UK foreign aid being spent in Britain passes £4bn mark, experts say

The government is now spending more of the UK's foreign aid budget at home than on direct help for poor countries overseas, development experts say.

More than £4bn meant for development aid will be spent in Britain this year, largely to support rising numbers of asylum seekers and refugees.

This means less money can be spent elsewhere, because the total budget is capped at 0.5% of national income.

The government insists the UK remains one of the largest global aid donors.

The experts calculate the UK will spend only about £3bn in aid money - known as official development assistance or ODA - this year on direct bilateral payments for development and humanitarian projects in poor countries. A further sum, bringing the budget up to the total of roughly £11bn, is given to multi-nation institutions that organise aid efforts around the world.

Aid charities say the changing allocations amount to a further squeeze on the aid budget, which have already been cut in absolute terms since 2020.

The assessment of how much is being spent at home comes from two of Britain's leading development experts: Stefan Dercon, former chief economist at the Department of International Development and Ranil Dissanayake, policy fellow at the Center for Global Development think tank. Both also used to advise the government.

Under international rules, countries are allowed to spend foreign aid on the domestic costs of asylum seekers and refugees - but only for the first year after their arrival.

This year has seen a massive increase in numbers of people arriving in the UK from Ukraine and Afghanistan, as well as those travelling across the English Channel in small boats.

The Home Office says 140,300 people have arrived from Ukraine so far this year. That figure is expected to rise because 194,300 visas have been granted and thousands more are being considered.

A further 10,000 people have arrived from Afghanistan and, separately, some 38,000 people have entered Britain via small boats.

Paying for their accommodation, subsistence, health, travel and education is hugely expensive. Home Office officials told MPs on the Home Affairs Committee this week that hotel costs alone for asylum seekers and refugees are £6.8m a day. That works out at £2.4bn per year.

One of the experts who carried out the calculations, Prof Dercon, said: "Within the fixed 0.5% ODA budget, the UK is now spending more of its development budget inside the UK than inside poor developing countries. One area in which ODA costs are soaring are the refugee and asylum seekers costs, mainly for Ukraine.

"It means much of what is left will be more cuts to humanitarian spending for African and Asian crises, and less for those things the UK built a reputation for doing well."

Charities and development organisations such as Save the Children, the ONE campaign, BOND and the Center for Global Development estimate the total costs will be at least £3bn this year.

If other parts of the aid budget already allocated domestically - on research, scholarships, training and administration costs - are included, that means more than £4bn is likely to be spent in Britain.

That would leave about £3bn to spend on direct bilateral aid around the world on programmes focused on economic reform, health and education, climate resilience, and humanitarian projects.

The rest of the roughly £11bn total aid budget is allocated to multilateral organisations such as United Nations agencies and the World Bank.

Government figures about aid spending are not transparent and the experts' assessment is, by necessity, based on estimates and assumptions of future costs.

But the second expert, Ranil Dissanayake, said: "Though the government is making it very difficult to actually look at the numbers, it's extremely likely that refugee spending in the UK alone is already higher than the UK's country specific aid to low and lower-middle income countries."

Romilly Greenhill, UK director of the ONE campaign, said: "This is a discreet, further squeeze to the aid budget. Spending money on refugees from Ukraine is vital, but the way UK aid is managed means that low-income countries are effectively footing the bill.

She added the UK's actual budget available to spend overseas is closer to 0.3% of national income than 0.5%.

"And the way the budget is managed means that the Foreign, Commonwealth and Development Office (FCDO) gets what is left after Home Office spending needs have been met. This is not the way to show international leadership or demonstrate our commitment to be a truly global Britain."The FCDO 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 £11bn in aid in 2021, and UK aid has recently gone towards those in need in the Horn of Africa and Pakistan."