UK aid to hit 17-year low with ‘significant new cuts’ feared

U.K. aid spending on international programs will fall to its lowest level in 17 years without an urgent bailout by its new Labour government, aid groups are warning. The budget will be just 0.36% of gross national income in 2024 once the huge sums diverted to hosting asylum-seekers are stripped out, according to a new analysis carried out by Bond, the network for U.K. aid organizations. That would be the smallest proportion since 2007, and make “significant new cuts” likely in the months to come. Strikingly, the U.K. has shelved a planned £707 million ($934 million) payment to the International Development Association, even as the World Bank’s fund for low-income countries seeks a bigger replenishment in December. The fresh spending squeeze comes despite Keir Starmer’s government promising a “reset” of development policy it condemned as “degraded” after massive cuts and the chaotic scrapping of a dedicated aid department under the Conservatives. Bond urged ministers to change course by holding the aid budget at its 2023 level and, in the longer term, by setting out a path to returning to spending the U.N. benchmark of 0.7% of gross national income. “We also want the government to commit to reducing the amount of UK aid being spent on refugees and asylum seekers, with this vital support coming from elsewhere in government,” Gideon Rabinowitz, Bond’s policy and advocacy director, told Devex. “Without this action there will be unprecedented cuts to programmes supporting the most marginalised people in the world and a further slide in the UK's international reputation.” Devex reported in July that Labour will continue the raiding of the Foreign, Commonwealth & Development Office’s aid budget for what are known as in-donor refugee costs, or IDRCs, allowing the “surrender” of a further £991 million in the 2024-25 financial year. IDRCs swallowed up a staggering £4.3 billion, or 27.9%, of official development assistance, or ODA, in 2023, money diverted to the Home Office to pay the accommodation and subsistence costs of a 100,000-plus backlog of asylum-seekers. The impact on FCDO was reduced by an emergency £2.5 billion Treasury cash injection over two years — which quietly hiked ODA spending to 0.58% of national income in 2023, instead of the planned 0.5% — but the money ran out in March 2024. A fresh bailout looks unlikely, after the new government said it had identified a £22 billion “hole,” highlighting a £6.4 billion “overspend” on the asylum system as one of its biggest headaches. Bond’s analysis said around 60%, or £3.8 billion, of this spending is likely to be reported as official development assistance, based on the last two years’ figures, which would cut ODA to just £9.7 billion if refugee costs are excluded. At around 0.359% of national income, this would be below the previous low of 0.363% in 2022, Bond said — taking the U.K. back to the level seen in 2007, before big increases in the aid budget after the Conservatives won power in 2010. New development minister Anneliese Dodds has said little about future policy since her surprise appointment in July, but she did tell members of the U.K. Parliament she wanted to avoid “unplanned reductions” in aid spending. Multilateral programs such as IDA are vulnerable if Labour sticks to big increases in bilateral aid announced a year ago, when country-by-country spending was promised a rise from £1.58 billion in 2023-24 to £2.69 billion. In a statement, an FCDO spokesperson did not dispute Bond’s analysis, while saying: “Ministers are reviewing the FCDO’s 2024-25 ODA budget and we will publish planned allocations in due course.” The U.K. would deliver its existing £1.4 billion pledge to IDA “in full and in line with the timelines agreed with the World Bank,” the statement said.