UK aid faces third major cut in 3 years, with £1.7B to be cut

The United Kingdom’s aid budget is set to be slashed for the third time in three years, with development organizations bracing for a £1.7 billion — $2.05 billion — cut to be made in less than six months, and bigger cuts expected next year.

The news comes as it was revealed that the U.K. spent more bilateral aid on its own shores than on anything else in 2021 — with £1 billion spent on housing refugees — knocking down health as the area receiving the most money, according to the government’s Statistics on International Development, released Wednesday.

“Yet again, the government looks set to force further cuts to UK aid, which will mean more programmes delivering lifesaving healthcare, clean water and sanitation, and shelter will come to an end,” said Simon Starling, director of policy, advocacy and research at Bond, the U.K. network for INGOs.

Foreign Secretary James Cleverly said in a Tuesday statement that the Foreign, Commonwealth & Development Office now expects to spend £7.58 billion on aid in the current fiscal year, which runs to March 2023. It had originally estimated it would spend £9.3 billion.

The government’s statement said “we will meet the financial commitments we have made to multilateral organisations,” leading to expectations that the aid cut will largely fall on bilateral aid — just as occurred when the budget was cut from 0.7% to 0.5% of national income last year.

Bilateral aid was due to account for just over two-thirds of all spending this year — just over £6 billion — according to The UK’s 2022 aid strategy, and sources who were briefed by officials said the reduction amounts to a 30% cut in the bilateral aid budget. But there are also planned multilateral cuts, including a fall in EU funding.

The FCDO is planning to also spend around £7.58 billion in aid in the next fiscal year, ending March 2024, “though this remains indicative,” wrote Cleverly. The original budget for the year was £10 billion, meaning that the cut in next year’s spending could be £2.4 billion.

Given that the U.K. currently faces double-digit levels of inflation, even just maintaining the budget at its current level next in cash terms could represent a substantial real-terms cut in bilateral aid. But there are other factors involved that further complicate predicting next year’s cut to bilateral aid, such as changes in multilateral spending.

It is not known which areas or regions will be most affected, and when asked, FCDO directed Devex to Cleverly’s statement. It is understood International Development Minister Andrew Mitchell — who led a parliamentary rebellion against previous aid cuts in 2021 — wants to prioritize protecting spending on humanitarian and women and girls. 

The Autumn Statement revealed a £1 billion increase in aid spending for this year to help meet controversial refugee costs estimated to be at least £3 billion, which are causing the aid cuts because of the 0.5% aid target. But the new money is not expected to allay the pressures the domestic spending put on the FCDO’s aid budget, as the £1 billion spent in the U.K. last year was on a smaller number of refugees, mostly from Afghanistan.

While announcing an end to the U.K. aid freeze, which had been in place since the resignation of former Prime Minister Boris Johnson in July, Cleverly’s statement raised suspicion it heralded further cuts on Tuesday. It said the government “will act swiftly to manage our bilateral programmes this financial year. We will approach this in a proportionate way, with experts on the ground in country empowered to determine which programmes to continue in line with our approach to prioritisation.”

“People already facing poverty, climate change and famine are paying the price for the increase in the Home Office’s UK-based refugee costs,” said Starling. “The additional resources to cover the costs of hosting refugees in the UK are welcome but insufficient. It is shocking that we are now spending more UK aid on this rather than on health, humanitarian assistance, education or water and sanitation.”

“The Chancellor and Foreign Secretary must urgently refocus UK aid on addressing poverty internationally and develop a plan to return to spending 0.7% of GNI on UK aid,” he added.

“The Foreign Secretary’s statement yesterday amounts to an admission of yet another round of aid cuts. It’s impossible to take the FCDO’s professed ‘long-term, patient’ approach when every couple of months they cancel more work,” Ranil Dissanayake, senior fellow at the Center for Global Development wrote to Devex. “All of this stems from the Government’s approach of counting non-development things as aid. That has to stop if we want to rescue the situation.”

The international development statistics covered the year the 0.7% to 0.5% cut was made, and revealed that humanitarian spending fell from the second largest area of bilateral spending, at £1.5 billion in 2020, to just £743 million in 2021, the sixth largest area of spending, behind ‘Economic Infrastructure and Services’ — that includes British International Investment — which became the third largest area of spending last year. BII, the U.K.’s development finance institution, received £600 million in 2021, which has been criticized because the organization does not engage in life-saving work.

The statistics also confirmed that excess COVID-19 vaccine doses were charged to the aid budget, the share of aid spent by government departments other than FCDO increased, and the trend of spending in middle-income countries over low-income countries continued. Spending in Africa fell to the lowest in a decade, putting the U.K. behind most other Group of Seven donors on the continent.