In 2020, the UK Government announced it would reduce its aid spending from 0.7% to 0.5% of gross national income (GNI), in response to the impact of the Covid-19 pandemic on the UK’s economy and public finances. Spending is not expected to return to 0.7% during the 2024 to 2029 parliament.
Additional pressure on the UK’s reduced aid budget has come from the requirement to meet existing commitments to international organisations, international climate finance spending, and hosting an increased number of refugees and asylum seekers from 2022.
This briefing explains the international rules that apply on reporting aid spending on refugees in aid-donor countries, the patterns of past UK aid spending on refugees, the significance of this to spending from 2022, and how the Conservative and Labour Governments have responded.
What are the rules on aid spending?
Under international aid rules, many of the costs of hosting refugees can count towards the aid budget for the first 12 months refugees are in the UK. This includes basic subsistence costs, such as food and accommodation.
How much UK aid is spent in the UK?
A growing amount of UK aid has been spent on UK-based refugees, with spending increasing from £410 million in 2016 to £4,273 million in 2023 (rising from 3.2% of the aid budget to 28%). The Home Office was responsible for £2,936 million of this aid spending in 2023. Most support for refugees went towards providing food and shelter.
Other aid, such as on scholarships and administration, is also spent in the UK. In 2023, this totalled £833 million.
How did the Conservative Government respond?
The Conservative Government acknowledged that the costs of supporting those arriving from Ukraine, the resettlement of Afghans, and other asylum applications put a pressure on the overseas aid budget.
In March 2023, while acknowledging the aid budget can meet these needs, the Independent Commission for Aid Impact (ICAI), an official body charged with monitoring UK aid spending, argued the UK was not adopting a conservative approach to its reporting, in comparison to many other European countries (see below).
Both the ICAI and Commons International Development Committee recommended the government introduce a funding floor or ring-fence to ensure a proportion of the UK aid budget is spent overseas.
In response to the committee’s recommendation, in May 2023 the Treasury rejected it as “unaffordable” in current circumstances. The government instead announced an additional £2.5 billion in aid for 2022 to 2024 to help restrict the impact of in-donor refugee costs. This funding was classed as aid spending, and resulted in aid spending rising to 0.58% of GNI in 2023.
While welcoming the funding, the ICAI said it would not cover all the costs.
How has the Labour Government responded?
The Labour Government, in office from July 2024, has not announced additional spending to compensate for spending on refugees in the UK in 2024/25. In its Autumn 2024 budget, the Treasury said that the Home Office would take further steps to control the asylum budget. The Minister for International Development, Annelise Dodds, said that the Home Office is “committed to bringing order to the asylum system and has taken steps to unblock the backlog of claims, which will help reduce costs”.
International Development Committee Chair Sarah Champion said the government should have gone further to control asylum spending. The Conservatives and Liberal Democrats criticised the lack of additional funding.
How do other countries count this aid?
In May 2024, the Organisation for Economic Cooperation and Development (OECD) published a report on how members of the Development Assistance Committee (which includes most major donors, save for China) had used their aid budgets to support Ukrainian refugees (PDF). Spending across DAC countries has increased since 2020, but not as large as the UK.
The report said that the “vast majority” of donors were using funds additional to their originally planned international aid budgets. Some, including Australia and Hungary, did not count the costs towards their aid budgets at all, or only some limited spending (the case in Belgium and Netherlands, for example).
Update log
July 2024: Updated with ICAI and OECD reports
December 2024: updated with new FCDO statistics on spending and Labour Government policy