Reducing UK aid spending: Which countries are impacted?

Since the Covid-19 pandemic began in 2020, the Government has twice reduced its foreign aid spending.

This Insight briefly sets out the priority themes and countries for UK aid, how these have been impacted by changes to aid spending, and the potential future trajectory of UK aid spending.

Reductions in aid

Between 2013 and 2020, the UK met the UN target of spending 0.7% of Gross National Income (GNI) on Official Development Assistance (ODA).

In July 2020, the Government reduced spending on ODA by £2.9 billion. This was to ensure the 0.7% target was not exceeded when the pandemic-induced recession caused a 10% decline in GDP.

In November 2020, the Government announced aid spending would be reduced to 0.5% of GNI in 2021 as a “temporary measure,” while focusing public spending on the UK’s pandemic response.

The reductions have been controversial. Charities and UN Agencies argue they have disrupted the delivery of aid and impacted on government priorities such as health and gender equality.

The Government emphasises that the creation of the Foreign, Commonwealth and Development Office (FCDO) allows it to use diplomacy and development “in lockstep” to maximise the effectiveness of UK aid.

Priority countries have seen spending reduced

The Government’s March 2021 Integrated Review of UK foreign, defence and development policy identified Africa and the Indo-Pacific as the UK’s two priority regions. Priorities within those regions included Nigeria, East Africa, South Africa, Pakistan, and Bangladesh.

The Review cited as reasons Africa’s shared values with the UK and high rates of poverty, and the Government’s intention to promote open societies, trade, and climate change collaboration in Asia.

The FCDO has said addressing the humanitarian crises in Yemen, Syria, Somalia, and Sudan are also a focus. It has previously announced reduced spending commitments to Yemen and Syria.

Bilateral aid to some of the countries receiving the most aid has decreased in recent years, converging on around £200-250 million per year even before 2020’s pandemic-related reductions.

However, three priority countries – Somalia, Sudan, and South Africa – did see increases in aid in 2020.

China will continue to receive some aid

UK aid to China has been contentious, as China is a middle-income country and global power. The former Department for International Development announced its intention to stop direct aid to China in 2011.

While the FCDO has announced it will reduce ODA spending to China by 95%, to £900,000, it is uncertain what other Departments plan to spend.

Most aid to China comes from other Departments—in 2020, £26.8 million of the £64.1 million of UK ODA was from the Department for Business, Energy, and Industrial Strategy. The cross-Government Prosperity Fund also spent £15.5 million in China in 2020, so total ODA to China in 2021 is likely to exceed £900,000.

The Independent Commission for Aid Impact has asked the Government for clarity on the future of non-FCDO ODA to China. Remaining FCDO spending will focus on human rights and open societies.

Aid reductions in 2020 were not evenly distributed

Most aid typically goes to Africa and Asia, and these regions bore the greatest reductions in 2020.

There were some increases: aid to the Americas increased by £28.6 million, with large increases to Colombia and Mexico (the former largely because of a new programme tackling deforestation).

Neither did all aid sectors see decreases: spending on health increased 11%, and spending on refugees within the UK rose 32%.

Future spending

In July 2021, the Commons supported a Government motion setting out the conditions that must be met before UK aid spending returns to 0.7% of GNI. The Office for Budget Responsibility (OBR) will need to show that the country isn’t borrowing for day-to-day spending, and the ratio of underlying debt to GDP is falling.

If the next OBR forecasts in October, are similar to those in March, ODA spending is unlikely to return to the 0.7% level until at least 2024.

Development analysts expect some rises in aid spending as the economy recovers from the pandemic. However, some have warned there may be further reductions in UK programmes during 2022 to meet existing commitments to international organisations, such as to the EU Development Fund under the Withdrawal Agreement.

The BBC has reported the Treasury is considering whether to designate donations of Covid-19 vaccines as official aid, putting pressure on other aspects of the aid budget.

For more on what the reductions may mean for aid recipients, see our briefing, Reducing the UK’s aid spending in 2021.

Further reading

Commons Library, Reducing the UK’s aid spending in 2021

Commons Library, The 0.7% aid target

About the authors: Philip Brien and Philip Loft are researchers in the House of Commons Library, specialising in international development.

Image: UK aid logo © DFID – UK Department for International Development – licensed under CC BY 2.0