UK aid spending: Statistics and recent developments

On 15 December 2022, the House of Lords is due to debate the following motion:

Baroness Northover (Liberal Democrat) to move that this House takes note of His Majesty’s Government’s approach to Official Development Assistance spending.

1. What is Official Development Assistance?

The Development Assistance Committee (DAC), part of the Organisation for Economic Cooperation and Development (OECD), defines official development assistance (ODA) as grants, loans and other flows that:

• are provided by official agencies, such as governments
• are administered with “the promotion of the economic development and welfare of developing countries” as their main objective
• are offered on terms that are more generous than market rates—for example, grants or “soft” loans

ODA excludes military aid, peacekeeping and transactions that have primarily commercial interests.

The UK is a member of the committee and provides ODA under these terms. There are currently 31 members in total.

2. What is the UK’s ODA spending?

In 2021 (the latest figures available), the UK’s ODA spend was £11,423mn, a decrease of £3,054mn (21.1%) on 2020. The Foreign, Commonwealth and Development Office (FCDO) explained that this decrease was “driven by the government’s decision to reduce ODA from 0.7% of Gross National Income (GNI) to 0.5% in 2021”. The move from a 0.7% to 0.5% target is covered in section three of this briefing.

The following graph shows UK ODA spend since 1970, both as a proportion of GNI and in cash terms (£mn):

Figure 1: UK aid spend since 1970

£7,146mn of UK ODA (62.6%) was delivered through bilateral channels in 2021. This includes aid direct to programmes in countries/regions (such as Syria) and aid channelled to a specific country/region through a multilateral organisation (for example, funding the World Food Programme’s work in Yemen). This was a £2,386mn (25%) decrease from 2020.

£4,277mn of UK ODA in 2021 was delivered through core contributions to multilateral organisations. This is ODA given directly to a multinational organisation, such as the UN and its agencies, without being designated for a specific purpose and where it is then pooled with other donors’ contributions. At 37.4%, multilateral aid in 2021 was the highest proportion of UK ODA since 2014. However, the spend still represented a 13.5% (£668mn) decrease compared to the previous year.

2.1 Bilateral aid breakdown

Explaining the makeup of bilateral aid, the FCDO stated in its report that:

Bilateral ODA includes ODA to specific countries or regions as well as ODA to multiple countries and/or regions. Also included is ODA to specific sectors for which there are no designated benefitting country or region, or where benefitting countries are not known until the end of the programme.

The FCDO added that, in 2021, 47.9% (£3,421mn) of the UK’s bilateral ODA was allocated to a specific country or region. This was a reduction from 52.9% (£5,041mn) in 2020. It said this was partly due to an “increase in in-donor refugee costs which are not allocated to a benefitting country or region”.

Breaking down bilateral ODA spend by region in 2021 reveals that:

• Africa remained the largest recipient of bilateral aid from the UK, receiving £1,727mn (or 50.5%). However, this was a decrease of £883mn (33.8%) from 2020. The FCDO stated that the largest decrease in spend was in the humanitarian aid sector and the country experiencing the largest decrease was Ethiopia.
• Asia was still the second largest recipient, receiving £1,334mn (or 39%). This was a decrease of £639mn (32.4%) compared to 2020. Again, the largest decrease was in the humanitarian aid sector, with Bangladesh the country facing the largest decrease.
• The Americas received £196mn of UK bilateral ODA in 2021, a decrease of £77mn or 28.1% compared to 2020. The production sectors (such as agriculture) experienced the largest decrease.
• Europe received £154mn of UK bilateral ODA in 2021, a decrease of £12mn on the previous year. Turkey experienced the largest reduction.
• The Pacific region received £10mn, a decrease of £9mn from 2020. Fiji was the largest recipient.

UK bilateral ODA spend to the top five recipient countries (out of 132 countries) was £689mn. This was a decrease from £1,174mn in 2020, a reduction of 41%. These countries received around a quarter (24.5%) of the total country-specific UK bilateral ODA in 2021.

The top five countries are set out in the following graph:

Figure 2: Top five recipients of country-specific ODA in 2021

Afghanistan was the largest recipient, receiving £187mn. Explaining this, the FCDO stated:

Afghanistan has become the top recipient of UK bilateral ODA in 2021, after being the fourth largest recipient in 2020. This coincides with the humanitarian crisis and Taliban takeover. Compared to the other top five recipients, Afghanistan experienced the smallest bilateral ODA decrease in 2021 (£38m). Afghanistan has been in the top five since 2015, although 2021 is the first time it is the top recipient.

Ethiopia had been the largest recipient in 2020. However, its bilateral aid receipts from the UK decreased from £254mn in 2020 to £120mn in 2021. It is now the fourth largest country-specific recipient.

The largest sector for UK bilateral aid spending was ‘refugees in donor countries’ (£1,052mn). This was also the only sector that didn’t see a decrease in spending in 2021, with spend actually increasing by 67.6%. The DAC’s rules allow the costs of assisting refugees in donor countries to be accounted for as ODA by the country for the first 12 months they are there, but only for the costs associated with their basic subsistence (such as food and accommodation).

The other sectors in the top five for spending were: health (£970mn); economic infrastructure and services (£820mn); multisector/cross-cutting (£795mn); and government and civil society (£773mn).

2.2 Multilateral aid breakdown

Explaining some of the multilateral spending, the FCDO highlighted the money provided to the European Union and Gavi:

The EU remains the recipient of the largest core contribution from the UK. The UK’s share of the EU ODA budget in 2021 was £684 million compared to £1,149 million in 2020. EU attribution fluctuates from year to year because the EU works on a seven-year programming cycle and so EU disbursements in any given year can vary. The UK’s share of EU ODA spend (European Development Fund and the Development share of the EU Budget), will continue on a declining scale until approximately 2029, in line with UK commitments.

Gavi, the Vaccine Alliance (Gavi) received £222 million from FCDO in 2021, an increase of £22 million from 2020. This funding supported Gavi to restore immunisation services affected by the pandemic, and to strengthen health systems to increase their resilience to COVID-19 and future disease outbreaks.

2.3 Contributors of UK ODA

The vast majority of the UK ODA spend in 2021 came from the FCDO. It accounted for £8,175mn (71.6%) of ODA.

However, the share of total ODA spending by non-FCDO contributors (for example, other government departments) increased in 2021, from 26.3% in 2020 to 28.4%. Spending in 2021 from non-FCDO contributors was £3,248mn.

The Home Office was the largest non-FCDO contributor, spending £1,041mn in 2021, an increase of £444mn, or 74.3%, on 2020. The FCDO explained this was due to “increased accommodation costs for the rising number of asylum seekers coming to the UK and the ODA eligible costs of the Afghanistan Citizen Resettlement Scheme (ACRS)”.

2.4 Comparisons with other DAC countries

The FCDO provided analysis of the UK’s final spend for 2021 alongside provisional figures for the other DAC countries.

Overall, it found that total ODA spend from DAC countries was still trending upwards:

Net ODA is more than double the amount it was in 2000 in real terms. Total ODA from DAC country donors in 2021 was £130.1 billion (grant-equivalent measure), an increase from £126.5 billion in 2020. Total ODA from DAC country donors in 2021 is the highest level on record.

The UK was the fourth biggest contributor in 2021, falling from third in 2020. Provisional figures showed that the only countries above the UK were:

• United States (£30.8bn)
• Germany (£23.4bn)
• Japan (£12.8bn)

However, the United States’ contribution was only 0.18% of its GNI, well below the 0.7% UN target and also lower than the total DAC-wide contribution of 0.33%.

Only Germany both met the 0.7% target and contributed more than the UK or similar to the UK in cash terms. For example, the FCDO explained:

Luxembourg, Sweden and Norway each provided considerably less ODA than the United States in 2021, at £392 million, £4.3 billion and £3.4 billion respectively, but their ODA contributions each equate to over 0.9% of their national income. Sweden’s ODA:GNI ratio was 0.92% and Norway’s was 0.93%. Luxembourg had the highest ODA:GNI ratio at 0.99%.

Along with Luxembourg, Sweden and Norway, only Denmark (0.70%) and Germany (0.74%) met or exceeded the UN’s target of an ODA:GNI ratio of 0.7 per cent in 2021, since the UK reduced its target to 0.5 per cent. These same countries also met or exceeded the target in 2018, 2019 and 2020, alongside the UK.

France’s contribution was similar to the UK’s, contributing £11,230mn and 0.52% of GNI.

3. What is happening with the 0.7% target for aid spending?

The UN’s target for donor countries to spend 0.7% of GNI on aid spending originated from a UN resolution passed in 1970. The OECD explained that DAC members generally supported the target, with some exceptions:

DAC members generally accepted the 0.7% target for ODA, at least as a long-term objective, with some notable exceptions: Switzerland—not a member of the United Nations until 2002—did not adopt the target, and the United States stated that it did not subscribe to specific targets or timetables, although it supported the more general aims of the resolution.

The UK first met the target in 2013, and subsequently made a commitment to the target in the International Development (Official Development Assistance Target) Act 2015. The act made it a “duty” for the UK to annually meet the 0.7% target. If the target is missed, the government must lay a statement before Parliament that explains why and how it will be met in future. The statement can refer to one or more of the following factors:

• economic circumstances and, in particular, to any substantial change in gross national income
• fiscal circumstances and, in particular, the likely impact of meeting the target on taxation, public spending and public borrowing
• circumstances arising outside the United Kingdom

The UK met the target in each year from 2013 to 2020. However, in the November 2020 spending review, the then chancellor, Rishi Sunak, announced that annual UK ODA spend would be reducing to 0.5% of GNI. He said that it was a temporary reduction due to the difficult economic circumstances brought about by the Covid-19 pandemic and that the government needed to prioritise resources on jobs and public services. Mr Sunak said the government intended to return to the 0.7% target when the “fiscal situation allows”.

On 12 July 2021, Mr Sunak issued a written statement that set out the fiscal circumstances that would need to apply to return to the 0.7% spending target. These were that:

• the government was not borrowing to finance day-to-day spending (excluding spending on investment—also known as a current budget surplus)
• underlying government debt (public sector net debt, excluding the Bank of England, as a percentage of GDP), was falling

The House of Commons debated the policy on 13 July 2021, and then approved it by 333 votes to 298.

It is unclear when the fiscal circumstances to return to the 0.7% target will be met. The Office for Budget Responsibility stated in its November 2022 ‘Economic and fiscal outlook’ that, following the current difficult economic circumstances, the Treasury does not expect the conditions to be met in the current forecast period (running up to 2027/28). However, the Treasury did state that an additional £2.5bn will be provided to help cope with the issues impacting Ukraine and Afghanistan.

Further to this, there was a freeze on the UK’s “non-essential” aid spending between July and mid-November 2022. This was reportedly due to concerns about overspend and the cost of various crises (for example, support for Ukraine and its refugees). Writing to the House of Commons International Development Committee in October 2022, the then minister for development, Vicky Ford, explained:

Exemptions will remain in place for spending that is vital to protect against immediate threat to life and wellbeing, will prevent people falling into humanitarian need, or will prevent delays to accessing healthcare, primary education, sanitation and clean water, in addition to considering the value for money of any decisions.

The shadow secretary of state for international development, Preet Gill, criticised the freeze, fearing it would impact the world’s most vulnerable and could cost lives.

Speaking to the House of Commons International Development Committee on 6 December 2022, Andrew Mitchell, minister of state in the FCDO, stated that the ODA freeze was over but that the budget would still be “incredibly constrained” for the rest of the financial year. He also confirmed ODA spending had been stretched because of Home Office spending on refugees. However, he said that work was underway to try to put downwards pressure on the amount of ODA money being spent by the Home Office, and also highlighted the additional £2.5bn of funding announced by the Treasury. He said that due to these additional funds, in practice, the UK was working to a target of 0.55%.

The government has faced criticism for its decision to move away from the 0.7% target. For example, all five living former prime ministers called on the government to rethink the planned target cut. Sarah Champion (Labour MP for Rotherham), chair of the House of Commons International Development Committee, also argued that “supporting the world’s poorest is the right thing to do” and that the government should be “defining Global Britain as a force for good”. Similarly, Stephanie Draper, the CEO of Bond, a network of international development organisations, said:

This is a tragic blow for the world’s most marginalised people, and many questions remain as to when and how the decision will be made about when we will return to 0.7%. The amount we spend on aid has already declined this year and this significant additional cut will cost lives. We should be stepping up our support, not reducing it. We hope MPs from all parties will stop this from happening on our watch.

There were unsuccessful attempts to force the government to reverse the spending reduction, some involving members of the House of Lords and members of the House of Commons. This included questions and debate about the legality of the decision. Further information on this can be found in section three of the House of Commons Library briefing ‘0.7% aid target’ (29 November 2022).

4. What is the UK’s current international development strategy?

In May 2022, Boris Johnson’s government published a new international development strategy. The strategy had been foreshadowed by the government’s integrated review of security, defence, development and foreign policy, published in March 2021.

The strategy outlined four key priorities for UK aid spending:

• Deliver honest and reliable investment, building on the UK’s financial expertise and the strengths of the City of London, and delivering the prime minister’s vision for the clean green initiative, supporting partner countries to grow their economies sustainably.
• Provide women and girls with the freedom they need to succeed, unlocking their future potential, educating girls, supporting their empowerment and protecting them against violence.
• Provide life-saving humanitarian assistance and work to prevent the worst forms of human suffering, prioritising our funding and being a global leader in driving a more effective international response to humanitarian crises.
• Take forward our work on climate change, nature and global health. We are putting the commitments of our presidency of G7 and COP26, our global leadership in science and technology, and our Covid-19 response, at the core of our international development offer.

The strategy emphasised the importance of taking a “whole of government approach” to international development, while also working alongside UK businesses, civil society, academia and research centres. It also stressed the importance of UK defence and diplomacy services complementing development activities.

In addition, the strategy set out the government’s intention to take a “distinct” approach to international development, through:

• taking a patient approach which helps our partners to tackle the structural problems they face, building the strong economic and social foundations that underpin long-term development
• doing proportionately more through country and bilateral programmes, being a more responsive development partner to countries’ needs and more consciously geopolitical in approach
• using our world-class British expertise to support partner countries through providing advice, exchanging lessons and evidence of what works, and building partnerships across government, business and civil society
• stripping back excessive bureaucracy associated with delivering aid, giving our ambassadors and high commissioners greater authority and making it quicker to get programmes delivering on the ground

Regarding the geographical focus of UK aid spending, the strategy set out the government’s aims for different regions. For example, on Africa, the paper stated:

We will sustain our commitment to Africa, building partnerships with African countries that lead to a freer, safer, more prosperous, healthier, and greener continent. Geostrategic competition in Africa will intensify over the next decade, and the impacts of Covid-19, climate change and biodiversity loss are increasing the vulnerability of many countries and their citizens. Our response will articulate the benefits of freedom and openness for governments and their people—to achieve lasting growth, stability, poverty reduction, and reduced humanitarian need, in the face of growing challenges from authoritarian influence, zero-sum politics and disinformation. We will empower women and girls through 12 years of quality education, better sexual and reproductive health and rights, preventing violence and working to end preventable deaths.

In addition, it specifically outlined the UK’s commitment to address humanitarian, security and regional stability issues in North Africa and the Middle East, including Syria and Yemen.

Highlighting the “critical” importance of the Indo-Pacific region to the UK’s economy and security, the strategy said aid in the region would focus on building stronger economic ties, humanitarian support, improving girls’ education, and promoting free and open societies. It also emphasised working together on science partnerships and to address climate and biodiversity goals.

Addressing the situation in Europe, the strategy outlined the importance of a “secure and resilient” region. It said the UK would continue to help Ukraine and would also focus on strengthening the region’s security in light of the threats it faced; for example, by “supporting private investment in resilient, sustainable infrastructure” and helping build “economic and social freedoms which will underpin lasting resilience of societies and economies in the face of ongoing threat from malign influence and aggression”.

It also said it would work with countries in Latin America on key global challenges, such as “adaptation to climate change, protecting biodiversity and tackling deforestation in the Amazon and elsewhere, and supporting sustainable infrastructure and growth”.

Further information, including details of specific programmes, can be found in the full strategy. For example, the strategy highlights British Investment Partnerships. It explains that these are government and private sector partnerships which it hopes can “mobilise up to £8 billion of UK-backed financing a year by 2025 including from the private sector, targeting the main barriers to investment”. These focus on a number of different areas, including infrastructure and climate projects.

In addition to the strategy, the government also has a statutory duty to ensure UK aid is provided with the aim of reducing poverty and gender inequality. This is set out in section 1 of the International Development Act 2002.

5. What concerns have been raised about the UK’s aid strategy?

5.1 Response to development strategy

The response to the government’s aid strategy has been mixed, with many raising concerns about its focus on investment and taking a top-down approach. For example, the chair of the International Development Committee, Sarah Champion, said:

The foreign secretary’s strategy has two main thrusts. It advocates aid for trade—linking the provision of aid to access for UK goods and services. And it says more of our money should go on direct government-to-government spending rather than spending through international bodies such as the United Nations. I fear that adds up to a double whammy against the global poor.

We all want our exporters to do well and to create jobs in the UK. But aid for trade is dangerous. It can distort the core, legally stipulated purpose of our assistance—which is to support the poorest and most vulnerable whether in the countries of sub-Saharan Africa or in Ukraine. Supporting the poorest in the world should not be conditional on a trade deal or agreeing to investment partnerships. The UK has rightly been hugely critical of China for such an approach, so I fail to see why we are following down the same road. It is depressing and disappointing that the UK would devise a strategy like this.

Promoting bilateral aid over multilateral programmes might have advantages in some circumstances. For example, it can be more efficient by cutting out the middleman. But multilateral partners like the UN tend to be the first on the ground in humanitarian disasters and the last to leave. This strategy suggests shifting a significant amount of our spending away from multinationals without a clear assessment of the impact. That’s risky and may face legal challenges. The government must be sure the poorest and most vulnerable benefit from such a shift. If bilateral aid simply follows trade, the second punch of the double whammy kicks in—the poorest will lose out again.

However, she did welcome the strategy’s focus on women and girls, noting that they were often the most vulnerable and that support for them was often overlooked.

The director of the Institute of Development Studies, Professor Melissa Leach, raised similar issues, whilst also criticising the strategy for not taking a more overarching view on issues and not making the sustainable development goals an integral part. She explained:

The strategy’s emphasis on short-term, quick-win and often technical solutions is expedient for government but overlooks the deeper causes of poverty, vulnerability, and problems such as climate change and violence against women. Effective development needs to engage in the partnerships and forms of action that can tackle causes and so generate lasting improvements to people’s lives.

Universal challenges such as global health security and climate change require co-ordinated international responses, and the linking of local and national action with global level commitments and solidarities. Multilateral agencies such as the UN are best placed to lead and inspire these and whilst there is room for reform, we believe it’s short-sighted for the FCDO to cut support for them without a clear assessment of the impact this will have. The increased bilateral aid spend should not be tied to trade deals or investment partnerships but instead focused on supporting the most vulnerable communities to face our rapidly accelerating global crises.

Writing for the Royal United Services Institute, Simon Rynn acknowledged these views, accepting that top-down solutions have often led to “white elephant development projects” and that previous attempts to involve the private sector in development had “seen modest results”. He also agreed that reductions in aid spending and a “retreat from multilateralism” may have damaged the UK’s global standing and “hurt the poor”. However, he argued that a new approach may be warranted, stating that the international development landscape is “often dysfunctional and bureaucratic”, and that there have been failures to address inequality and make progress on the sustainable development goals. He hoped the new strategy may therefore offer some new direction:

Do the key ideas and directions set out in the new UK government strategy take us in the right direction? In this respect, the document is of mixed value. Many of its themes and preoccupations are not new at all (such as climate spending, humanitarian relief, and women and girls). And some headline-grabbing announcements are really continuations or enhancements of previous trends and themes […]

But some approaches are new. The strong emphasis on investment and alternative financing mechanisms is one. ‘British Investment Partnerships’ in which the UK government works with businesses are projected to raise £8 billion of financing by 2025, ‘including from the private sector’. British International Investment, which replaces the Commonwealth Development Corporation, will be a vehicle for this, helping to mobilise third-party capital including sovereign wealth funds and pension funds. There are also references to new economic partnership agreements, Free Trade Agreements with African states over goods and services, and a ‘Developing Countries Trading Scheme’ to help align trade and development […]

The new framings around investment in support of self-reliance, linked to the best of UK expertise, will tap into a section of the voting public’s sense of the UK as being simultaneously a force for good and the home of credible institutions. But it is also an attempt to marry international agendas with promotion of UK businesses, exports, science and technology, and a domestic ‘resilience’ agenda. By deploying UK expertise in fields such as health or law and order, benefits should in theory accrue at home. In these respects, the document is novel and interesting —could it even help to chart a course ahead in a time of populism and economic nationalism? Much will, of course, depend on where and for which parties the benefits are realised.

5.2 Impact of spending reductions

It is hard to ascertain the actual impact on development work and programmes due to the reduction in spending from 0.7% to 0.5%. However, the international development news website Devex has attempted to track the impact on a monthly basis. For example, it has listed some programmes closing and highlighted reports of lower or missed UK funding for health projects.

In addition, the International Development Committee said it had heard evidence that:

• over nine million women and girls will not have access to contraception as a result of the cuts
• 11 million children under five and women will be at risk of malnutrition
• nearly four million fewer girls will have access to a decent education

The National Audit Office (NAO) published a report in March 2022 considering how the spending reductions were being managed. Some of its key findings included:

• reducing the total ODA budget by £4.2bn through a one-year spending review, with a very short time for allocation decisions, increased risks to value for money
• the FCDO had a clear, centralised approach to allocating a reprioritised and reduced ODA budget, but this did not fully consider the impact on outcomes
• prioritising some existing government spending commitments meant that the FCDO’s budget for its bilateral programmes was reduced by 53%, more than the overall reduction in ODA
• the FCDO’s local teams had to make significant reductions in budgets, leading to some programmes being modified or stopped early
• lack of transparency in the approach to and outcome of ODA changes affected the quality and scrutiny of the allocation decisions and contributed to uncertainty in the sector

The NAO concluded that the FCDO should look carefully at the impact of the changes when assessing future ODA allocations:

The speed and depth of reductions, combined with the reprioritisation of spending, has had an immediate impact locally as FCDO country offices looked to modify or bring programmes to an end ahead of schedule. While it is too early to assess the impact of these changes on long-term value for money, building its understanding of this impact will help the government with its approach to future budget allocations—including a return to the 0.7% target—for which it should have more time and certainty.

5.3 Spend on refugees

Concerns have also been raised about the proportion of funding being spent on refugees in the UK. For example, the Centre for Global Development think tank stated that the UK was taking in the highest number of refugees for four decades, but that this was coming at the expense of other aid programmes. It highlighted five findings from its work on the subject:

• The UK is expecting to receive its highest number of arriving refugees and asylum seekers for at least 40 years. Our analysis suggests around 270,000 arrivals, compared to a recent average of just under 40,000 with the vast majority of the increase from Ukrainian refugees.
• The UK has almost doubled how much in-donor refugee aid it reports per recipient compared to pre-pandemic levels; and out of all DAC countries, only Hungary claimed more aid per recipient than the UK in 2021.
• While it’s technically allowed to count refugee hosting costs as ODA, few countries, and none of the G7, are funding all the costs of Ukrainian refugees from their existing aid budget. The UK is.
• This could mean that up to £3bn, a quarter of the UK’s annual aid budget, is spent on hosting refugees in 2022.
• Even with freezes in existing spend, increases in the aid budget from higher national income and expected reductions in payments to the EU, cuts of £900mn for aid programmes, some 8 percent, will still need to be made in 2022 to finance this. This would be the third round of cuts to these programmes in three years; and will be a significant blow both to the 131 countries receiving UK support and to the UK’s reputation.

The House of Commons International Development Committee has launched an inquiry on the subject. This will consider how the money is used to support refugees in the UK and the impact this has on other aid programmes. The committee is also running an inquiry looking at aid provided to other countries that host large numbers of refugees.

In addition, the House of Commons Library has published a briefing giving further background on UK spending on UK-based refugees: ‘The UK aid budget and support for refugees in the UK in 2022’ (9 November 2022).

---

Cover image by DFID on Flickr.