What foreign aid is being cut, how much was being spent, and what happens next?
Sir Keir Starmer has announced that the government will cut aid spending to pay for a boost to defence. So what impact could this have on the various countries and bodies that receive aid?
Firstly, how much is aid being cut by?
Around £6bn per year will be taken out of the aid budget and transferred over to pay for defence.
That amounts to a reduction in aid spending from 0.5% of GDP – a measure of the size of the UK economy – to 0.3%.
Previously, the UK was mandated by law to spend 0.7% of GDP on aid.
However, this was lowered by the previous Tory government following the pandemic.
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Where could aid savings be found?
The government has so far only specified one area it wants to make savings in – the money that goes on housing asylum seekers in the UK.
This may not sound like aid funding in the traditional sense, but the costs of supporting refugees during their first year in the UK does count towards the official figure for development assistance.
What’s more, this spending has grown rapidly over the last few years.
According to the Independent Commission for Aid Impact (ICAI) – a body that scrutinises aid spending – it has increased from 4% of the aid budget in 2020 to 28% in 2023.
A large amount of this is driven by the cost of housing asylum seekers in hotels.
This figure should drop if the government can cut the number of people entering the UK illegally while also processing, returning or rehoming refugees more quickly.
That could mean more cash being diverted towards foreign spending. But if it can’t be reined in, then the cuts could fall more heavily on overseas projects.
What has been protected?
Downing Street says it is carrying out a “line by line” review of aid spending, meaning – in theory – any part of the budget could be cut.
To try and figure out what might be vulnerable, it’s probably easier to look at what is safe.
The government has already said it will prioritise “the most vital programmes in the world’s worst conflict zones” such as Ukraine, Gaza and Sudan.
Ukraine received the highest amount of bilateral aid (money given directly to a country) in 2023 with a spend of £250m.
Gaza and the West Bank received £42m, while Sudan and South Sudan were given £109m.
In total, that accounts for around a fifth of the total amount of bilateral aid allocated to specific countries.
This figure will also likely increase given the dire humanitarian situation in Gaza.
What about climate finance?
Climate finance is also included in the overall aid figure.
This includes spending to help developing nations respond to climate change and mitigate its impact.
It’s a key subject of debate at conferences like COP where richer industrialised countries make pledges to help poorer developing ones.
It’s also another area that – for now anyway – the government says it’s committed to.
In 2019, the UK announced it would double international climate finance by providing at least £11.6bn in the five years leading to 2025/26.
The ICAI says a lot of this is “backloaded” meaning a larger allocation is needed in the coming financial year.
What’s more, reductions during the pandemic have made the required increase even steeper.
Sticking to these big commitments will ringfence another large chunk of money and potentially focus cuts on other areas more deeply.
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So what is left?
One seemingly “unprotected” area is bilateral aid spending on countries that are not facing the most acute levels of war, conflict and humanitarian crisis.
There is precedent for targeting this type of spending when budgets are tight. According to the ICAI, reductions since 2019 have fallen predominantly on some of the longest-standing aid partners the UK has.
Pakistan has seen one of the biggest reductions, dropping from £305m to £69m between 2019 and 2023. Bangladesh’s allocation fell by 77%, while Ethiopia’s was cut in half.
It’s possible these figures could be reduced further as the overall amount of spending is cut back.
The government has also announced the halting of aid to Rwanda due to the government in Kigali supporting a rebel group that has captured parts of the Democratic Republic of Congo.
Downing Street says this is unrelated to the wider aid announcement.
But it does suggest that funding for countries associated with controversial, dubious or illegal causes could now be more at risk.
What about other humanitarian crises?
UN figures show the UK’s share of global humanitarian financing fell from 9.5% in 2019 to 2.9% in 2023 before increasing slightly to 5.9% in 2024.
As previously mentioned, the government has already committed to maintaining funding for Ukraine, Gaza and Sudan.
Given the dire situations in those regions, could this mean a reduced scope for funding other crises in places like Yemen and Syria? Or even a limited capacity to respond to crises that may come along in other countries?
Could funding for international bodies be cut?
A huge chunk of aid spending goes to “multilateral agencies” such as UN bodies, health organisations and the European Union.
According to ICAI, this form of aid has stayed relatively stable since 2020 – while other areas have been squeezed.
This is partly because contributions like this are often determined by fixed multi-year agreements and as such are harder to quickly back out of.
But if current funding levels are maintained, this would ringfence another big slice of spending and once again exaggerate cuts in other areas.
That said, a decision to cut funding for bodies like the World Health Organization or the World Food Programme would be politically controversial.
Parts of this budget will decrease over time though, as UK contributions to EU projects are due to gradually phase out by 2030 following Brexit.
What impact will this have?
The primary impact this squeeze will have is on the programmes and people in the countries that will see their funding cut.
Some will welcome this – pointing to a limited number of dubious-sounding programmes that UK money has been allocated to.
But others say the whole decision is a false economy because it increases the risk of instability turning into conflict in the countries affected, and as such ramps up the dangers posed to the UK and the world.
This is exacerbated – many say – by recent aid cuts announced by the US and other European countries.
This leaves ministers with a series of big decisions over what the UK wants to achieve strategically with its aid spend.
According to one senior figure at ICAI, aid spending at 0.7% of GDP allowed the UK to do lots of things in lots of areas.
A reduction to 0.3% – combined with existing spending commitments – will limit this and raise questions about whether certain regions should be focused on or if funding for international agencies should be revisited.
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Again, all of these decisions will have real-world consequences.
But they may also have a geo-political impact, especially if rival powers like China step in to fill the funding gaps.
The calculation in government is that the world has changed and as such, hard military power now matters a lot more than the soft power that aid can bring.