More than £4bn of UK’s foreign aid budget spent in Britain

Large portion of spending goes on housing refugees, development analysts say

Analysts say a large percentage of the UK's foreign aid budget is spent at home. PA

The UK is now spending more of its international development budget at home than in poor countries, analysts said.

That is because a large proportion is being spent on housing refugees, mainly from Ukraine, according to the Centre for Global Development (CGD).

Prime Minister Rishi Sunak was criticised for cutting the foreign aid budget from 0.7 per cent to 0.5 per cent of national income when he was chancellor, as well as setting a precedent for letting the Home Office and other departments use the pot, and bending the rules on what can be considered aid.

The UK aid budget is about £11 billion, with about £4bn going to multilateral institutions, including the World Bank.

Of the remaining £7bn, which is controlled by the UK, more than half will be spent at home this year, including £3bn on housing refugees, according to CGD’s analysis.

While the UK is allowed to count refugee-hosting costs as official development assistance (ODA) under internationally agreed rules, it is one of a few countries — and the only one in the G7 — to fund all the costs of Ukrainian refugees from its aid budget, the Washington and London-based think tank said.

Ranil Dissanayake, policy fellow at CGD, said: “The development budget — the pot of money we put aside to help the world’s poorest people — is being squeezed from every angle.

“Not only was it slashed by almost a third, Rishi Sunak then set a precedent as chancellor for letting other departments claim whatever they could back from this pot.

“Saying we spend 0.5 per cent of our national income on aid is becoming meaningless, when such a huge proportion of this pot is being spent domestically, rather than on helping people facing enormous hardship across the world.”

One of the Conservative MPs who rebelled against Mr Sunak’s aid budget cuts last year, Andrew Mitchell, has now been appointed by the prime minister as development minister in the Foreign Office.

Mr Mitchell, a former international development secretary, could increase pressure on Mr Sunak to honour his pledge to return to 0.7 per cent international aid spending by 2024-2025.

However, the prime minister is considering freezing the budget for an additional two years — saving £4bn a year — as he looks for ways to plug a multi-billion pound fiscal gap, the Telegraph reported.

Mr Mitchell “focused strongly on results for the poor, and value for money — at the moment, the way budgets are handled they deliver neither,” according to Stefan Dercon, professor of economic policy at Oxford University’s Blavatnik School of Government.

He tweeted on Wednesday: “Aid is now only 0.3 per cent of GNI (gross national income) once we account for all asylum/refugee costs and other spending programmes for Ukraine inside the UK. That is now less than it was before 1997.”

He blamed the Home Office’s “[poor] management of accommodation costs in the UK” and predicted “more cuts to humanitarian spending for African and Asian crises, and less for those things the UK built a reputation for doing well”.

A representative at the Foreign, Commonwealth and Development Office said: “Across government, there are significant pressures on the 0.5 per cent ODA budget due to the costs of accepting refugees from Afghanistan and Ukraine as well as wider migration challenges. How many refugees arrive in any particular period is not certain, so there is not a fixed cost.

“We remain one of the largest global aid donors, spending more than £11bn in aid in 2021, and UK aid has recently gone towards those in need in the Horn of Africa and Pakistan.”