The United Kingdom has allocated an additional £2.5 billion (roughly $3 billion) through 2024 to “help meet the significant and unanticipated cost” placed on the aid budget by its spending on refugees. But it’s not enough to avoid further cuts, experts say.
Meanwhile, the freeze on nonessential aid spending will be “lifted shortly,” International Development Minister Andrew Mitchell told Devex. “We’re still crunching the [figures].”
The amount spent on receiving Afghan and Ukrainian refugees in the U.K., while not made public, has likely ballooned to between £3 billion and £5 billion, placing great pressure on the aid budget.
Unlike other major donors, the U.K. government had chosen to count all of the refugee costs as official development assistance, straining the £12 billion aid budget. That hinders the government’s ability to run development programs and leads to claims the U.K. is spending more aid domestically than overseas.
Mention of the additional cash was left out of Chancellor Jeremy Hunt’s statement to Parliament, where he said ODA spending would remain “around 0.5%” in the Autumn Statement on the economy.
But government documents, released after Hunt made his statement, said “the government is providing additional resources of £1 billion in 2022-24 and £1.5 billion in 2023-24 to help meet the significant and unanticipated costs which have been incurred” by hosting refugees. It did not specify whether the money would be classified as ODA.
“I think they've avoided saying that for presentational reasons but it will certainly ease pressure on ODA and I'd expect it to be all ODA-ble if the govt wants to report it,” Ian Mitchell, senior fellow and director of development cooperation in Europe at the Center for Global Development, wrote to Devex.
The think tank estimates refugee costs at around £3 billion this year alone, leaving a shortfall despite the extra money.
The BBC reported earlier this week the aid budget could increase to 0.55% this year — a prediction that the additional money for refugees has essentially fulfilled. As recently as October, politicians raised concerns the aid budget could drop to as low as 0.3%.
“Meanwhile incentives of Home Office and other government departments spending ODA remain totally inadequate - just spend as others will have to cut if you are inefficient. So much for focusing on a more efficient Whitehall,” said Stefan Dercon, a senior former official at the Foreign, Commonwealth & Development Office, wrote to Devex. “It seems it applies to everything but for all departments outside FCDO that can spend ODA.”
Dercon agreed there would be further cuts despite the new funding.
Despite Hunt making a renewed commitment to tackling poverty and climate change, the statement was met with disappointment from civil society.
“The Government’s Autumn Statement made positive claims … but masked a deeply troubling reality: real terms aid cuts to children living in the world’s hardest places…. the UK is pulling back its support when more is desperately needed,” said Mark Sheard, CEO of World Vision UK.
“We are deeply concerned about what will constitute ‘aid’ in the future and how much of this budget the Government will attempt to claw back at the expense of people living in fragile and dangerous contexts. Today’s announcement has signified this Government’s misplaced priorities and continued to undermine the UK’s influence.”
“The OBR’s forecasts show a significant shock to public finances so it won’t be possible to return to the 0.7% target until the fiscal situation allows,” Hunt told the House of Commons.
“We remain fully committed to that target and the plans that I’ve set out today assume that ODA spending will remain around 0.5% for the forecast period. … I am proud our aid commitment has saved thousands of lives around the world, so I look forward to working closely with [Andrew Mitchell] now rightly back in his place in Cabinet, to make sure we continue to play a leadership role in tackling global poverty,” he said.
The Autumn statement made no changes to the fiscal rules on returning to 0.7% — when the government is not borrowing for day-to-day spending and when underlying debt is falling — introduced by Prime Minister Rishi Sunak when he was chancellor.
Those tests are extremely unlikely to be met. The CGD’s Mitchell described the return to 0.7% as “dead for this government.” Although documents released alongside the Autumn Statement appear to include projections for an increase of more than £5 billion in ODA spending in the fiscal year to April 2025, the expectation is that this is unlikely.
Hunt also officially declared the economy to be in recession. The country’s gross national income will also fall in real terms, which could further reduce budgets and inflame political tensions around international spending.
Despite some wobbles in Whitehall prior to the 27th United Nations Climate Change Conference, which began last week in Sharm el-Sheikh, Egypt, Hunt said “now would be the wrong time to step back from [the UK’s] international climate responsibilities ... we remain fully committed ... to the historic Glasgow Climate Pact agreed at COP26". The U.K. has made a five-year climate finance pledge of £11.6 billion.
While the government is allowed to spend aid internally on refugees for their first year in the country under aid rules set by the Organisation for Economic Co-operation and Development's Development Assistance Committee, it was criticized for not adding the cost to the aid budget, like other donors.
The aid spending on refugees in the U.K. is set to be investigated by the International Development Committee of politicians who scrutinize development policy.
“Transparency and accountability is essential and this inquiry will look across government departments to understand how this aid is being spent and who might lose out as the balance shifts from the world’s poorest people to the UK’s international priorities,” said Sarah Champion, chair of the committee.
The Home Office has rejected efforts to discover how much ODA the government has spent domestically. Devex asked in October how much aid the department expected to spend on refugee costs this financial year, and was told to request the information through a Freedom of Information request.
On Nov. 14, a reply arrived, but said “the fluid, demand-led nature of the in-donor support provided by the Home Office means it is not yet possible to provide an accurate spend figure for FY 22/23. However, Home Office ODA spending in 2022 is likely to exceed ODA spend from the last calendar year, which was £915 million in 2021 (provisional figure).”
The spending figures will be published online “in due course,” said the FOI response, with provisional statistics in April 2023 and a final version in the autumn.
Update, Nov. 18, 2022: This article has been updated to clarify the U.K. pounds to U.S. dollar conversion rate as of the day of publication.