UK aid in 2024 – provisional statistics show the need for reducing asylum costs amidst cuts to the aid budget

Last week the government published the provisional Statistics on International Development (SIDs) outlining the UK’s Official Development Assistance (ODA) spending for 2024.

The Prime Minister’s announcement on 25 February to cut the UK aid budget from 0.5% to 0.3% of GNI by 2027 to finance an increase in the defence budget, dampens what might have otherwise been some welcome trends outlined in the SIDs data. 

The development sectors dismay at the decision to cut the aid budget was further deepened by the plan laid out by the Chancellor in her Spring Statement, which outlined the government’s intention to start implementing the cuts immediately, despite calls by Bond and members to maintain the aid budget at 0.5% in 2025 and 2026.

The Chancellor also announced that the ODA budget set out for the period 2025/26-2029/30 would not be adjusted to reflect changes to projected GNI. In this break from long-standing practice, it’s likely that ODA spending could fall below the already adjusted ODA target of 0.3% of GNI. The FCDO will also lose its status as ODA ‘spender’ and ‘saver’ of last resort.

With little apparent effort on the part of the government to limit the likely catastrophic impact of these cuts, which the ONE campaign estimates may threaten the lives of 600,000 people, the latest SIDs data must be considered in the context of the government’s decision to drastically cut ODA.

With this is mind, what can the provisional SIDs tell us about the pressures that will be placed on a significantly reduced ODA budget going forward?

Continued high asylum costs will place intensified pressure on a significantly reduced aid budget

Overall, the UK ODA budget dropped from £15.34bn (0.58% of GNI) in 2023 to £14.07bn (0.5% of GNI) in 2024.  At the same time the amount the government spent on supporting refugees and asylum seekers in the UK (referred to as in-donor refugee costs or IDRC) fell to £2.8bn down from £4.3bn in 2023. The ODA spent domestically within the UK on supporting refugees and asylum seekers stood at 20.1% of the total ODA budget in 2024. The declining share of ODA spent on IDRC is welcome, but the drastically reduced ODA budget means that the portion of ODA spent on IDRC will continue to place pressure on a tightly constrained ODA budget.

Notably, despite being the largest spender on IDRC amongst government departments, the reduction by the Home Office only contributed £567million to the total £1.4bn reduction in IDRC spending, bringing Home Office spending to roughly the same levels as in 2022. ICAI has previously pointed out that the Home Office’s high spending on hotel accommodation for asylum seekers is one of the main drivers of these costs, raising concerns not only around poor value for money but also around safeguarding for those seeking refuge and asylum in the UK.

While the government has taken welcome steps to turn around the asylum system, the provisional SIDs show that, particularly the Home Office, has not gone far enough to reduce these costs. The cuts of the aid budget from 0.5% of GNI to 0.3% by 2027 makes it all the more crucial to find more cost-effective solutions by ending the use of hotels as soon as possible.

Continuing to allocate £2.8 billion of UK aid for expensive asylum accommodation costs within the UK is unsustainable, inefficient, and undermines crucial development and humanitarian efforts that address the root causes of insecurity and displacement. While it is essential to support refugees and asylum seekers in the UK, this should be managed with a separate budget, and the use of costly and unsuitable hotels for accommodation must be brought to an end.

Where did the remaining budget go?

Bilateral ODA saw a slight increase (12.6%) in 2024 to £11.3bn, while humanitarian assistance increased by 60.5% to £1.4bn.

As for regional allocations, Africa saw the largest increase by 41%, meaning for the first time since 2021 the percentage share of regional-specific bilateral ODA for Africa reached over 50%. This is very welcome, given that spending in Africa has been deprioritised for several years.

However, these positives are overshadowed by the fresh round of aid cuts which will have some serious implications for the bilateral budget. In a letter to the chair of the International Development Committee, Minister Baroness Chapman announced that bilateral aid spending has been set to meet only existing contracts, with a few exceptions, including Ukraine, the Occupied Palestinian Territories, Sudan, and the Overseas Territories. Without doubt, this will reverse any progress made in 2024.

At the same time, multilateral spending has hit an all-time low in 2024, with an allocation of only £2.8bn or 19.9% of total UK aid – making this the lowest percentage share since these statistics were first published and the only time that the multilateral budget went below 30% of total ODA, with the exception of the 24.6% spent in 2022.

With aid cuts coming into effect immediately the provisional SIDs hint at the damaging trade-offs between bilateral and multilateral allocation decisions that the government will have to make in order to meet their reduced budget. The Global Fund for Aids, TB and Malaria (GFATM) and the Global Partnership for Education (GPE), and GAVI (the global vaccine alliance) are still all up for replenishment in the coming months.

What next for UK aid?

It’s now a matter of urgency that in-donor refugee costs are brought down, and that any savings are returned to the FCDO to allocate to overseas programmes. As well as continuing to address blockages at all stages of the asylum process, we urge the government to end the use of hotels for housing asylum seekers as soon as possible and making use of the 2026 break clauses. Instead, we recommend scaling up the use of more cost-effective and appropriate community housing for asylum seekers by giving local authorities responsibility and resources to accommodate people seeking asylum, rather than private companies.

We are also calling on the government to set out a transparent and consultative process for assessing the impact of the anticipated cuts and deciding what to prioritise, with an emphasis on targeting the remaining ODA in countries and sectors focused on alleviating poverty and inequality and reaching the most marginalised people.

The government must also urgently make good on their manifesto pledge to tackle unsustainable debt, as well as supporting efforts to reform global tax and trade systems, making these more equitable, and tackling illicit financial flows from low- and middle-income countries (LMICs). The upcoming 4^th International Conference on Financing for Development will be an important moment for the UK to show their ambitions and work with LMICs and civil society on these issues.