A committee of MPs has lambasted the Treasury for refusing to ringfence the UK’s aid budget for overseas spending, calling its response to their recommendations "pathetic".
The International Development Committee had recommended that the 0.5% of Gross National Income currently reserved for overseas development aid should only be spent on people in the poorest countries – rather than the current situation where much of it is spent on refugees and asylum seekers in the UK.
It made the proposal after raising concerns about the proportion of aid being spent within the UK. The Home Office spent £3.7bn of ODA in 2022 – more than a quarter of the £12.8bn budget for the year – mainly on hotel accommodation for refugees.
But John Glen, chief secretary to the Treasury, said the government “cannot accept” the suggestion as it is "not affordable in the current highly challenging economic and fiscal context”.
In a letter to the committee, the minister said the government has mitigated the pressures on the aid budget, mostly caused by the Home Office’s increasing use of it, by topping up it up with an extra £1bn in 2022-23 and £1.5bn in 2023-24.
The UK currently aims to spend 0.5% of GNI on ODA, until debt is falling as a percentage of GNI, when it can rise again to 0.7% – the United Nations target. However, the Autumn Statement boost has pushed spending up to 0.55%.
Glen said the government has also been working to strengthen the value for money and effectiveness of support offered to refugees and asylum seekers in the UK, which would “reduce ODA eligible costs”.
In response, IDC chair Sarah Champion said the government has “completely missed the point”.
“This pathetic, mealy-mouthed response does not address our core recommendation that the UK’s aid budget should be used to alleviate the conditions faced by people living in the world’s poorest countries,” she said.
Champion accused the chief secretary to the Treasury of “making foreign policy…which goes against the grain of the relaunch of the government’s development agenda recently set out by [development minister Andrew Mitchell]”.
In December, Mitchell set out an aim to return Britain to its status as a “development superpower”.
He also outlined plans to set up a committee to scrutinise how other departments are spending aid cash, to “drive up the quality of spend”.
The FCDO, which is in charge of ensuring official development assistance spend does not go above 0.5% of GNI, had to pause all “non-essential” overseas aid spending in July 2022 due to the increasing extent to which the Home Office was taking over the budget.
The IDC labelled the government’s approach to ODA “incompatible with the spirit of international rules on aid spending” in its March report, which urged the government to rethink how the budget is used.
The OECD's Development Assistance Committe allows countries to use ODA on domestic support for refugees and asylum seekers during their first 12 months after arriving. But it has urged donors to take a “conservative approach” to counting in-country spend on refugees as aid.
According to the government’s independent aid watchdog, the UK spent twice as much on average as other donor countries on in-country refugee costs: 28.9% compared to 14.4%.
The Independent Commission for Aid Impact said the Home Office's increasing appropriation of the budget has had a “severely negative impact across the UK aid programme”. It urged ministers to consider an upper limit on how much of the UK’s aid budget can be spent on in-country refugee costs – or to set a minimum level of spending on ODA by the FCDO – in a report published a few weeks after the IDC's.
Champion added: “We are not the only people to call out the mounting evidence of the effects of recent aid cuts which are eroding critical health programmes, education initiatives, climate work and humanitarian responses, while the Home Office is using the UK’s aid budget to pay hotel bills.
“Need we remind the Treasury that the D in FCDO stands for development?”