Why UK aid spending is finally rising after years of painful cuts

It is one of the most obscure committees within the U.K. government, but it is helping to deliver a big increase in aid spending overseas after years of devastating budget cuts. One year after Andrew Mitchell, the then-newly installed international development minister, set up what he dubbed a “star chamber” — to get a grip on chaotic allocations of official development assistance — there is tentative evidence that order is being restored. Spending is now rising sharply at the Foreign, Commonwealth & Development Office, helping to enable a £1 billion ($1.27 billion) humanitarian relief pot and a £150 million “resilience and adaptation” fund to help low-income nations prepare for climate disasters, and falling at the domestic departments which were grabbing more and more of a shrinking ODA pot. It suggests FCDO is stemming the bleeding from the cuts that wrecked aid programs and brought international criticism — even as the promise to quickly restore aid spending to 0.7% of gross national income has not been fulfilled. Full details of FCDO’s spending boost from the quiet work of the star chamber will not be revealed until April, but it seems certain to be many, many hundreds of millions of pounds, a significant addition to a £7.4 billion budget in the 2023-24 financial year. We do know FCDO has, overall, an extra £1.5 billion of ODA to spend in this calendar year. Some come from a slightly larger economy, but U.K. growth has been relatively stagnant — meaning that much of the money has been swiped back from other departments. So what is this committee or star chamber — a beloved phrase for British politicians, because of its historic association with King Henry VIII — and how does it work? Co-chaired by Mitchell and Chief Secretary to the Treasury Laura Trott, it was slated to meet three or four times a year to examine all spending above £60 million to improve, in a euphemistic phrase, “the quality of ODA.” In plain speak, that largely means stopping the Home Office from using ODA meant for aid programs overseas to spend on its huge backlog of asylum-seekers in the U.K. – which gobbled up a staggering £3.7 billion of ODA in 2022, or 29% of the total. It meant more international aid was being spent at home than overseas. The ferocity of this arm-wrestle was hinted at by the Home Office apparently trying to dip into ODA to help meet the vast bill for trying to deport refugees to Rwanda before something — though it’s unclear exactly what — stopped it. As recently as last June, FCDO was still arguing with the Treasury over its 2023-24 budget, and it then acknowledged a third year of bilateral funding cuts would kill thousands “in acute humanitarian need.” Nick Dyer, the senior FCDO number two civil servant, lifted the lid on far rosier news for his department when, before Christmas, he told Parliament’s International Development Committee it was no longer required to “give up” £1.5 billion the Treasury had demanded in savings. “That is a much better problem to have than cutting and we are talking to ministers now about how to accommodate that,” Dyer told members of Parliament, adding: “We are in a much better place than we were two years ago.” Devex understands a very large chunk of this £1.5 billion is flowing back to FCDO because ODA diversion to domestic refugee costs by both the Home Office and the Department for Levelling Up, Housing and Communities has been cut significantly. “We have turned the corner on that,” said one FCDO source on condition of anonymity. It is badly needed because the “temporary” cut to spending only 0.5% of GNI on international aid — which Prime Minister Rishi Sunak once said would be reversed in 2024 — now stretches far into the future. The Conservative government has admitted it will not be reversed before 2029 and Labour, the strong favorites to win this year’s election, has promised similar tough overall spending rules. On the £1.5 billion rise, Mitchell told Devex: “We now have the budget under better control thanks to the work of the committee and the appointment of the second permanent secretary [Nick Dyer]. “This will support us to reach our development goals of tackling humanitarian and climate change priorities, and supporting the world’s most vulnerable people.”