Britain halves its foreign-aid budget

Britain used to pride itself on being a star among those helping poorer parts of the world. In 2020 it was one of only seven countries that told the OECD, a club of mostly rich countries, that it met the UN’s target of spending 0.7% of gross national income (GNI) on aid. But its politicians keep reducing such aid. In 2021 the Conservatives controversially cut aid spending from 0.7% of GNI to 0.5%. Now Sir Keir Starmer has said that he is chopping it again in order to find extra cash for defence. The latest cut will be to the bone. Aid spending will be just 0.3% of GNI in 2027—not enough to cover everything diplomats have already promised to poor countries.

Since 2020 the biggest use of this money has been spending on asylum-seekers within Britain. By 2023, 28% of the aid budget was spent in Britain, compared with just 3% of it in 2016. A quirk of the OECD’s rules for counting official aid lets countries include the cost of resettling those claiming asylum in the 12 months after they arrive. In 2023 asylum-seekers soaked up £4.3bn ($5.3bn) of the £15bn total. Aid for war zones outside Ukraine was only £743m.

Asylum will probably continue to consume as much cash as before, if not more. It seems unlikely to be on the chopping block. In the year ending September 2024 the number of people who arrived in Britain seeking asylum rose by 1% against the same period the year before.

Instead, Britain’s spending in poor countries will shrink. But how? Take a glance at what has already been promised in international agreements. The list is not short. It spans handouts worth £12bn to reduce emissions overseas between 2021 and 2026, most of which is yet to be spent; billions of pounds to rebuild Ukraine; and £2bn committed to the World Bank between 2025 and 2028. Along with spending on asylum, an average year of just these three expenditures would have used up 0.3% of 2023 GNI. Reneging on such promises would be embarrassing for the government.

That leaves aid given directly to poor countries. Schools, clinics and bilateral handouts to governments which have relied on British aid for decades to alleviate poverty could take the hit. Such spending has been the backbone of British aid since the 1960s. But there is no longer enough cash to do it all. Sir Keir may think that cutting foreign aid was the least painful way to make room for more defence spending. But he has left himself some nasty choices. ■

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