The uncertain financial implications of the UK’s Rwanda policy

by Peter William Walsh and Madeleine Sumption

An earlier version of this analysis was submitted as evidence to the UK Parliament’s Public Accounts Committee inquiry on Asylum accommodation and Rwanda.

This commentary examines the financial impacts of the UK’s policy to send some asylum seekers and irregular migrants to Rwanda.

The government has indicated that saving money is an important goal of the Rwanda policy. Government statements about the policy have typically pointed to the costs of the UK asylum system and suggested that a policy that deters people from coming to the UK and claiming asylum would make the system more sustainable. However, the full financial impact of the Rwanda policy is not known. This is partly because the government has not provided enough information to be able to estimate the full costs of the scheme. It is also because some of the things that will affect the financial costs and benefits are hard to predict.

This commentary outlines four unknowns that will substantially influence the finances of the Rwanda policy and hence an assessment of its value for money:

• The deterrent effect. The policy’s financial impact hinges on whether it dissuades people from coming to the UK through irregular routes, such as by small boat. The number of people likely to be deterred cannot be known in advance, but evidence from other countries suggests deterrent effects are often small.
• The number of people relocated. If more people are relocated, this will push up the scheme’s costs in the short run, but may also increase any deterrent effect in the longer run.
• The departure rate from Rwanda. If a person relocated to Rwanda decides to leave the East African country, the UK would stop its per-person payments to Rwanda and pay £10,000 to facilitate the person’s voluntary departure. As a result, the more relocated people decide to leave Rwanda, the lower the cost of the policy.
• The financial implications of the status quo. If the government succeeds in making the UK’s asylum system more efficient, the economic rationale for the Rwanda policy is weakened.

We do not consider the wider costs of the Illegal Migration Act (IMA). That includes the cost of supporting people in the UK who were not deterred by UK policies and have not been removed to Rwanda or another country. These costs could be considerable if the Rwanda policy does not have its intended deterrent effect, as we explain in the Migration Observatory analysis Why the government’s economic impact assessment of the Illegal Migration Act tells us little about the Act’s economic impact.

We also do not consider costs to individual asylum seekers, which a full social cost-benefit analysis would include.

The finances of the Rwanda policy

Under the Rwanda deal, the UK government provides fixed-cost development funding to Rwanda, as well as per-person development payments, and per-person processing and integration payments (Table 1).

According to an investigation by the National Audit Office (NAO), the development funding comprises a fixed cost of £370 million, plus an additional £120 million once 300 people are relocated to Rwanda. An additional £20,000 will be paid to the development fund for each person that is relocated.

In addition to payments into Rwanda’s development fund, the Home Office will send per-person payments to Rwanda to cover asylum processing, operational costs, and an integration package for each relocated person. The integration package includes accommodation, food, education, language training, and professional development. These payments last up to five years and total £150,874 per person.

The NAO’s report does not include wider costs of implementing the Illegal Migration Act, such as providing additional detention capacity to hold people before they are relocated.

Table 1

Summary of the Rwanda policy’s financial implications

Cost category	Cost (£)
Development fund fixed payments	£370 million to 2026 (comprising £220 million sent to Rwanda as of Feb 2024, plus £50 million each year in 2024, 2025, and 2026) £120 million once 300 people have been relocated to Rwanda
Development fund per-person payments	£20,000 per relocated person
Per-person asylum processing, operational, and integration payments	£150,874, paid quarterly, over five years: Year 1: £45,262 (includes £11,000 for asylum assessment) Year 2: £37,718 Year 3: £30,175 Year 4: £22,632 Year 5: £15,087 If a relocated person decides to leave Rwanda, the UK would stop the above payments and pay Rwanda a one-off payment of £10,000 to facilitate the individual’s voluntary departure. £100 per year, up to £500 in total for healthcare
Direct Home Office costs (as at February 2024)	£2 million direct staff costs £2.3 million in Home Office legal fees £15.3 million in set-up costs for escorting people to Rwanda (estimated to reach £23.5 million by the end of 2023-24)
Estimated future direct Home Office costs	£1 million per year in staff costs £11,000 per person for flights to Rwanda £12.6 million to train escorts in 2024-25 £1 million per year after 2024-25 in escorting costs £Unknown in legal fees
Wider costs	£Unknown: Implementing the Illegal Migration Act, e.g., cost of providing sufficient detention facilities to hold people before they are relocated.
Estimated total costs (assuming 10% departure rate from Rwanda)	100 people relocated: £434 million 200 people relocated: £452 million 300 people relocated: £590 million 500 people relocated: £625 million 1,000 people relocated: £714 million 5,000 people relocated: £1.4 billion 10,000 people relocated: £2.3 billion 20,000 people relocated: £4.1 billion 30,000 people relocated: £5.9 billion 50,000 people relocated: £9.4 billion

Source: Migration Observatory analysis of National Audit Office (2024), Investigation into the costs of the UK-Rwanda Partnership.

Notes: Rwanda’s development fund is called the Economic Transformation and Integration Fund (ETIF), which is designed to support economic growth in Rwanda. ‘Estimated total costs’ is highly uncertain and includes the £370 million fixed-cost payment to Rwanda’s development fund up to 2026-27, £120 million paid if 300 people have been relocated to Rwanda, known direct Home Office costs as of February 2024, estimated future direct Home Office costs for the remainder of the Partnership, per-person development fund payments of £20,000, per-person operational and healthcare payments, and per-person flight costs. It assumes, following the National Audit Office, that 10% of people relocated to Rwanda depart over the five-year period, based on a quarterly departure rate of around 0.5%. The estimated total cost excludes legal fees beyond February 2024, the per-person costs of providing escorts to relocate individuals, which depends on the number of flights required, and the wider costs of implementing the Illegal Migration Act, such as expanding detention capacity.

Figure 1

Unknown 1: The deterrent effect of the Rwanda plan

The total financial effect of the Rwanda policy depends fundamentally upon how many people it deters from entering the UK without permission. This is because sending asylum seekers to Rwanda will be more expensive than keeping them in the UK, according to the Home Office. However, if enough people are deterred from coming to the UK to claim asylum, the government saves the resources it would otherwise have spent on them.

It is not possible to know what the Rwanda policy’s deterrent effect will be, especially without any information about the number of people who might be removed. Neither the Impact Assessment for the Illegal Migration Act nor the National Audit Office’s investigation attempt to estimate the deterrent effect. Studies on asylum policies in other countries have typically found that the deterrent effects are small, because:

• Policy is not the most important factor driving changes in the number of people claiming asylum. Global developments, such as conflicts in countries of origin, appear statistically to be more important.
• Decisions about where and how to move depend not just on policy. Many other factors, such as the presence of family members or the language in the countries of destination, also play a role.

While there are examples of countries that have seen much larger reductions in maritime arrivals, such as Australia, those cases usually involved physical enforcement activities, such as boat interceptions and pushbacks, in addition to policies designed to affect asylum seekers’ decisions. Evidence on the impacts of asylum deterrence policy is summarised in the Migration Observatory’s report, UK policies to deter people from claiming asylum.

In practice, the deterrent effect of the Rwanda policy may well depend on how many people are removed there. If the number is relatively small (up to a few per cent of newly arriving asylum seekers), the evidence from other countries suggests the deterrent effect may also be small. If the number is very large (i.e., a substantial majority of all asylum seekers), it is reasonable to assume a bigger deterrent effect. The international evidence showing small deterrent effects is largely based on less radical policies, such as restricting access to benefits for asylum seekers, and would be less directly relevant to a policy that sent a large majority of asylum seekers to another country.

Unknown 2: The number of people who will be relocated to Rwanda

The main known cost of the Rwanda policy is the cost of removing people to Rwanda. This includes the per-person payments made to the Rwandan government, plus other associated costs such as those relating to logistics and administrative and legal costs. The NAO estimates that the marginal per-person cost of sending someone to Rwanda is around £182,000 (including operational and healthcare payments, the per-person development fund payment, and per-person costs for flights (estimated at £11,000 for chartering and fuel, but excluding per-person escorting costs). The average cost per person will be higher because the scheme has fixed costs, including lump-sum payments to Rwanda and possibly the expansion of detention facilities in the UK.

Given that the number of people sent to Rwanda crucially affects the finances of the programme and its likely impacts, it is notable that the government has been so vague on this issue. Available information from public statements suggests the number could be anywhere between a few hundred and tens of thousands of people.

The current uncertainty about the number of people relocated means there are radically different scenarios for the scheme’s finances. For example, in one plausible scenario, the UK spends roughly £600 million to remove 300 people,^[i] with limited deterrent effect, although the precise costs are highly uncertain. This would be a cost of around £2 million per relocated person.

In another scenario, the UK initially sends tens of thousands of people to Rwanda at a much higher cost. This could cost roughly £4 billion to relocate 20,000 asylum seekers^[ii] – a cost of around £200,000 per person – plus the additional costs of expanding detention facilities. In this scenario, however, the UK may spend less in subsequent years if fewer asylum seekers come to the UK due to a larger deterrent effect. Some people would still be removed to Rwanda in the subsequent years, but not as many. It is not clear whether this latter scenario is plausible, because it requires such a large initial outlay, high capacity in Rwanda, and the legal and operational ability to remove asylum seekers. If it did happen, the overall financial impact of the scheme would depend on how many years it lasted. This is because the costs would be front-loaded. A key factor in the long-term impact would thus be whether Rwanda was willing to negotiate an extension of the scheme, and at what cost.

In practice, the number of people who will be relocated to Rwanda will depend on several factors, including:

• The capacity of Rwanda to process asylum applications.
• Capacity in the UK to detain asylum seekers and arrange their removal.
• Legal challenges delaying or preventing removal, potentially including appeals made to the European Court of Human Rights.

All of these factors are highly uncertain.

The total number of people who could potentially be sent to Rwanda is also not known. This number is relevant as it affects the potential maximum size of the scheme (and thus its costs), as well as the share of people who are potentially subject to the policy who are removed. The maximum number of people who are potentially liable to be removed to Rwanda will depend on factors such as:

• The number of people detected arriving in the UK through irregular routes. When the Illegal Migration Act is implemented fully, the Home Secretary will be obliged to remove all adults who arrived irregularly in the UK on or after 20 July 2023. Of these, some can be removed to their country of nationality because the Home Office views these countries as safe. These safe countries currently include the EEA (the 27 EU countries plus Iceland, Liechtenstein, and Norway), Switzerland, Albania, India, and Georgia. Currently, irregular entrants of all other nationalities could be removed only to Rwanda. There are currently no of how big this group is. Home Office statistics show that around 52,000 asylum claims were submitted since the enactment of the IMA on 20 July 2023. Most of these claimants will be eligible for removal to Rwanda.
• The number of people who accept voluntary return to their own country, or move on to another country. In 2023, over 19,000 people who were liable for removal left the UK voluntarily, with over half going to Albania (3,000), India (2,800), Brazil (2,200), China (1,000), and Turkey (900). There were few voluntary returns to many of the top countries of nationality for asylum seekers, such as Afghanistan or Iran.
• Implementation decisions. For example, the government can remove irregular migrants who have not claimed asylum to Rwanda but may choose to focus on those who have claimed asylum.

Beyond the fixed and per-person costs, the Home Office will face certain additional costs if the number of people removed to Rwanda is relatively large. In particular, the Illegal Migration Act 2023 (IMA) extends powers to detain people ahead of removal. Current policy enables the government to detain people if there is reason to believe they will abscond, although there are not sufficient data to establish the likely prevalence of absconding among people eligible for removal to Rwanda.

At present, the UK has fewer than 1,000 free detention spaces. The government is planning to increase its detention capacity, although it is not clear what total capacity would be required under current government plans. The Home Office has not provided enough detail about how it plans to implement detention policies under the IMA and Rwanda scheme to assess the likely costs of detention resulting from either policy measure.

Building new detention capacity has substantial up-front costs, and holding people in detention is more expensive than housing them in regular accommodation. The IMA Impact Assessment assumes a cost of £85 per day to support someone in regular asylum accommodation, while in Q4 2023, the cost of holding someone in immigration detention was estimated at around £116 per day.

Unknown 3: The departure rate of relocated people – and how long they stay in Rwanda

The cost of relocating a person depends on how long the person remains in Rwanda. If a person leaves Rwanda within five years, the UK government will stop its operational payments (up to around £151,000 per person, made quarterly), and pay Rwanda £10,000 to assist in the person’s voluntary departure.

This means the payments to Rwanda will depend heavily on how many relocated people remain in Rwanda, and for how long.

If a relocated person leaves immediately, the UK government would pay around £41,000 (the £20,000 per-person payment to Rwanda’s development fund, plus £11,315.50 (the first-year payment of £45,262 divided by 4 to give the quarterly payment], plus £10,000 to facilitate voluntary). If they stay at least five years, the UK would pay around £171,000 in per-person payments – around four times more. The longer a person stays in Rwanda, the greater the per-person payments (Figure 2).

Figure 2

The NAO report states that the Home Office’s “working assumption” on the departure rate is that 10% of people who are relocated to Rwanda will leave voluntarily (presumably within five years of arrival).

However, this ‘departure rate’ is highly uncertain. Evidence^[iii],[iv] on Israel’s similar policy of sending Eritrean and Sudanese people to Rwanda suggests a much higher departure rate, which would reduce the total cost of the scheme.

Unknown 4: the financial implications of the status quo

The fiscal impact of the Rwanda scheme depends on the financial cost of the system it is replacing. The more it costs to process and support asylum seekers in the UK, the greater the savings from removing those people to Rwanda instead. By contrast, if the government makes the asylum system more efficient, the economic rationale for the Rwanda policy is weakened.

Before the implementation of the Illegal Migration Act, there were two main costs associated with asylum. First, the cost of supporting refugees in the UK after their claims are accepted. Research on the fiscal impact of refugees is limited, but it is likely that over the course of their lifetimes, refugees require net fiscal support because they tend to have lower employment rates and often struggle to find well-paid work. If the Rwanda policy does have a deterrent effect, the costs of supporting refugees in the UK would be lower. For more detail see our commentary on the

Second is the financial cost of the UK’s asylum system. This cost has increased sharply in recent years, from £733 million in the financial year 2018/19 to around £4 billion in 2022/23. This increase is due primarily to the large backlog of unprocessed claims. As the backlog falls, costs can be expected to decline.

However, the future costs of the backlog and the UK asylum system more broadly are uncertain. Some of this uncertainty results from the unpredictable nature of asylum migration, which is not possible to forecast accurately.

Additional uncertainty comes from the Illegal Migration Act. If the IMA creates a large cohort of people who cannot be granted or refused asylum and who also cannot be removed from the UK (see above), the government could incur high costs over time. Some of these costs would fall to central government, which is expected to provide accommodation and support to destitute asylum seekers who do not have a decision on their claim. Other costs would fall to local government—for example, if people leave the asylum support system and become irregular migrants in the UK. Either way, it is possible that the IMA improves the fiscal impact of the Rwanda policy, by pushing up the cost of the UK’s asylum system.

Conclusion

This analysis has highlighted four factors that could substantially influence the cost of the Rwanda policy: its uncertain deterrent effect, the number of people relocated, how long people remain in Rwanda, and the costs of the UK’s asylum system without the Rwanda scheme.

The influence of these factors on the cost of the Rwanda policy is unknown. In large part, this is because they are highly uncertain and cannot be forecast with precision. But the government could provide more information about its plans, which would enable broad estimates of costs to be calculated. For example, the government could provide its working assumptions for the number of people it will send to Rwanda under different scenarios, as well as the number of people it envisages detaining before their removal, and for how long.

References

[i] This should be viewed as a highly uncertain estimate and includes the £370 million fixed-cost payment to Rwanda’s development fund up to 2026-27, £120 million paid once 300 people have been relocated to Rwanda, known direct Home Office costs as at February 2024, estimated future direct Home Office costs for a five-year period, £6 million in per-person development fund payments (£20,000 x 300), £55 million in per-person operational and healthcare payments, and flights estimated at £11,000 per person, which includes costs for chartering and fuel but not escorts. The estimate also assumes that 10% of people relocated people depart Rwanda over the five-year period (based on a quarterly departure rate of around 0.5%). The estimate excludes unknown legal fees after February 2024, and the costs of providing escorts to relocate individuals, which depends on the number of flights required.

[ii] The IPPR’s figure assumes 10% voluntarily depart Rwanda over the five-year period, and includes the £370 million fixed-cost payment to Rwanda’s development fund, plus £120 million once 300 people have been relocated to Rwanda, plus £400 million in per-person development fund payments (£20,000 x 20,000), plus per-person operational and healthcare payments.

[iii] Shoham, S., Bolzman, L. and Birger, L. (2018). Moving under Threats: The Treacherous Journeys of Refugees who ‘Voluntary’ Departed from Israel to Rwanda and Uganda and Reached Europe. Available at: https://www.law.ox.ac.uk/research-subject-groups/centre-criminology/centreborder-criminologies/blog/2018/10/moving-under

[iv] Birger ,L., Shoham, S. and Bolzman, L. (2018). “Better a prison in Israel than dying on the way”: Testimonies of refugees who “voluntarily” departed Israel to Rwanda and Uganda and gained protection in Europe. https://doi.org/10.18452/20087