successive Conservative ministers that officials knew understated the ballooning cost of asylum and illegal immigration spending.

- Richard Partington, Jessica Elgot

In a report partially vindicating Rachel Reeves's claim that the new Labour government inherited a far worse financial situation than initially thought, the Institute for Fiscal Studies think tank suggested the Home Office had repeatedly lowballed its budget estimates.

It found ministers knew budgets it had submitted were insufficient and habitually drew on Treasury contingency reserves, a practice that one Labour source described as "like the wild west".

Labour said it was proof the previous government had "covered up" the extent of the crisis in the asylum system and that ministers "ran away from the problem".

Government sources said the IFS had now shown "in black and white" that there was a black hole in the public finances that was previously unknown. "This is entirely consistent with the situation we have found in government," one said. "Previously ministers had no regard at all for value for money. It is a really serious dereliction of duty."

Analysing three years of financial records, the IFS found the Home Office had told parliament at the start of each year it needed an average £110m to cover Britain's asylum, border, visa and passport operations.

However, it ended up spending much more: an average £2.6bn a year.

"The Home Office has got into the bad habit of submitting initial budgets... to parliament that it knows to be insufficient, in the expectation of a top-up from the Treasury's contingency reserve later in the financial year," it said.