Foreign Office diverts £4.3bn of overseas aid budget to refugees in UK

Critics say depleted budget is weakening Britain’s ability to respond to global crises

Migrants arriving on shore in southern England. UK government spending on 'in-donor refugee costs' rose by £600 million in 2023. EPA

The UK Foreign, Commonwealth and Development Office (FCDO) diverted £4.3 billion ($5.4 billion) of overseas aid funding to support migrants and refugees in the UK last year, new figures have shown.

Spending on “in-donor refugee costs” rose by £600 million in 2023, while the overall aid budget increased by about £2.6 billion.

For the second year running, more than a quarter of the UK’s total aid budget was spent on refugees, although its share of the overall budget fell slightly from 28.9 per cent to 27.9 per cent.

International rules allow countries to count first-year costs of supporting refugees as overseas development assistance (ODA), with the amount spent in future expected to be less than in previous years.

But the practice has been criticised for reducing the amount that can be spent on developing countries, with MPs on the Commons International Development Committee accusing the Home Office of conducting “raids” on the ODA budget.

As in previous years, the FCDO said the majority of the increase in spending on refugees was “due to Home Office spend”, which rose by £559 million in 2023.

International Development Committee chairwoman Sarah Champion said the higher spending on refugee costs in the UK was “deeply worrying”.

“We have expressed our concerns on a number of occasions and ministers are still not listening," she told PA.

“Almost 30 per cent of our aid is being spent on refugee costs – nearly five times our bilateral spend on emergency international humanitarian aid.

"We do not believe that UK ODA is being spent in the spirit of the OECD [Organisation for Economic Co-operation and Development] rules.”

Shadow international development minister Lisa Nandy said it “beggars belief” that the UK government was using the ODA budget to “bail out their failing asylum system with a blank cheque”.

“This is sticking-plaster politics at its worst, terrible value for money for British taxpayers and is no way to run the development budget or the Home Office," she said.

Tamsyn Barton, chief commissioner of the Independent Commission for Aid Impact (ICAI), said allowing the Home Office to spend “an unlimited amount” on hosting asylum seekers at the expense of the FCDO’s budget “sets the wrong incentives” and raises concerns about value for money.

“What’s more, using so much of the aid budget on UK asylum hotels, rather than on supporting people nearer home, is inequitable and inefficient," she added.

ICAI has previously warned the passing of the Illegal Migration Act might mean people arriving by irregular routes are no longer eligible for UK aid, an issue Ms Barton said “appears still to be unresolved”.

News that the amount of ODA being spent in the UK had increased again has been criticised by the international development community.

Migrants arriving in Europe - in pictures

Gideon Rabinowitz, from the UK aid NGO network Bond, said the government “seems to have lost its grip on UK aid spending”, weakening Britain’s ability to respond to global crises.

“NGOs are once again seeing vital funding for emergency support programmes in Somalia, Yemen and elsewhere being cut or held back, and we suspect this is due to escalating Home Office asylum costs taking an increasing chunk of the UK aid budget," he said.

“The government must stop seeing the UK aid budget as the primary pot for this spending, given that it is legally required to support poverty reduction in lower-income countries.”

Ian Mitchell, senior fellow at the Centre for Global Development, said the figures underlined the UK’s “poor and deteriorating” record for spending on locally led development, with about half the bilateral aid budget now being spent in Britain.

“The UK spent over £15 billion on development last year, including on life-saving humanitarian aid in Gaza, in Sudan following the coup, and in Turkey and Syria after the earthquake," a UK government representative said.

“Our spend in 2023 also helped fragile states to access finance, millions of women globally to receive family planning support and is tackling the effects of climate change. We are also nearly doubling our spend in low-income countries this financial year.

“Last year’s budget was boosted by additional funding to support refugees in the UK, who have escaped oppression and conflict overseas, including from Ukraine and Afghanistan. We will continue to ensure our aid budget delivers value for money for British taxpayers.”

On Wednesday, the Home Office also announced it would close more asylum hotels in the coming weeks, bringing the total number of hotels returned to normal use to 150 by the beginning of May.

The number of asylum seekers being housed in hotels has fallen by more than a third in the past six months, as the government moves residents into private rented accommodation and “large sites” such as the Bibby Stockholm barge.

Overall, the UK spent £15.4 billion on overseas aid in 2023, equivalent to 0.58 per cent of GDP and the highest proportion of national income on aid since 2021, when the government said it would temporarily reduce its target for aid spending from 0.7 per cent of GDP to 0.5 per cent.

Much of the increase came from spending through multilateral channels such as the World Bank, which rose 75 per cent to £5.5 billion thanks in part to the FCDO delaying several large payments from 2022 to 2023.

Bilateral aid spending by the FCDO fell by £460 million, primarily due to a reduction in spending on aid to Asia.

Africa remained the main recipient of bilateral aid from the FCDO, receiving £1.1 billion – roughly the same amount as in 2022.

The amount of bilateral aid spent on humanitarian assistance fell from £1.1 billion to £888 million.

Ms Champion welcomed the increase in overall aid spending but said it was still “far short of the government’s manifesto commitment”.

“We can see from the significant cuts in programming in Asia, as well as those to humanitarian assistance, that much more aid is needed internationally, so there is little in these figures to celebrate," she added.