Britain’s asylum dispersal system is on the brink of collapse, according to a number of “unprecedented” warning letters written by council leaders and politicians to the Home Office.

Joint letters have been written by 14 leaders of councils across Yorkshire, Middlesbrough, Newcastle and Sunderland, the Welsh and Scottish governments as well as by Susan Aitken, leader of Glasgow council, the only local authority in Scotland to take asylum seekers.

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They warn the government the voluntary system that provides accommodation in local authorities for those seeking refugee status is on the verge of “catastrophic failure”. There were 26,350 asylum applications in 2017.

The decision to write en masse to the government has been prompted by the new asylum accommodation contracts – one of the government’s largest procurements, worth more than £4bn over 10 years – which are out to tender. They will replace the existing Compass contracts, delivered by G4S, Serco and Clearsprings in 2019.

Despite the huge sum of public money involved, local authorities and politicians say there has been little to no public or parliamentary scrutiny of the contracts. Key stakeholders crucial to the long-term sustainability of the system say they fear a repeat of failures that led to local authorities being forced to step in to prevent mass homelessness of asylum seekers.

In some areas, including the north-east, Yorkshire and Humber, and Northern Ireland, there have been no successful bids for the contracts.

It is understood that a bid by the outsourcing company G4S, which has been hit by financial losses while running the service since 2012, was not accepted by the Home Office. G4S has declined to comment.

New bidders are being sought for the 10-year contracts, leading to fears that local authorities may have to accept higher numbers of asylum seekers and poorer quality accommodation.

The £660m procurement for asylum housing in the regions of the councils represented in one of the joint letters to the home secretary, Sajid Javid, including Barnsley, Leeds, North East Lincolnshire, North Yorkshire, Sheffield and York, is one of those which has collapsed.

One letter, signed by the leaders of councils including Bradford, Calderdale, Doncaster, East Riding, Hull, Kirklees, Selby and Wakefield, warns Javid of a significant risk for the 5,500 asylum seekers in the region and asks him to “personally intervene to enable the Home Office to get a grip on the asylum system”.

“We have still not been approached by the Home Office to work collaboratively on risk management and strategic planning, and we are disappointed in the decision taken to exclude local authorities during this period, and, in more recent weeks, to seemingly limit public scrutiny until the re-tender process was closed,” the letter stated.

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“Our previous experience of the Home Office managing the transition of asylum housing contracts in 2012 was unfortunately one of failure. G4S were unable to fulfil their contract, and mass sudden homelessness of hundreds of asylum seekers was only prevented by local authorities stepping in. It is not apparent that lessons have been learned.”

The letter adds that many towns and cities across the north of England have more asylum seekers clustered in a handful of wards than entire regions in the south and east of the country. “Being an asylum-dispersal area is voluntary and some local authorities in our region have over recent months been giving serious consideration to actively pursuing withdrawal,” it says.

Dave Brown, the head of Migration Yorkshire, said: “This letter is unprecedented and the potential impact on how Yorkshire is able to support those people fleeing persecution is almost unthinkable.”

Sir Steve Houghton, the leader of Barnsley council, said the system is “teetering on the edge”.

Aileen Campbell, the communities secretary in the Scottish government, said it was “deeply concerned”. “The handling of the procurement process for the next asylum accommodation contract, particularly the barriers put up to a public sector bid for the contract and the limited engagement with Scottish partners, is extremely disappointing,” she said.

The Welsh government cabinet minister Julie James said recently in a plenary session at the Welsh assembly that it had made a number of attempts to gain access to the contracts but were unsuccessful.

Katie McSherry, who leads on accommodation issues nationally for Asylum Matters, said: “We are shocked that the government is pushing through such a model with the intention of it being binding for the next 10 years, without even a review period built in.”

A Home Office spokesperson said: “We are planning meetings with stakeholders across the UK to discuss the concerns they have raised. We are committed to working closely with local partners to identify, manage and prevent welfare and cohesion problems.”