Some councils have not been as economical as they could have been in supporting asylum seekers

Sir Andrew Foster Audit Commission Controller

The bill for supporting asylum seekers totalled �835m in 2000/1 - �34 for every UK household.

Accommodation accounted for two thirds of that cost.

Councils can claim back a flat rate of �140 a week for single adults and �240 for families - �300 in London.

The Audit Commission report says that system means "rough justice for councils"..

Sir Andrew Foster, controller of the Audit Commission, said: "We have discovered that some councils have not been as economical as they could have been in supporting asylum seekers, and we question whether some areas have been allowed to claim too much.

"They should examine carefully how they can improve this, and we give examples of how some places have managed this well."

'No regional pattern'

In more expensive parts of the country, such as London and south-east England, councils have to spend more than the Home Office allows to find the right housing, says the commission.

This led to a �30m shortfall in 1999/2000, which they could not claim back from the government.

Audit Commission experts found that only four of 12 councils they examined spent less than the �240 allowance for refugee families.

Seven of them were inside the �140-a-week threshold for single adults.

The report says there is no regional pattern because four councils outside London had higher unit costs than any borough in the capital.

One non-London borough was spending �320 per family every week.

"A fairer system would take account of the local going rate for accommodation," it adds.

"It would compensate authorities who are out of pocket through high local rents and it would impose greater financial discipline on those with lower local rents."

Savings

Some authorities have made significant savings.

The commission highlights Lambeth in south London for cutting costs by up to �800 a week by moving families out of hotels and into rented homes.

The Home Office welcomed the report and its "sensible conclusions".

A spokesman said the department would discuss implementing a new grant scheme for this tax year with the Local Government Association and the Association of London Government.