8 questions we still have about the future of UK aid

After U.K. Prime Minister Keir Starmer’s shock February announcement of a new cut to U.K. aid from 0.5% of gross national income to 0.3%, many development professionals have been asking for clarity on a host of questions. Some of the answers are yet to be determined, but Devex is addressing some of the top concerns of those involved in foreign aid provision. We identified the biggest gaps in information at a Devex Pro briefing event on March 11 and have since endeavored to tackle them one by one. Here is what we learned. 1. Will there be cuts in 2026? And what will get cut? On March 26, U.K. Chancellor Rachel Reeves announced in the Spring Statement that she would provide an additional £2.2 billion ($2.9 billion) in spending for the Ministry of Defence in the next financial year — and that to fund this, aid cuts would start immediately. There will be a cut (compared to the original budget of 0.5% of GNI) of £500 million in 2025/26, followed by cuts of £4.8 billion in 2026-27 and £6.5 billion in 2027-28, when U.K. official development assistance, or ODA, will reach 0.3% of GNI. Bond, the U.K. network for organizations working in international development, described the “sudden and damaging reductions” as a “reckless and cruel decision” and urged the government to maintain U.K. aid at 0.5% of GNI over the next two years. As for where the cuts will fall, Starmer wrote in a letter to Bond that the U.K. “will continue to play a key humanitarian role in Sudan, in Ukraine and in Gaza, as well as tackling climate change and supporting efforts on global health.” And in a letter to the chair of the International Development Committee, Development Minister Jenny Chapman confirmed that bilateral aid spending has been set to meet only existing contracts, suggesting that with a few exceptions, there will be no new additional bilateral aid programming in 2025/26. Exceptions include full U.K. aid allocations for Ukraine, the occupied Palestinian territories, Sudan, and the British overseas territories. The U.K. has also pledged £25 million toward Myanmar earthquake relief efforts. Chapman also confirmed that initial 2025/26 aid allocations for multilateral bodies have been set at the full-planned level. 2. FCDO was in the middle of a spending review. Is it now going to start again? The 2025 spending review — the process the U.K. government uses to set all departments’ budgets for future years — is taking place in two phases. At the Autumn Budget in October, Reeves set out Phase 1 of the review, which confirmed departmental budgets for 2024-25 and set budgets for 2025-26. The total U.K. aid budget was forecast to be £13.3 billion in 2024-25 and £13.7 billion in 2025-26, which would have amounted to 0.5% of GNI. Phase 2 — which will look at areas where government departments can find savings and efficiencies in their budgets to ensure all funding is focused on the government’s priorities — is due to conclude on June 11. The Foreign, Commonwealth & Development Office, or FCDO, is understood to regard the review as “ongoing” and appears unlikely to restart the process. 3. FCDO was also midway through an analysis of aid spending. What happens there? Last August, Minouche Shafik, the former top civil servant at the axed Department for International Development, or DFID, and ex-president of Columbia University, was asked to review whether the U.K.’s aid delivery is fit for purpose. U.K. Foreign Secretary David Lammy asked Shafik to look at how the government could “maximise the impact” of the model created when DFID was folded into FCDO in 2020. Shafik said in October that she would publish an interim report in November and a fuller report “three months later.” Devex understands that Shafik has concluded her review and made a series of recommendations which are being considered by Lammy. 4. Will there be an impact assessment for the cuts? Aid professionals feel strongly that an impact assessment should take place, particularly for funding supporting women and girls. “Last time there were cuts [to the U.K. aid budget], women and girls were disproportionately affected,” said Helen McEachern, chief executive of Care International U.K. Asked in the House of Lords if she would commit to carrying out and publishing an impact assessment in relation to women and girls, Chapman responded: “Ordinarily, yes.” A spokesperson for FCDO added in a response to Devex: “Detailed decisions on how the ODA budget will be used will be worked through as part of the ongoing Spending Review process, based on various factors including impact assessments.” 5. What's the UK going to do about the Global Fund replenishment? A founding member and long-time partner of the Global Fund to Fight AIDS, Tuberculosis and Malaria, the U.K. pledged £1 billion for its seventh replenishment, and will co-host the eighth later this year with South Africa. While hosting the event may be a sign the U.K. plans to continue its former generosity, a report published in October by the Center for Global Development noted that the Global Fund replenishment is competing with those of the World Bank’s International Development Association and vaccine alliance Gavi, in what it described as a “replenishment traffic jam.” Such a traffic jam can only have intensified with the latest cuts to U.K. aid. “The government hasn’t yet officially confirmed its contribution,” said Adrian Lovett, executive director for U.K., Middle East, and Asia Pacific at the ONE Campaign. “It is believed to be still under discussion. There is cause for concern that the UK won’t even be able to match its pledge of £1 billion at the last replenishment round.” 6. What's happening to in-donor refugee costs? There’s been controversy in recent years over the proportion of the aid budget — £4.3 billion, or roughly 28% of the aid budget, in 2023 — that is used to support refugees within the U.K. Many aid advocates believe that support for refugees domestically could be taken from other coffers, and Devex has previously reported that the U.K. specifically spends far more money per head on in-donor refugee costs, or IDRCs, than any other leading economy. The Center for Global Development calculated that about £3 billion of refugee costs would be taken from the aid budget in 2027 if per capita costs remain the same, predicting that the government’s overseas aid spending would represent just 0.17% of GNI if there was no change in asylum spending. In her recent letter to the chair of the International Development Committee, Sarah Champion, Chapman announced that FCDO will lose its role as the U.K. government’s aid “spender and saver of last resort,” meaning that it will no longer need to adjust its budgets to hit a spending commitment if GNI changes or other departments’ costs increase. Responding to the letter, Champion, a Labour member of Parliament, said the measures could represent a positive step forward in terms of IDRC. “Unshackling aid from percentage targets could protect aid spending from drains on its resources like reckless Home Office spending on asylum hotels at home,” she said. FCDO declined to comment on the subject, but is understood to be expecting aid budget asylum spending to fall. According to provisional statistics from FCDO, the U.K. spent £2.8 billion of ODA (20.1%) on costs associated with asylum-seekers in the U.K. in 2024, a sharp drop from 2023’s figures. 7. What’s going on with debt, tax, and illicit financial flows? Development aid is about more than spending, and there are things the U.K. can do to achieve a fairer world even with a drastically reduced aid budget. Helping lower-income countries achieve debt justice is one of them. In February, the then-U.K. development minister, Anneliese Dodds, announced a new scheme under which banks will receive government support if they introduce clauses enabling debt restructuring to go ahead where a deal is backed by a majority of lenders behind a syndicated loan. However, campaigners including Christian Aid, CAFOD, and Debt Justice warned that voluntary measures fall far short of what is required, arguing that what’s needed is a debt justice law which would force private lenders to join debt restructuring agreements. The bill that could make this new law a reality is currently working through Parliament, with the next debate scheduled for July 11. The U.K. can also wield influence through tackling global tax abuse and implementing fairer global taxation policies. Almost half a trillion U.S. dollars are lost annually to tax abuse, with low- and middle-income countries disproportionately affected — and according to a letter sent in March to Starmer, Reeves, and Lammy, and coordinated by Tax Justice UK, the U.K. and its overseas territories are responsible for over a quarter of this — $129 billion annually. The letter, signed by more than 40 global nonprofit organizations, called on the government to support the United Nations tax convention and the implementation of fully accessible registers of beneficial ownership in British and overseas territories. These registers would provide details about the actual owners of various corporate entities and are seen as vital transparency tools to crack down on tax abuse by superrich individuals and corporations. 8. Will the £900 million-a-year recapitalization of British International Investment go ahead? FCDO declined to comment, but most sources think this is unlikely given multiple pressures on a much-reduced pot of aid funding. “There is huge uncertainty,” said Lovett. “Officially, we expect recapitalisation to go ahead, although the amount committed is unknown. There is a case to pause BII recapitalisation altogether, and redirect these funds to the most crucial, lifesaving elements of ODA that are under threat.” Gideon Rabinowitz, director of policy and advocacy at Bond, and Alex Farley, policy and advocacy manager for development finance at Bond, both agreed with Lovett, pointing to the fact that BII itself stated that it can sustain its current level of investments (£1.3 billion in 2023) without additional capital contributions from the U.K. government. Therefore, wrote Rabinowitz and Farley in a joint blog, pausing new government capital contributions to BII for at least the period of the supposedly temporary reduction in U.K. ODA would have limited impact on the institution’s operations.