MPs are worried the Home Office has a "blank cheque" to spend aid money on supporting refugees within the UK, the chair of the International Development Committee has warned – as the chancellor allocated an extra £2.5bn to support refugee services.
Up to £5bn of Official Development Assistance may have been spent on in-country refugee funding so far, said Sarah Champion.
And the committee is concerned about a lack of transparency about how the money is being spent, the IDC chair said. “What we fear is the Home Office has a blank cheque,” she said.
The MPs found the Home Office so obstructive when they enquired about how ODA is used to support refugees in the UK, Champion said, that they have resorted to launching an inquiry into the subject.
The IDC opened an inquiry on 16 November into the government’s aid spending on refugees, after it was unable to get the information through the “usual channels.”
The announcement came just ahead of yesterday’s Autumn Statement, which allocated a further £1bn this year and £1.5bn in 2023-24 to “help meet the significant and unanticipated costs which have been incurred” by hosting refugees. Documents published alongside the statement did not specify whether the funding would come from the aid budget.
The committee has been asking the Home Office for information about its aid spending since the summer, but has been unsuccessful, Champion said.
The inquiry will examine whether using ODA to support refugees within the UK is an “efficient, effective and ethical” use of public funds. The IDC's main concern is that the combination of reduced aid funding in the last two years and allocation of the funds to other ministerial departments to support refugees domestically limits the intended use of the money to bolster international development.
Spending ODA funds within the UK is not illegal. But Champion said this use of aid cash “goes against the spirit” of the aid budget’s intention to support “the world’s poorest people” overseas, and makes the UK look “hypocritical”.
Champion said the ODA budget has come under extra pressure in the last 18 months as the UK has accepted significant numbers of Afghan and Ukrainian refugees, as well as additional “migration challenges”.
This problem is coupled with the reduction in the international development budget in 2020 of about £15bn to £10bn, according to Champion. Then-chancellor Rishi Sunak reduced the UK’s commitment to spending 0.7% of Gross National Income on ODA to 0.5% amid the economic fallout from the coronavirus pandemic.
Hunt said in the Autumn Statement that in light of economic pressures, it would “not be possible to return to the 0.7% target until the fiscal situation allows”.
“We remain fully committed to the target and the plans I have set out today assume that ODA spending will remain around 0.5% for the forecast period,” he said.
Under Organisation for Economic Cooperation and Development rules, the Home Office may use ODA funding to support asylum seekers during their first twelve months in the UK.
Champion accused the Home Office of putting a “raid on the FCDO’s budget” by using money to support services for in-country refugees instead of developing countries. While the funds are shared across multiple departments, the largest proportion is spent by the Foreign, Commonwealth and Development Office, which oversees aid spending.
Champion also criticised the Home Office’s lack of transparency about how it spends aid money. “If we’re right and they are spending all this money, it goes against the spirit, not the rules,” she said.
The committee will be looking for information on how the ODA budget has been spent this year; how the use of the aid budget to support refugees in the UK relates to the OECD guidelines; and the impact of using aid to support domestic schemes on the delivery and maintenance of UK-funded programmes in low-income countries.
The IDC will also examine: how the Foreign Office and other government departments work together to account for, allocate and control aid spending in the UK; and if domesic aid spending is transparent enough to facilitate scrutiny by parliament, taxpayers and civil society.
A government spokesperson said: “There are significant pressures on the Official Development Assistance budget across government due to the costs of accepting people from Afghanistan and Ukraine, as well as wider migration challenges. Obviously, the number of refugees who arrive in any particular period is not certain, so there is not a fixed cost.
“We remain committed to international development and providing support to the world's poorest.”