What’s been happening to UK aid this week? Cuts, cuts and more cuts

UK aid is set to remain “around” 0.5%, despite more and more of it going towards the Home Office’s UK refugee hosting costs. This means more cuts to programmes around the world.

There have been a series of announcements on Official Development Assistance (ODA) over the past few days. On Tuesday the Foreign Secretary published a written Ministerial Statement confirming and building on the Autumn statement last week. We learnt that for 2022 ODA is remaining “around” 0.5% and that the government are also allocating an additional £1bn this year to UK refugee hosting costs, to be spent by the Home Office. The additional resources to cover the costs of hosting refugees in the UK are welcome but insufficient. This leaves a stated £7.6bn for the Foreign, Commonwealth & Development Office’s (FCDO) ODA spend in 2022.

Yesterday, the government published their final statistics on ODA in 2021. These tell us how the UK’s ODA budget was spent, building on what we learnt from April’s Provisional Statistics. 2021 was the first year with a reduced 0.5% GNI target, so these statistics are critical because they show how the reduced budget has been spent. They also help us better understand the announcements made on 2022 spending.

ODA spend in 2021: those who have been marginalised are the most impacted

As we already knew, in 2021 the ODA budget was reduced to 0.5%, a drop of £3bn compared to 2020 to £11.4bn. This means we see reductions across the board in these statistics.

The starkest impact of these cuts is on “least developed countries” (LDCs). The amount of bilateral ODA going to LDCs dropped by £961m in 2021, a cut of 40% taking it to a total of £1.4bn. This is a far greater cut than those to lower and middle-income countries, which received a cut of £339m, or 29%, and upper-middle-income countries, who saw reductions of £117m, or 17%. Of the 10 countries that received the biggest cuts, 6 were LDCs. This is a heartbreaking way to prioritise ODA spending. As if the cuts alone weren’t bad enough, we now know they were focused on the countries least able to respond to or mitigate a reduction in funding.

The other striking finding is that hosting refugees in the UK became the biggest sector for ODA spending in 2021. 14.7% of the bilateral ODA budget was spent on UK refugee costs, a total of over £1bn. More was spent on hosting refugees in the UK than on health (£970m, a drop of 39%), humanitarian aid (£743m, a drop of 51%) and education (£87.5m, a drop of 16%). The decision to welcome and support refugees in the UK is very welcome. But the consequences of funding this through the ODA budget are clear – marginalised communities around the world have lost out on humanitarian support, health programmes and education so that the UK can subsidise its domestic costs.

The statistics reveal how much is spent bilaterally by country. This is the first year where less than half of the total bilateral spending (47.9%) is tagged to a specific country or region. This means that we know nothing about the geographical spread of over half the bilateral budget. What is clear is that there have been huge cuts almost across the board. For example, Afghanistan is now the country receiving the most bilateral ODA in 2021, and yet it also overall received £39m less than in 2020. Reductions to other countries in crisis, such as Ethiopia receiving £134m less and DRC receiving £63m less than in 2020, demonstrate again that countries most in need of support have lost out from the decisions to reduce and divert the ODA budget.

We also see some shifts in country spending as a result of climate finance commitments being met through the ODA budget alone. The biggest percentage increases (though still small in absolute amounts) were largely to small islands, with St Vincent & the Grenadines, Vanuatu, Samoa and Tonga receiving the biggest percentage increases. South Africa also entered the top 10 countries receiving ODA with an increase of £54.2m compared to 2020, in part due to a new BEIS climate finance programme. However, alongside this, we have heard reports of climate finance programmes being cut elsewhere. Climate finance is needed and welcome. But these statistics demonstrate again that taking climate finance from an already stretched ODA budget forces further cuts elsewhere, which ultimately land on the communities who will struggle to bear the brunt of them.

ODA spend in 2022: even further cuts

The decision to attribute the growing costs of refugee hosting to the ODA budget has led to delays in agreeing on departmental allocations and pauses in ODA spending. The government announcement of an additional £2.5 billion to refugee costs over the next two years is a welcome recognition that these costs cannot all be absorbed into a 0.5% ceiling.

However, the stated £7.6bn remaining for FCDO ODA spending in 2022-23 is £1.72bn less than originally planned, a staggering decrease of 18.45%. For 2023-24, this increases even further to a reduction of £2.15bn or 24%. The statement makes clear this will require further cuts to programming “with experts on the ground in country empowered to determine which programmes to continue.”

Looking forward: restoring transparency and an ODA budget focused on tackling poverty

For the past two years, these statistics have been published in September, so the delay until November, particularly in a year of upheaval for UK ODA, is not ideal. The 2021 statistics provide one of the few insights into how the political decisions on ODA have played out. Receiving them 12 months after the end of 2021 limits civil society’s understanding of decisions affecting them. However, this is also exacerbated by the broader lack of transparency around the cuts, which forces us to expect the statistics to provide all the information that should have been shared through other means. In particular, Bond wants to see the government publish an ODA budget in advance so that we can understand and input into priorities beforehand, rather than learning about them months after the spending is done and the cuts have been made.

These statistics provide useful insight into the priorities and trends of UK ODA spending in 2021. However, as we come to the end of 2022, they provide limited information about current ODA priorities. The Foreign Secretary’s statement this week makes clear that further cuts are coming. At COP27 the UK committed to increasing adaptation spending by £500m a year for the next 2 years. If taken from a decreasing ODA budget, these commitments will again require reductions to other spending priorities. We hope to see clarity around this in the form of a published and comparable 2022 and 2023 ODA budget, as well as engagement and transparency about any possible restructuring of the ODA budget which may be taking place. In the long-term, the government must recentre their strategy on the commitment to leave no one behind, including no longer using ODA to subsidise their UK refugee costs at the expense of marginalised communities facing poverty, injustice conflict and climate change poverty in other countries.