On 1 July 2021, the House of Lords is due to debate a motion moved by Lord Fowler (Crossbench) that “this House takes note of the importance of the UK foreign aid programme”.

This In Focus article considers this in the context of UK overseas development assistance (ODA). It includes recent commentary on the importance of aid spending, with much of this responding to the recently announced reduction in spending. It also includes links to further reading.

UK foreign aid spending in 2021/22

The Government has announced that it expects to spend £10 billion on overseas development assistance (ODA) in 2021/22. This represents 0.5% of expected gross national income (GNI) and is a reduction in aid spending from the legislative target of 0.7%. ODA allocation was £14.5 billion in 2020.

The reduced ODA spend was announced by Chancellor Rishi Sunak in the November 2020 spending review. He explained that it was a temporary reduction due to the difficult economic circumstances brought about by the coronavirus 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 allowed.

The Government faced criticism for this decision. For instance, 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, 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”. There were unsuccessful attempts in the House of Commons to force the Government to reverse the cuts.

There has also been debate about whether legislation is required to allow the Government not to meet the target. The International Development (Official Development Assistance Target) Act 2015, which sets the target, contains a section allowing the Government to miss the target for certain reasons, including economic or fiscal circumstances. However, Lord Garnier (Conservative), a former solicitor general, and Lord Macdonald of River Glaven (Crossbench), a former director of public prosecutions, have both argued that although the current legislation sets out what the Government must do if it fails to meet the 0.7% target, it may be unlawful for the Government to take a decision in advance not to meet it.

Further details on the announced reduction in ODA spending can be found in the House of Lords Library article, ‘Reduction in the UK’s 0.7 percent ODA target’, 18 June 2021.

Allocations of 2021/22 aid spending

Work has been ongoing to allocate the overall ODA budget for 2021/22. Foreign Secretary Dominic Raab carried out a cross-government ODA review after the spending review which concluded in January 2021. It set departmental ODA budgets in line with seven core priorities “in the overarching pursuit of poverty reduction”. These priorities were: climate and biodiversity; Covid and global health security; girls’ education; science and research; defending open societies and resolving conflict; humanitarian assistance; and promoting trade.

In April 2021, Mr Raab set out how the Foreign, Commonwealth and Development Office (FCDO) will spend its allocation of the overall ODA budget for 2021–22. This amounts to £8.1 billion, approximately 80% of the UK’s total ODA spending. The breakdown by thematic area is shown in the table below:

FCDO ODA allocation, 2021/22
Thematic area £m
Climate change and biodiversity 534
Covid and global health 1,305
Girls’ education 400
Humanitarian preparedness and response 906
Open societies and conflict 419
Science, research and technology 38
(plus thematic R&D)
Trade and economic development 491
Financial transactions 863
Programmes with cross-cutting themes 1,940
Arm’s-length bodies, international subscriptions and other fixed costs 1,219
Total 8,115

Mr Raab did not set out a country-by-country breakdown of planned aid spending, but he said the FCDO would spend around half its bilateral aid budget in Africa, and one third in the Indo-Pacific and South Asia, to promote open societies, reinforce trade links and promote climate change collaboration. The FCDO’s ODA to China will be reduced by 95% to £0.9m to fund programmes on open societies and human rights, although there would be some additional ODA this year only to meet the contractual costs of exiting former programmes.

Importance and impact of foreign aid spending

Government policy and statistics

The Government’s integrated review of security, defence, development and foreign policy (IR) emphasised the importance of aid spending for meeting its strategic objectives around the world. Published in March 2021, the IR maintained the UK will “remain a world leader in international development and we will return to our commitment to spend 0.7% of GNI on development when the fiscal situation allows”.

The IR set out a strategic framework to run to 2025, grouped under four overarching strategic objectives:

  • Sustaining strategic advantage through science and technology.
  • Shaping the open international order of the future.
  • Strengthening security and defence at home and overseas.
  • Building resilience at home and overseas.

ODA spending is identified as particularly relevant under the second strategic objective. The IR emphasises the Government’s plans to use ODA as a way of “increasing our impact as a force for good”. The Government intends to focus aid work on areas “which are important to a globally-focused UK and where we can have the greatest life-changing impact in the long-term”. It says the UK will maintain its commitment to Africa, while increasing development efforts in the Indo-Pacific.

The “Indo-Pacific tilt” is a key theme of the IR. It sets out an ambition for the UK to become “the European partner with the broadest, most integrated presence in support of mutually-beneficial trade, shared security and values” in that region by 2030. ODA spending is identified as having a role in this. The Government says it remains committed to development in a region that is home to a third of the world’s poorest people. It intends to work closely with like-minded bilateral and multi-lateral partners, including on global priorities such as girls’ education and tackling climate change. It describes using ODA “more strategically” in the region in support of its wider objectives and moving gradually from offering grants to providing UK expertise and returnable capital, including support to infrastructure, where countries can finance their own development.

The IR also stressed the importance of development aid for achieving the United Nations’ Sustainable Development Goals (SDGs) by 2030. It said the UK would remain a “world-leading international development donor” and would be committed to the fight against global poverty. It also said the UK would “support others to become more self-sufficient through trade and economic growth and increase our ability to achieve long-term change through combining our diplomatic and development expertise”.

The IR says the Government will ensure that all UK ODA is aligned to the Paris Agreement, reflecting a commitment to tackling climate change and its effects as a driver of future instability and poverty. The IR says the UK will “maintain a liberal approach to economic development, creating greater opportunities for all and modelled on open societies” and will “more effectively combine our diplomacy and aid with trade”. The UK will “continue to provide principled humanitarian assistance at moments of crisis”, including responding to unanticipated events, funding bilateral and multilateral programmes and leading a global campaign to protect 20 million people from catastrophic famine. To support this, the Government intends to promote the use of digital technology to provide faster and cheaper support to those affected by crises.

The Government’s statistics on ODA spending for 2019 reported that the £15.2 billion spent that year was split as follows:

  • 67.5% was spent bilaterally, eg allocated to specific countries or programmes; and
  • 32.5% was spent multilaterally, eg contributed through organisations such as the European Commission, United Nations and the World Bank’s International Development Association.

The majority of bilateral aid spending was spent on humanitarian aid (15% or £1.5 billion). Humanitarian aid encompasses emergency response (including the provision of food and other resources), reconstruction, relief and rehabilitation, and disaster prevention. The next highest proportion of bilateral aid spending was allocated to health (13.9%). The two regions receiving the most bilateral ODA were Africa and Asia, and the top five recipient countries were Pakistan, Ethiopia, Afghanistan, Yemen and Nigeria.

Most of the UK’s aid spending in recent years has been channelled through the Department for International Development (DFID) (now part of FCDO). The department’s most recent annual report, covering 2019/20, outlined the impact of its work and spending against six objectives: strengthening global peace, security and governance; strengthening resilience and response to crises; promoting global prosperity; tackling extreme poverty and helping the world’s most vulnerable; supporting a strong and resilient international system; and improving the value for money and transparency of UK aid. It summarised achievements as follows:

  • Supported 14.3 million children to gain a decent education, between April 2015 and March 2019.
  • Reached 32.6 million people, including at least 10 million women and girls, with humanitarian assistance between April 2015 and March 2019.
  • Reached 50.6 million children under five, women of childbearing age, and adolescent girls through our nutrition relevant programmes from April 2015 to March 2019.
  • Supported 23.5 million women and girls to use modern methods of family planning between April 2018 and March 2019.
  • Supported 51.8 million people to access clean water and/or better sanitation between April 2015 and March 2019.
  • Continuously supported 26 countries to manage their public finances more transparently since 2016, and 40 countries in 2018/19 alone.

On 23 June 2021, the Independent Commission for Aid Impact (ICAI) published a report assessing how the Government were implementing the ICAI’s previous recommendations intended to improve the effectiveness of government interventions and to assure taxpayers of the value for money of UK aid spending. The report raised concerns about an emerging issue with the transparency of UK ODA. It said that interactions with departments had become more challenging and that it was getting more difficult to obtain relevant information. It also described the Government’s response to the ICAI’s ongoing reviews and recommendations as “inadequate”. The ICAI believed this was partly due to the impact of and response to the coronavirus pandemic, but also due to the formation of the FCDO. It suggested these developments were slowing progress on implementing its recommendations.

Committee work

In a report on maintaining aid effectiveness published in July 2020 (prior to the announced aid cuts), the House of Commons International Development Committee emphasised the importance of ODA for poverty reduction. It discussed this in the context of the announced merger between DFID and the Foreign and Commonwealth Office (FCO) to create the new FCDO. It also emphasised that the coronavirus pandemic could exacerbate global poverty:

The pandemic has the potential to wipe out the development gains of the past 30 years, imposing a catalogue of challenges upon the poorest and most fragile countries. These societies are facing severe damage to their economies, combined with stretched national healthcare systems, reduced access to education and challenges to food security. The effects of the pandemic will be felt for years to come.

It claimed that combating poverty in other countries was in the UK’s national interest. For example, it said it improved the UK’s global standing and influence:

Through tackling poverty, UK aid extends the UK’s influence on the international stage, creating soft power. Whether through the response to the Ebola crisis, or support to refugees fleeing Syria, UK aid targeted towards the poorest and most vulnerable underlines the UK’s reputation for working towards the global common good, extending UK diplomatic influence at both bilateral and multilateral level.

The committee is currently running an inquiry into the future of UK aid, which includes scrutiny of the cut in UK aid. The committee has also highlighted the importance of protecting aid spending in reference to previous work. For example, it has queried the potential impact of the cuts on work to improve girls’ education in low-income countries and on helping countries deal with the impacts of coronavirus.

A number of organisations have submitted written evidence to the committee’s new inquiry, including the World Health Organisation (WHO) and Médecins Sans Frontières. Both have expressed concern about the impact of funding changes to the UK’s Accelerating the Sustainable Control and Elimination of Neglected Tropical Diseases programme (ASCEND), and therefore on efforts to combat neglected tropical diseases (NTD). The WHO said ASCEND provides “crucial funding to national control, elimination and eradication programmes in 19 countries”. It also stated there were no obvious alternative sources of funding to “fill the funding gaps that will be left by the exit of ASCEND”. In its written evidence, Save the Children UK said that because UK aid predominantly targeted the world’s poorest people, cuts to the UK’s aid budget “cannot be made without impacting the poorest and most vulnerable people in the world”.

The FCDO provided written evidence to the committee defending the cuts. On the impact of the changes, the FCDO said it had worked “over the last year with our supply partners in both the private and voluntary sector to help them adapt to the impact of the pandemic on the UK aid programme”. It said that allocation decisions for 2021–22 had been taken in line with objectives set out in the Integrated Review. The FCDO also said it was mindful of the impact of reducing or closing programmes on its supply partners and had considered FCDO programme managers’ advice on managing changes to specific programmes.

The following International Development Committee reports cover the importance of aid spending for addressing other specific global issues:

In addition, the chair of the House of Lords International Relations and Defence Committee, Baroness Anelay of St Johns, has written letters to Dominic Raab to express the committee’s opposition to the announced ODA cuts. In her letter of 25 November 2020, she said:

We regard ODA spending to be an essential component of the UK’s international engagement, which also complements the UK’s defence and diplomatic activity. Cutting the 0.7% commitment would undermine the UK’s ability to tackle major long-term global challenges, such as climate change and mass migration, damage the UK’s international influence and soft power, and further disadvantage some of the world’s poorest people.

Dominic Raab has responded that it was a difficult but temporary decision driven by the impact of the coronavirus pandemic on UK finances. However, he emphasised that the UK remained a “world-leading donor”.

External commentary

Bond (the UK network for organisations working in international development) states that aid spending is important to: help the world’s poorest and most vulnerable people; fight global disease outbreaks (such as Ebola); maintain and improve the UK’s global standing; and help end dependence on aid.

In 2018, it estimated that, since 2015, UK aid spending had:

  • Reached 17 million people, including 7.3 million women and girls, with humanitarian assistance.
  • Immunised an estimated 28.7 million children, saving 475,000 lives.
  • Reached 26.3 million children under five, women of childbearing age, and adolescent girls through nutrition related programmes.
  • Supported 7.1 million children to gain a decent education.
  • Supported 27.2 million people to access clean water and/or better sanitation.
  • Supported 30 countries to manage their public finances (including natural resources and extractives) more transparently.

It stated that aid spending can also help reduce future conflicts and the impact of global issues, such as climate change:

Aid is the smart thing to do because it is in our mutual interest. Helping the developing world to meet the challenges they face means a world with fewer preventable epidemics, less conflict and less poverty. It is smart because it creates a better world for all of us and future generations. Aid can be used proactively to lessen the chances of future crises or disasters by investing in resilience measures like climate change adaptation.

Climate change for example is a major threat to development, threatening to undo years of development to which UK aid has made such an important contribution. For example, typhoons and floods destroy entire communities, damage homes and property, while unpredictable seasons lead to poor or failed harvests for poor farmers, putting millions at risk of hunger.

Although it acknowledged that there are still questions as to how the announced ODA cuts will look in practice, Bond claimed their impact will be “devastating”. Based on analysis and information available by 20 May 2021, it presented projections about their impact. This included:

  • Save the Children has estimated that aid funding to tackle malnutrition has been cut in half, with funding to basic nutrition cut by 80% to less than £26 million.
  • United Nations Development Programme (UNDP) core funding has been cut by £33 million to £22 million, a 60% cut in funding. Bond calculated that the funds lost could have helped 1.2 million people to have better access to basic services; 350,000 people in crisis-affected countries to get a job or better livelihood; 280,000 people to gain access to justice; and 23 million hectares of land and marine habitats be protected, improved or restored.
  • UK funding to UNAIDS will be cut by 83%. Bond argued this cut would jeopardise the fight to end HIV by 2030.

Others, such as the academics Victoria Honeyman and Simon Lightfoot, have linked development aid to improving the UK’s trade links with other countries and to relationship building (often referred to as ‘soft power’). They state that it allows the “UK to push its agenda overseas, be it in terms of security, immigration or human rights concerns”. In addition, the British Council’s 2018 ‘Value of Trust’ report (which was based on polling of over 19,000 young people across G20 countries) found that the perception of the UK as a contributor of overseas development aid was the biggest factor driving trust in the UK Government and the second biggest driving trust in British people.

However, writing an article for the World Economic Forum website in 2014, the economist Sebastián Edwards noted that foreign aid spending is often controversial in development economics. He stated that some believed it was ineffective and has harmed poorer countries throughout the years. This is due to it potentially “creating dependency, fostering corruption, and encouraging currency overvaluation” and preventing countries from taking advantage of the opportunities of the global economy. In contrast, others believed more aid was necessary, and that “large increases” could reduce poverty.

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Cover image by DFID on Flickr.