How might UK aid funding change after the latest cuts?

The United Kingdom is one of the biggest contributors to official development assistance. But that may change in the next few years after the country’s Prime Minister Keir Starmer announced that it will be reducing its international development budget by 2027 from 0.5% of its gross national income to just 0.3% and shifting the money to the country’s defense budget. In light of the cuts, Devex took a look at what the U.K. is currently funding and what it plans to fund. The journey to 0.7% The most recent cuts come despite the government vowing that it would be ramping up its ODA contributions to meet the recommended 0.7% ODA-to-GNI ratio from the current level of 0.5%. The ODA-to-GNI ratio of 0.7% was established in 1970. This serves as a benchmark for how much a donor should provide to ODA in relation to its income. Only a few of those in the Organisation for Economic Co-operation and Development's Development Assistance Committee could consistently reach this target. In 2023, only five countries reached this target: Norway, Luxembourg, Sweden, Germany, and Denmark. In 2015, the U.K. passed legislation to ensure that the 0.7% target is met consistently. This legislation was set aside during the COVID-19 pandemic, which put the U.K.’s ODA budget at just 0.5% of its income. It is expected that this will happen again once the budget changes come into effect in 2027. What is the United Kingdom currently funding? The U.K. government is mainly funding in-donor refugee costs, Africa, and Ukraine. To understand current U.K. aid spending, we drew data from two main sources: The Statistics on International Development and the Foreign, Commonwealth & Development Office’s commercial pipelines, which can be found on the U.K. government’s website. Since the announcement of the initial budget decrease post-COVID in 2021, the U.K. has begun to slowly increase its ODA over the years. In 2023, the U.K.’s ODA totaled £15.3 billion, which was a 20% increase from 2022. The ODA-to-GNI ratio recorded was at 0.58%. The majority of this, £10 billion, was given bilaterally, and the rest was given multilaterally. The majority of ODA was channeled through its main development agency, FCDO. It spent around £9.5 billion, accounting for 62% of the U.K.’s total ODA. The second highest contributor is the Home Office with almost £3 billion, accounting for 19.3% of total ODA, almost all of which was spent on in-donor refugee costs. The Department of Health and Social Care comes next with £535 million, the majority of which was spent on in-donor refugee costs. For the past few years, the U.K. has spent a significant proportion of ODA on in-donor refugee costs. These costs are for assisting refugees and asylum-seekers on the donor’s soil, which the OECD counts as ODA. The U.K. allocated 28% of it’s ODA, or £4.3 billion, to in-donor refugee costs, while £878 million went to humanitarian aid and £723 million went to multi-sector/cross-cutting projects. Geographically, Africa is the biggest recipient of ODA with £1.2 billion, accounting for 46% of the total. Asia comes next with £864 million, Europe with £353 million, the Americas with £197 million, and Oceania with £8 million. Bilaterally, Ukraine was the top recipient of U.K. ODA. This is in response to the Ukraine/Russia conflict. It received £250 million in ODA. Ethiopia comes next with £164 million, Afghanistan with £115 million, Syria with £109 million, and then Yemen with £101 million. Multilaterally, the International Development Association was the top recipient of the U.K.’s ODA with almost £2 billion, accounting for 37.1% of the total multilateral ODA. The next recipient is the Global Fund to Fight AIDS, Tuberculosis and Malaria with £958 million, and then the European Commission — Development Share of Budget with £432 million. What is the UK planning to fund in the future? According to our previous analysis of the FCDO’s recent commercial pipelines, there are 72 opportunities with an estimated contract value of £1.96 billion. Most of this, £1.1 billion, will be dedicated to development-related opportunities. There are 58 new contracts that are worth £1.1 billion and 14 re-procurement contracts that are worth £827.9 million. FCDO released 33 tenders worth £744.2 million during the last quarter of 2024. The other 14 tenders, which are worth £672 million, will be released in the first quarter of 2025. The remaining tenders will be advertised from the second quarter of 2025 to the second quarter of 2029, which may or may not be affected by the budget slash in 2027. In the forecast, the Democratic Republic of Congo will be the biggest recipient of FCDO funding. There will be four contracts that amount to £92.8 million. The largest of which will be a £65 million contract to address the issues of deforestation in the Congo Basin. Zambia is the next biggest recipient of aid with £78 million for four contracts. The largest contract amounts to £38 million to support democratic institutions and practices. South Sudan follows with £59.2 million worth of contracts already allocated to it. Sector-wise, humanitarian and emergency response will be getting most of the money with £266.5 million. The majority of cash will be going to the Humanitarian Emergency Response Operations and Stabilisation, or HEROS, 2.0. This is FCDO’s global humanitarian and emergency response program. Green development contracts are up next with £252.8 million, which is different from climate and environment contracts that come next with £218.6 million. Try out Devex Pro Funding today with a free five-day trial, and explore funding opportunities from over 850 sources in addition to our analysis and news content.