The Home Office wrote off £48.5m after Labour ministers scrapped plans by the previous Conservative administration to use a former Ministry of Defence site as asylum accommodation.
Ministers axed the plans for the RAF Scampton site in September after costs ballooned and a Home Office review found it no longer represented value for money.
The department initially estimated that set-up and refurbishment costs for the project would be £5m, but had spent £60m on the site by late summer last year.
A review of the plans, published in September, found that opening the site from autumn 2025 as planned would cost a further £122m by the end of its use in 2027, taking the total cost to nearly £200m.
The Home Office’s 2024-25 annual report and accounts says: “RAF Scampton, the former Ministry of Defence site in Lincolnshire, was planned to be used for asylum accommodation. Plans were axed as the assessment found the site was not value for money for the taxpayer. This has resulted in a constructive loss of £48.5 million.”
Announcing in September that the plans for the site would be scrapped, Dame Angela Eagle, who is the minister for border security and asylum, said: “Faster asylum processing, increased returns and tighter enforcement of immigration rules will reduce demand for accommodation like Scampton and save millions for the taxpayer as we drive forward work to clear the asylum backlog and strengthen our border security.”
She added that the department had “listened to community feedback and concerns about using this site for asylum accommodation”.
The Home Office also said in September that work to close the site would begin immediately, with the site's sale happening in line with the process for disposing of Crown land.
In a Public Accounts Committee hearing last year, the department's then-permanent secretary Sir Matthew Rycroft admitted the department got its assessment of the setup cost “woefully” wrong and said there was “very significant optimism bias”.
The 2024-25 accounts also confirms that the Home Office paid a total of £290m to the Rwandan government for the Migration and Economic Development Partnership which sought to send asylum seekers to the east African country. Labour cancelled the scheme in July 2024.
The Home Office made £270m in paymens intended to support economic development in Rwanda. As a result of the cancellation of the MEDP, this expenditure is classified as a "constructive loss". The Rwandan government said last year that it was "under no obligation" to repay the £270m.
A separate £20m one-off payment, made in April 2022, to cover advance operational costs of the MEDP was also classified as a "constructive loss", as the Home Office "derived no benefit from this payment".