Immigration Minister Caroline Nokes is due to meet council leaders from Yorkshire and the Humber later this month after a warning that some are considering pulling out of the scheme that homes more than 5,000 asylum seekers around the region.
In August, a letter signed by 14 council leaders to Home Secretary Sajid Javid, seen by The Yorkshire Post, said there is a risk of “catastrophic failure” for the system which provides accommodation for those seeking refugee status.
Local councils say they are being increasingly side-lined and that many towns and cities across the North each have more asylum seekers “clustered in a handful of wards than entire regions in the South and East of the country”.
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Their concerns were echoed on Friday by Greater Manchester metro mayor Andy Burnha, who also warned of "catastrophic failure" within the asylum process if the region's creaking public services continue to support a 'disproportionate' number of people compared with elsewhere in the country.
He is threatening to withdraw Greater Manchester entirely from the system, claiming the Home Office has shown 'blatant disregard' for the concerns of local leaders.
The future of the £600m contract to provide asylum housing in Yorkshire between 2019 and 2029 was thrown into doubt this summer after it emerged that there were no successful bids to run it when it comes up for renewal next September.
It is understood that a bid by outsourcing giant G4S, which has been suffering financial losses while running the service since 2012 due to having to deal with more asylum seekers than expected, was not accepted by the Home Office.
New bidders are now being sought for the ten-year contract, leading to fears that local authorities may have to accept higher numbers of asylum seekers and poorer quality accommodation so the Government can persuade a company to run the scheme.
Ahead of the meeting with the Immigration Minister, Sir Steve Houghton, Leader of Barnsley Council, said: “We hope the Home Secretary will pause and listen to these real concerns of local areas in the North.
"The clock’s ticking down, but we remain hopeful that in the next two weeks the Government will commit to a fairer distribution of asylum seekers around the country, proper partnerships between national and local government, and funding for us to support people placed in our local communities.”
Last week, Ms Nokes was accused of misleading Parliament after telling MPs that employers would have to carry out "rigorous checks" on EU staff who arrived after the UK leaves the European Union in March 2019.
The Government was forced to issue a statement denying that new checks would be needed.
A Home Office spokesman said: “We take the wellbeing of asylum seekers and the local communities in which they live extremely seriously.
"We will continue to work closely with local authorities across the United Kingdom to deliver on our statutory obligation to house destitute asylum seekers whilst their asylum claims are determined.
"Home Office officials are working closely with local partners, including local authorities in Yorkshire to understand and address any concerns that they may have.
“We are also working with a wide range of local authorities to increase the number of areas that accommodate and support people seeking protection – every local authority is encouraged to contribute.”