Sir Keir Starmer is to take UK overseas aid to its lowest level as a percentage of national income since records began, even if he manages to halve the current £4.5bn cost of housing asylum seekers.
The extraordinary finding, a complete reversal of Labour manifesto pledges and its historical commitment to helping the world’s poorest, is made by Ian Mitchell, the co-director of the respected London-based thinktank the Centre for Global Development.
It comes as 138 charities wrote to Starmer saying they are appalled that he is implementing the single largest cut to the UK aid programme in history.
On Tuesday Starmer announced the aid budget will be cut from 0.5% of gross national income to 0.3% in 2027. But in 2023, nearly £4.3bn, or 28% of the aid budget, was spent by the Home Office in funding the cost of housing asylum seekers in the UK.
Even if these costs were halved in 2027 through a mix of fewer asylum seekers, and lowering the cost of housing each asylum seeker, Mitchell calculates, the UK would still only be spending 0.23% of UK national income in 2027 on overseas aid, the lowest ever share of national income since records began in 1960.
The UK’s previous lowest ever share of national income spent on overseas aid was 0.24 % in 1999.
If the per-head refugee costs remain at their current level, official development assistance costs for refugees would be closer to £3bn in 2027, and aid not spent on refugees in the UK would fall to 0.20% of GNP.
In their letter, the NGOs accused Starmer of following in the US’s footsteps by accepting “the false choice of cutting the already diminished UK aid to fund defence”. Donald Trump’s administration has frozen funding for USAid, the US Agency for International Development, with a view in effect to dismantle it.
“We implore you to reverse this decision before significant damage is done to both the UK’s development and humanitarian work and its global reputation,” said the letter organised by Bond, an umbrella organisation for UK overseas aid groups.
It demands a Commons statement setting out what alternatives had been considered before the government decided on Tuesday to take a step that will “destroy Labour’s legacy on international development” and leave the “government’s ambition to be a reliable development partner on the global stage in tatters”.
Areas likely to be affected by UK aid cuts include climate change finance, humanitarian aid programmes, including in Yemen, and funding for Gavi, the Bill Gates-backed global vaccination programme. Experts said the bilateral programmes most likely to be damaged are those aimed at Syria, Yemen, Afghanistan, Ethiopia and Nigeria.
Aid groups say that unilateral UK aid projects are likely to be particularly affected because they are easier to exit than ones involving multiple countries. “With the amount committed to refugees in the UK, and now this cut, there will be almost nothing left. It’s an absolute mess,” one official from the sector said.
Whitehall sources said there was still “shock and distress” from those working on aid and development in the Foreign, Commonwealth and Development Office (FCDO), who had already seen their independent department abolished under Boris Johnson.
There is already an open voluntary redundancy scheme within the FCDO aimed at reducing headcount and those who work in the department said they thought demand would shoot up because morale is so low. “No one wants to work on closing down programmes they have spent their working life setting up,” said one civil servant.
Union sources said it was too early to say what cuts would look like, but some reduction in the workforce was inevitable, especially given some staff are paid out of the aid budget.
Anneliese Dodds, the development minister, was expected to give a “fireside chat” to those working on development in the department on Thursday to provide reassurances that its work was still valued.
The foreign secretary, David Lammy, is being urged by European diplomats to take a lead in calling for the $200bn (£158.5bn) in frozen Russian assets to be released to help Ukraine, a move that might ease the pressure on the UK aid budget.
So far the UK, faced by legal hurdles, had only been willing to use the interest on the frozen funds to guarantee loans to Ukraine, but Lammy, speaking before the aid cuts were announced on Tuesday, said: “Europe has to act quickly, and I believe we should move from freezing assets to seizing assets.”
The European diplomats argue US cuts mean €210bn (£173bn) of Russia’s frozen money held in the bloc, mainly in Euroclear, a Brussels-based securities depository, has to be seized. They are seeking to overcome resistance from Germany, France and the European Central Bank.
Another stopgap is to deploy the £2.5bn of frozen assets of the Russian oligarch and former Chelsea football club owner Roman Abrahamovic.
Lammy was only told about the halving of the aid budget 72 hours in advance. Just a fortnight ago he had advised the US it would be a strategic mistake to cut the budget of USAid, the now hastily dismantled US aid programme. Dodds had also repeatedly told the international development select committee she wanted predictability in the aid budget.
