The Home Office has promised to close 150 migrant hotels by May after figures showed aid spending on asylum seekers in the UK rose to £4.3bn in 2023.

The department said the number of people staying in taxpayer-funded accommodation had dropped from 56,000 in September to fewer than 20,000 people currently as part of a drive to end the “damaging” practice.

Approximately £8m a day was spent housing thousands of asylum seekers in hotels last year, prompting the government to seek out alternative accommodation sites, including the Bibby Stockholm barge in Portland, Dorset, and disused military bases at Scampton in Lincolnshire and Wethersfield in Essex.

Former immigration minister Robert Jenrick, who resigned over Rishi Sunak’s plan to send asylum seekers to Rwanda, announced last October that the government would be “exiting” 50 hotels by the end of January, with more to follow.

Home Secretary James Cleverly said the process would continue “until the last hotel is closed”.

“We promised to end the use of asylum hotels and house asylum seekers at more appropriate, cheaper accommodation; we are doing that at a rapid pace,” he said.

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“These closures deliver on the government’s plan to cut the use of hotels in the asylum system and we will keep going until the last hotel is closed.”

But Labour’s shadow immigration minister Stephen Kinnock said the announcement amounted to the Conservatives “celebrating failure”.

“So-called ‘asylum hotels’ didn’t exist before the Tories lost control of the asylum backlog, and Rishi Sunak promised to end them by the end of 2023,” he said. “Yet here we are with around 250 still in use come mid-April.”

The Home Office announcement followed findings from the Independent Commission for Aid Impact (ICAI) which said the amount of aid spent on hosting refugees and asylum seekers in the UK soared last year to £4.3 billion.

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The ICAI said the figure was driven up by the Home Office paying out £2.5bn on hotel accommodation for the year, saying it had “continuing value for money concerns” over the department’s spending.

“Far from reducing as the costs of schemes for Ukrainian and Afghan refugees fell, the amount of aid spent within the UK was driven up further by the Home Office’s spending on hotel accommodation for asylum seekers,” the watchdog said.

Last month, a report by spending watchdog the National Audit Office (NAO) found that the government’s alternative plans for housing asylum seekers will actually cost the taxpayer £46m more than the hotels they seek to replace.

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The Home Office is expected to have spent at least £230m developing four major projects at the end of March – the Bibby Stockholm barge, the former RAF bases and ex-student accommodation in Huddersfield, West Yorkshire.

But the NAO found that only two of the sites have opened so far – the Bibby Stockholm and the Wethersfield site – and they were only housing around 900 people by the end of January.

Both have suffered a number of setbacks, including an outbreak of Legionella on the barge in the days after it took its first asylum seekers, while, according to the NAO, the set-up costs for Wethersfield have risen from £5m to £49m.

Next week, MPs are expected to vote on amendments to the Safety Of Rwanda Bill, which aims to declare Rwanda a safe country to deport asylum seekers to. It effectively aims to circumvent the Supreme Court’s ruling last year that the policy of sending people who had arrived in the UK illegally to the African country is unlawful.

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