COUNCILS may pull out of a scheme to house asylum-seekers after carrying a “disproportionate share” of the costs and pressures, according to a report published today.

Town halls sign up voluntarily to house asylum-seekers under the “dispersal” approach, a policy which has received criticism as it places high numbers of refugees in Britain’s poorest communities due to cheaper housing and living costs.

The government would find itself facing “very severe difficulties” in housing asylum-seekers if the work of local authorities comes to a stop, the home affairs select committee warns in its report.

The report said: “The government must accept that it is not unreasonable for authorities who have, in many cases, supported dispersal for the best part of two decades and have carried a disproportionate share of the unfunded costs and pressures, to request more equitable treatment.

“It has reached the point where local authorities are contemplating withdrawal.”

The report added that the Home Office needs to show “greater urgency” in tackling the “degrading conditions” in which vulnerable people are being housed under accommodation contracts held by private outsourcing companies.

In October, an “unprecedented” number of letters were sent to the Home Office by 14 council leaders in Yorkshire, Middlesbrough, Newcastle, Sunderland, Wales and Scotland warning that the dispersal system was facing “catastrophic failure.”

There were 26,350 asylum applications in 2017.

Last year, the home office select committee found that applicants are concentrated in a small number of areas, placing pressure on local schools and healthcare services.

Although the number of asylum-seekers accommodated under immigration and asylum legislation at any one time has increased steadily since 2012, the committee found that the number of authorities which have agreed to participate in the scheme has not increased correspondingly.

In September 2016, only 27 per cent of local authorities has asylum accommodation within their boundaries. As of last month, 150 out of 453 authorities had come forward offering to take part, with 129 participating, according to figures given to the committee.

SNP MP Stuart McDonald, a member of the committee, said: “Local authorities have lost confidence in the system because the government has failed to listen and respond to their concerns.”

The Home Office said it was engaging with areas that to date have not participated in asylum dispersal, with a view to negotiating agreements to do so.