UK aid provisional statistics for 2023 – a quarter of UK aid still being spent in the UK

Yesterday the UK government published the Statistics on International Development: provisional UK aid spend 2023 (SID).

The data provides an initial overview of how the UK has spent its Official Development Assistance (ODA) budget over the past year. Here’s what we learned.

A quarter of ODA spent inside the UK

In 2023 the total ODA budget was £15.37bn, amounting to 0.58% of gross national income (GNI). This is a welcome increase both in total terms and percentage of GNI, as in 2022 it was at £12.8bn, equivalent to 0.51% of GNI.

However, looking at the budget spent on asylum seekers inside the UK paints a bleaker picture. UK aid spending on ‘in-donor refugee costs’ rose by 16.4%, from £3.7bn in 2022 to £4.3bn in 2023, meaning more than one-quarter of the whole ODA budget was spent inside the UK.

When queried last year about the already high aid spending on these costs in 2022, Minister for Development Andrew Mitchell acknowledged in front of the International Development Committee that the ODA budget was effectively “out of control” and promised to “bear down” on this spending. The statistics for 2023 show no progress in reducing these costs.

Given the significant overall increase in UK ODA in 2023, supported largely by the Treasury providing additional resources over and above the official 0.5% of GNI aid target to help manage the impact of refugee costs, the share of these costs in UK ODA went slightly down from 28.9% in 2022 to 27.9% in 2023, although this can hardly be seen as ‘bearing down’.

Since 2020, UK aid spent annually on housing asylum seekers inside the UK has increased by a staggering 584%. While the UK government needs to support asylum seekers, they should use the domestic budget rather than the ODA budget, which is legally required to support poverty reduction in lower-income countries.

Yesterday the Independent Commission for Aid Impact (ICAI) published a follow-up on last year’s review of UK aid to refugees in the UK, drawing similar conclusions. The review highlights the continued costs of housing refugees in hotels, concerns around value for money and safeguarding, and a maximalist approach to reporting all eligible in-donor refugee costs as ODA.

While ODA rules under the OECD Development Assistance Committee (DAC) allow for counting in-donor refugee costs as ODA, using such a maximalist approach is a political choice. This, according to ICAI, sets the UK apart from “most, if not all, large donors.”

The review also highlights the added contradictions by the Home Office in their use of The Illegal Migration Act, the passing of which seems to have led the Home Office to stop (since July 2023) processing the asylum claims of people arriving on small boats. As ICAI highlight, if refugees aren’t being given protection as asylum seekers under international law then there is a major question about whether their support costs can be reported as ODA.

Who spends the money and where?

Historically the FCDO (previously DFID and FCO) was the main spender of UK ODA. The merger of FCO and DFID was supposed to help centralise ODA. However, since the increased spending of ODA on housing refugees inside the UK, the Home Office has become a significant spender of the UK aid budget. In 2023 its budget was nearly £3bn (19.2%) of total ODA, up from £2.4bn (18.7%) in 2022, and since 2020 we have seen an increase of nearly 395% (£2.4bn).

The FCDO, on the other hand, has seen a steep decline. In 2022, its share of the UK ODA budget fell below 60%. While the preliminary statistics show a small rebound to 61.6% in 2023, it remains well below the post-merger levels of over 70%. Even with rising ODA budgets, it is not enough to fill the gaps created by several rounds of cuts.

It is unacceptable that the FCDO’s total bilateral budget (£4.1bn) is smaller than the budget being spent on refugee costs (£4.3bn).

The White Paper on International Development rightly highlights that humanitarian needs are at a record high, and it promises to spend £1bn on humanitarian needs in the financial year 2024 to 2025. SID 2023 confirms that we are still far off this target, having spent only £888mn (5.8%) of the bilateral ODA on humanitarian assistance. This is a decline of nearly 20% from 2022 and humanitarian programmes across the world have felt the squeeze.

The provisional data also gives us an overview of the FCDO’s region-specific bilateral ODA, which makes up 48.5% of the FCDO’s bilateral budget. While Africa has seen an increase in their share of region-specific bilateral ODA, the total spend has gone down from £1.06bn in 2022 to £1.05bn in 2023 and compared to 2020 it’s been cut by 53%. Both Asia (33% decrease) and Europe (26% decrease) have also seen cuts since 2022.

Given that a quarter of UK aid is spent inside the UK, it is not hard to see why these regions, where ODA is urgently needed to reduce poverty and support the Sustainable Development Goals (SDGs), have seen cuts in their budget, despite an increase in the total ODA budget.

Implications for future aid budgets

The provisional statistics only provide an initial overview of UK ODA in 2023, with further details following in the final statistics later this year. While the regional allocation of UK ODA gives us the first clues on the government’s ODA priorities, the final statistics will provide a better picture of ODA allocation according to income groups.

We will be particularly interested in looking at how much ODA has gone to the least developed and low-income countries to see how much focus the government has on poverty reduction. However, seeing a continued rise of in-donor refugee costs and a decline in total spending in Africa and Asia does suggest some concerning early conclusions.

Notably, the percentage share going to multilateral ODA has increased from 24.6% in 2022 to 35.9%, indicating that a ceiling of 25% set in the 2022 International Development Strategy has been lifted. This will particularly be of interest in 2024, when several replenishments of multilateral institutions will take place, including the World Bank’s International Development Association (IDA).

Most importantly, though, we will have to look at the overall ODA budget. In the 2022 Autumn Statement, the government announced an additional £2.5bn for 2022-23 and 2023-24. Yesterday’s numbers show that even additional money has not been enough to make up for the huge in-donor refugee costs.

If we go back to 0.5% in 2024 without additional resources, we will inevitably see further cuts to vital programmes. We therefore urge the government to commit to an aid budget of 0.58% of GNI as a new minimum spending floor, and to start scaling up to return to 0.7%.