Reduction in UK official development assistance spending

Spending review 2020

At the spending review in November 2020, the Chancellor, Rishi Sunak, announced a cut in UK aid spending. Instead of meeting a commitment to spend 0.7% of gross national income (GNI) on official development assistance (ODA), he said the Government would spend £10 billion in 2021–22, the equivalent of 0.5% of GNI. Mr Sunak said that because of the unprecedented emergency caused by the coronavirus pandemic, the Government had to make tough choices and needed to prioritise limited resources on jobs and public services. He said the Government’s intention was to return to the 0.7% target when the fiscal situation allowed.

The Government faced some 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”. However, Rishi Sunak argued at the spending review that the UK would remain the second highest aid donor in the G7, according to data from the Organisation for Economic Cooperation and Development (OECD). The most recent data from the OECD shows that in 2020, of the other G7 countries, Germany spent 0.73% of its GNI on ODA, France spent 0.53%, Canada and Japan both spent 0.31%, Italy spent 0.22% and the United States 0.17%, although the US expenditure was the highest in monetary terms.

The Institute for Fiscal Studies and the Center for Global Development described the projected 24% fall in UK aid spending between 2020 and 2021 as “a steep one-year fall and a potentially significant policy change”. They called for more clarity from the Government about how it will assess when to return to meeting the 0.7% target.

Statutory ODA spending target

The Government is under a statutory duty to meet the target of spending 0.7% of GNI on ODA each year. This is set out in the International Development (Official Development Assistance Target) Act 2015. The act also says that if the target is not met, the secretary of state must make a statement to Parliament explaining why, referring if relevant to: economic circumstances (for instance, a substantial change in GNI); fiscal circumstances and the likely impact of meeting the target on taxation, public spending and public borrowing; and circumstances arising outside the UK. The statement must also set out what steps the secretary of state has taken to ensure the target will be met the following year.

The Government suggested in 2020 it would legislate for the change of target, though it has not to date done so. Dominic Raab, Secretary of State for Foreign, Commonwealth and Development Affairs, said after the spending review that “given the requirements of the act, the fact we cannot at this moment predict with certainty when the current fiscal circumstances will have sufficiently improved and our need to plan accordingly, we will need to bring forward legislation in due course”. 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. Mr Raab said in January 2021 he was studying the requirements of the legislation “very carefully” and would set out further detail in due course on how the Government planned to proceed. He rejected suggestions the Government was “flouting” the requirements of the 2015 act by having announced a reduction in the target.

UK ODA spending in 2020

Provisional figures released in April 2021 show the Government met the 0.7% target in 2020. The UK’s ODA spending was £14.5 billion in 2020, compared to £15.2 billion in 2019—a decrease of 4.7%. This fall was driven by a decrease in GNI, and therefore a reduction in the value of the 0.7% target, because of the effect of the coronavirus pandemic on the size of the UK economy. The Government identified a package of £2.9 billion reductions in planned ODA spending in mid-2020 to allow it to meet, but not exceed, the lower 0.7% target for 2020. It said this was made up of underspends, delaying activity and stopping some spend. The Independent Commission for Aid Impact is currently conducting a review of the management of the 0.7% ODA spending target in 2020 but it will not cover the decision to lower the spending target to 0.5%.

UK ODA spending in 2021–22

Further work has been ongoing to allocate the overall ODA budget for 2021–22. Dominic Raab carried out a cross-government ODA review after the spending review. This concluded in January 2021. It set departmental ODA budgets in line with seven core priorities “in the overarching pursuit of poverty reduction”, namely: 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 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.

In March 2021, UK Research and Innovation (UKRI), the national funding agency for science and research, said its planned ODA funding from the Department for Business, Energy and Industrial Strategy (BEIS) for 2021–22 had reduced significantly. This left a £120m gap between allocations and commitments to grant holders. UKRI said the reduced ODA allocations would have “whole-system impacts in the UK and overseas”, including having to reprofile, reduce or terminate grants, and would mean it could not award new grants.

Integrated review of security, defence, development and foreign policy

What is the integrated review?

The Government previously had different plans for reviewing its ODA spending before the coronavirus pandemic took hold. In February 2020, the Prime Minister established an integrated review (IR) of foreign policy, defence, security and international development. The Government said it would cover all aspects of the UK’s place in the world, going “beyond the parameters of a traditional review by considering the totality of global opportunities and challenges the UK faces and determining how the whole of government can be structured, equipped and mobilised to meet them”. The Government expected the review to seek “new and innovative ways” to promote British interests overseas while continuing to commit 2% of GDP to defence and 0.7% of GNI to international development.

The IR was originally meant to run in parallel with a comprehensive spending review, with both due to conclude in autumn 2020. The Government said this would ensure departments were “equipped with the resources they need to enact the review’s main conclusions”. However, because of the coronavirus pandemic, the comprehensive spending review was scaled back to a one-year spending review. The week before the 2020 spending review statement, the Prime Minister announced the IR would conclude in early 2021. At the same time, he announced he was increasing defence spending by £24.1 billion over the next four years, raising defence spending as a share of GDP to at least 2.2 percent. Mr Johnson said the Ministry of Defence needed a multi-year financial settlement as equipping the armed forces required long-term investment.

The Government published the main conclusions of the IR in a command paper, Global Britain in a Competitive Age—The Integrated Review of Security, Defence, Development and Foreign Policy, on 16 March 2021. A separate Library briefing gives an overview of the IR.

What does it say about ODA spending?

The IR emphasises the need for an integrated approach to international work across government departments. It cites the creation of the Foreign, Commonwealth and Development Office in September 2020 as a key example of this, “integrating diplomacy and development to achieve greater impact and address the links between climate change and extreme poverty”.

The IR maintains 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 sets 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 (shaping the open international order of the future). 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 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.

Following the publication of the IR, the Foreign Secretary is due to lead a cross-departmental review to draw up a new international development strategy to ensure there is close alignment between UK aid and the objectives set out in the IR.

Responses to the IR

The Institute for Fiscal Studies and the Center for Global Development found there was little mention of the aid budget in the IR. They called for the forthcoming international development strategy to have clear and measurable objectives, a rigorous results framework and to be underpinned by robust budget allocation and evaluation processes.

Baroness Anelay of St Johns (Conservative), chair of the House of Lords International Relations and Defence Committee and a former minister in both the Foreign and Commonwealth Office (FCO) and the Department for International Development (DFID), said that a vision for international development, an “essential component of Britain’s international engagement”, was “absent” from the IR. She observed the IR contained “no acknowledgement of the impact of a precipitous drop in the aid budget, and no strategy for mitigating the impact of this decision”. She argued the commitment to use ODA “more strategically” was “an implicit criticism of past policy which sheds little light on a new approach”.

Sarah Champion (Labour MP for Rotherham), chair of the House of Commons International Development Committee, likewise observed there was “little more than a passing mention” of international development in the IR. She regretted that the reduction in the ODA target and the FCO/DFID merger had been “rushed through” rather than “properly explored” within the scope of the IR. She concluded the IR “has done little to alleviate fears that this is the beginning of the end for the UK’s development superpower status”.

Paul Abernethy and Abigael Baldoumas of the international development network Bond welcomed aspects of the IR such as commitments to reducing global poverty, achieving the United Nations’ sustainable development goals by 2030 and prioritising tackling climate change and biodiversity loss. But they said the IR “confirms the international development sector’s worries regarding the future independence and integrity of UK ODA”, arguing it “lays bare the continued erosion of an approach to aid that is based on where the need is greatest and reinforces the trend towards the prioritisation of UK trade and security interests”.

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Cover image by DFID on Flickr.