Inside the UK aid cuts: What will the 0.3% budget cover?

U.K. Prime Minister Keir Starmer recently announced that the country would slash its aid budget to just 0.3% of gross national income by 2027 — the lowest level since 1999. That’s down from 0.5% at the moment, and from 0.7% just a few years ago. What might those cuts look like in practice? First, let’s look at the numbers. The U.K. spent £15.3 billion on official development assistance in 2023, the latest year for which official figures are available. When the full cut comes into force in 2027, it’s expected to reduce the budget to £9.2 billion, based on economic forecasts. That’s a drop of around 40% in just four years. Although NGOs are advocating for the decision to be reversed, they’re not optimistic — so the key question now is how to soften the blow. “There is a way to do this that would cause the least damage,” said Gideon Rabinowitz, director of policy and advocacy at Bond, a network of U.K. aid NGOs. But, “We think we’re quite far away from that at the moment.” When will the cuts begin? One outstanding issue is whether cuts will begin before 2027. Aid advocates are pushing the government to keep the budget at 0.5% until then, allowing it to front-load multilateral commitments in the next few years and push through some big payments before the cuts come in. “It’s got to get [nearly] £2 billion out the door for the World Bank IDA [International Development Association] over the next three years,” said Rabinowitz. “Why not pay that upfront and then you’ll have more resources for bilateral programs and other priorities in the years in which you’re moving to 0.3?” There’s also £3.5 billion of climate spending that needs to be delivered next year due to a previous commitment, which will be difficult to achieve if funding has already started to be cut. In a parliamentary debate on March 5, Stephen Doughty, a minister of state at the Foreign, Commonwealth & Development Office, indicated that the government was still reviewing aid budgets for future years. However, experts believe that while the budget will likely be protected for the rest of this year, cuts will begin in 2026. Spending on refugees within the UK The other major consideration is the amount of aid spent domestically, and whether the government might change its policy on that to preserve more funding for overseas development. If not, researchers predict that in-donor refugee spending could consume about a third of the remaining aid budget in 2027. There’s been controversy in recent years over the proportion of the aid budget that is used to support refugees within the U.K. This is allowed within the international aid rules set by the Organisation for Economic Co-operation and Development’s Development Assistance Committee — at least during the refugee or asylum-seeker’s first year in the country — but many aid advocates believe that spending money within the U.K. is not a proper use of the funds, which are intended to support lower-income countries elsewhere in the world. The U.K. spent £4.3 billion of aid on supporting refugees in 2023, although that number is expected to fall as the government works to clear a backlog of cases. The Center for Global Development calculated that about £3 billion of refugee costs would be taken from the aid budget in 2027 if per capita costs remain the same, but Ian Mitchell, co-director of CGD’s Europe program, anticipates that the real figure will be lower than that, describing £2 billion as an “optimistic estimate.” That would reduce the amount of money available for overseas development spending to about £6 billion-£7 billion. There is also a smaller amount of other money spent domestically on things like administration and research. The aid community is advocating for the government to limit the amount of asylum costs that come from the aid budget. That could happen by reducing the per capita cost, capping the amount that can come from the aid budget, or counting some or all of the allowable expenses outside of that budget. However, the government has not previously proven amenable to these ideas, despite intensive lobbying from the aid community. Following the announcement of the cut, the prime minister was asked in parliament if the government would consider setting a deadline for taking asylum costs out of the aid budget, but he avoided giving a direct answer. In response to a query from Devex, an FCDO spokesperson said: “We’re working to tackle [the asylum backlog] at record pace so we can end spending on hotel bills and use more of the ODA [official development assistance] budget on our international development priorities overseas.” “Detailed decisions on how the ODA budget will be allocated are being worked through as part of the ongoing Spending Review,” which will be ready by June, the spokesperson added. What would the remaining money be spent on? In his announcement, Starmer said the U.K. would continue to play “a key humanitarian role in Sudan, Ukraine and Gaza, tackling climate change and supporting multinational efforts on global health and challenges like vaccination.” But in her resignation letter, former development minister Anneliese Dodds — who quit the government after the cut was announced — said “it will be impossible to maintain these priorities given the depth of the cut.” For her part, Dodds predicted that the cut would “lead to a UK pull-out from numerous African, Caribbean and Western Balkan nations … It will [also] likely lead to withdrawal from regional banks and a reduced commitment to the World Bank.” During the March 5 debate, Doughty indicated that decisions about specific programs hadn’t yet been made, but CGD’s Mitchell said that money will almost certainly have to be taken from both the bilateral and multilateral budgets. There are several multilateral replenishments coming up, including the Global Fund to Fight AIDS, Tuberculosis and Malaria, Gavi, the Vaccine Alliance, the Global Environment Facility, and the African Development Fund. That gives the government an opportunity to lower its commitments to those institutions — although it is co-hosting the Global Fund replenishment this year, which is expected to offer it at least some protection. “Our sense is that they are looking more favorably at the Global Fund replenishment,” said Rabinowitz. If there were to be a blanket 40% cut across the U.K.’s multilateral commitments, the ONE Campaign estimated that it could result in 37.9 million fewer children immunized against diseases like measles, polio, and rotavirus; 606,000 fewer deaths averted over five years due to reduced immunizations from Gavi; and 293,000 fewer schoolchildren receiving food assistance through the World Food Programme. Looking at the bilateral budget, the U.K.’s focus will have to be narrowed both geographically and sectorally, said Mitchell. There are three key routes it could take: the traditional Labour focus on poverty and health; the economic development agenda pursued by the previous Conservative government, which focused more on business and international investment; and a climate-first approach. “At the moment, it [the U.K.] does all three but it almost certainly won’t be able to do all three after the cuts,” Mitchell said. There are pulls in various directions. Advocates said that, given the reduced budget, it’s more important than ever to spend it on traditional development goals where it can have the biggest impact, rather than in areas that are perceived to benefit the U.K., such as migration and business. The sectors mentioned in Starmer’s speech — global health, climate, and humanitarian support — could indicate that this is the approach he intends to take. But, Mitchell said, as “the U.K. has followed the U.S. into this, and the U.S. is going down a road of cutting all of that [traditional aid] spend and maybe keeping on with some of the more transactional aid approaches, I think there is a risk that the U.K. could follow suit down that path.” The cut has proven broadly popular with the public — a YouGov survey found that 65% of the U.K. population supported the decision to cut aid in order to boost defense spending, and that support existed among voters across all the main parties. That means that, for now, there is little pressure on the government to reverse the decision or reduce the size of the cut. However, a budget of 0.3% of GNI minus refugee costs “is a very small international budget for a G7 country,” said Mitchell. And “over the course of that period [leading up to 2027] … as it [the U.K.] hosts the Global Fund replenishment, as it tries to assert its climate leadership, I think it may find that it’s genuinely too small to do what it wants.”