UK government to push ahead with Home Office aid budget raid

The United Kingdom government has no plans to restrict the Home Office’s spending of the aid budget on hotels to house refugees in the U.K., it has emerged. "We have an enduring legal obligation [to refugees], you can't have that and then the Treasury comes along and cap it," Chief Secretary to the Treasury John Glen told politicians on the International Development Committee. Despite admitting to having the figures of how much aid is spent inside the U.K. — as international programs are being cut — the government refused to make them public or say how the aid program is being affected. But the cost is thought to be in the billions, hampering the Foreign, Commonwealth & Development Office’s ability to budget and plan development programs despite an additional £2.5 billion (over $3 billion) given to the department in November 2022 to alleviate the pressures. The budget pressures take place amid a backdrop of a smaller aid budget of 0.5% of national income, controversially reduced from 0.7% in 2021. “This is out of control and the Home Office is sucking up money,” said Chris Law, one of the members of Parliament on the IDC. Referring to migration, Law added: “This is money that would be helping people who are going to come to these shores.” Citing a sharp rise in refugees to the U.K., Minister of State for Immigration Robert Jenrick said "we'd expect the figure to be very substantially higher" than the £1 billion cost to the aid budget in 2021. Migration is a highly contentious political issue in the U.K., with the government vowing to end “small boats” of migrants landing in the country. Jenrick linked the government's measures to limit immigration to the U.K. to relieving the pressure on the aid budget but also said he wanted aid to help people “fleeing persecution” to the U.K. “We are faced with an exceptional situation here,” said Andrew Mitchell, referring to the refugee schemes using funding to support people from Ukraine, Afghanistan, Syria, and Hong Kong. “We have never had this pressure.” Ministers said the domestic aid spending was in line with the aid rules of the Organisation for Economic Co-operation and Development’s Development Assistance Committee, which allows first-year domestic refugee costs to come from the aid budget. But MPs on the IDC argued that it was against the spirit of the rules and that other big donors accommodating refugees hadn’t taken money from international development programs to do it. Asked if the government's approach to spending aid domestically abided by clarification five of the DAC rules, which “emphasises the need for a conservative approach” Mitchell said: “I believe the Home Office is within the rules.” U.K. aid being spent at home increased from 2.9% in 2013 to 16.6% in 2021, according to Development Initiatives, a think tank. While the DAC average of in-donor refugee costs was 4.9% in 2021, the U.K.’s was 14.7%, according to DI. A spokesperson for the organization said the significant increase in in-donor refugee costs in the last two years “has been primarily driven by a dramatic increase in expenditure on initial accommodation”, which rose from 10% of Home Office expenditure on in-donor refugee costs in 2019, £41 million, to 67% in 2021, £662 million. The spokesperson said DI thought the U.K. may have breached the DAC rules on in-country refugee spending “because we suspect that factors including the impact of Covid-19 may have led to some asylum seekers receiving certain kinds of Home Office support for longer than usual. … “However, due to lack of data, we can’t be sure of the impact that this has on ODA figures,” he said. The session highlighted the extensive problems with the U.K. asylum system which, among other issues, suffers from a shortage of accommodation, meaning refugees are often placed in hotels, at a cost of £7 million per day, according to a BBC podcast. Some of the money spent on hotels is likely to go back into Treasury coffers in the form of value-added tax paid to hotels but Jenrick was unable to confirm an estimate of £401 million in VAT made by MP Richard Bacon. “Hotels will be a feature of the way in which we accommodate asylum seekers for some time to come, but I hope you’ll see over the course of this year a very substantial increase in dispersal accommodation,” said Jenrick. But he was unable to say how long the average stay in a hotel was for a refugee. Asked if there was any incentive to find cheaper accommodation for refugees, Jenrick said the government was looking at housing refugees at former military bases and other lands where they could get "decent but not luxurious accommodation". "It is a difficult time for the ODA budget and I don't think anyone would dissent from that view,” said Mitchell. “I want to confirm everything the committee has heard about the challenge we face.” He told MPs that the bilateral portion of the budget would be “incredibly constrained” between 2023 and 2024 but from 2024-2025, by which time an election is due, “things will get easier”. Glen said he thought the Treasury had planned for a return to 0.7% aid budget by 2026-2027 but needed to check. Mitchell said he was pressing the Treasury for extra funding “on all occasions'' and said he spent his time “trying to mitigate the consequences for the poorest.” While he avoided directly answering questions about how programs are being affected by the cuts, he emphasized co-financing initiatives the FCDO was working on. Earlier in the day, he said there would be an announcement in March on development structures within the FCDO when the update is published to the Integrated Review, the government’s foreign policy strategy. This article has been updated to clarify that comments made by Development Initiatives related to changes in in-donor refugee costs