UK’s foreign aid budget being spent in Britain, not abroad

More of the UK’s foreign aid budget is being spent in the UK rather than in poor developing countries, according to a report by Centre for Global Development (CGD).

The report released on Saturday, October 29 says that is because a large percentage of the money set aside for aid is being spent on housing and supporting refugees.

Prime Minister Rishi Sunak when Chancellor, changed the rules slashing the budget from 0.7 per cent to 0.5 per cent as well as allowing the Home Office and other departments to redirect funds intended for international aid. That meant these funds no longer needed to be spent on genuine aid but could instead be spent locally but still be classified as international aid.

Of the £11 billion annual budget around 40 per cent is allocated to multinational aid programmes such as those run by the World Bank, but more than half of the remaining funds aren’t leaving the country at all.

Counting refugee-housing as official development assistance is acceptable under internationally agreed rules, however the UK is one the few that has is using the funds to assist Ukrainian refugees and the only G7 country to do so.

Ranil Dissanayake Policy Fellow at the CGD is critical: “Saying we spend 0.5 per cent of our national income on aid is becoming meaningless, when such a huge proportion of this pot is being spent domestically, rather than on helping people facing enormous hardship across the world.”

He goes on to say that development budgets across the world are being squeezed but what the UK is doing is adding to the hardship in other countries.

Andrew Mitchell, who has been appointed as Development Minister in the Foreign Office, rebelled against Sunak’s cuts at the time. It is hoped that in the role he will be able to reverse some of those changes.

But with the UK facing a financial black hole the Telegraph has said the development budget could be further squeezed.

Stefan Dercon, Professor of Economic Policy at Oxford University’s Blavatnik School of Government says: “Mr Mitchell focused strongly on results for the poor, and value for money, but at the moment, the way budgets are handled they deliver neither.”

He tweeted on Wednesday: “Aid is now only 0.3 per cent of GNI (gross national income) once we account for all asylum/refugee costs and other spending programmes for Ukraine inside the UK. That is now less than it was before 1997.”

He predicts more cuts to humanitarian spending and less for those things the UK built a reputation for doing well.

A spokesperson at the Foreign, Commonwealth and Development Office said: “Across government, there are significant pressures on the 0.5% ODA budget due to the costs of accepting refugees from Afghanistan and Ukraine as well as wider migration challenges. Obviously how many refugees arrive in any particular period is not certain, so there is not a fixed cost.

“We remain one of the largest global aid donors, spending more than £11 billion in aid in 2021, and UK aid has recently gone towards those in need in the Horn of Africa and Pakistan.”

How the UK’s foreign aid budget is spent, is an emotive topic and one that does not enjoy everyone’s support with many wanting to see more money spent at home on Britain’s needy. But international opinion and agreement is that the wealthier countries should help those less well off, something the UK has always enjoyed a good reputation for. Could that now be under threat?

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