Andy Burnham is keen to show he is taking a different path to his predecessor, Keir Starmer. He has signalled that he harks back to the efforts of Tony Blair and Gordon Brown to position the UK as a leader in global social justice, not least in choosing Ed Miliband for his foreign secretary, and Brown’s former aide Kirsty McNeill as the development minister.
However, the jury is out on the substance. The aid budget, already cut by Rishi Sunak from 0.7 per cent of Gross National Income (GNI) to 0.5 per cent – was further slashed to 0.3 per cent by Starmer in defiance of Labour’s manifesto commitment. Instead of reversing course, Burnham has apparently funded his £2 cap on bus fares by raiding the aid budget further.
The question Burnham will be asking is how he can show the UK is contributing more to meeting global challenges without committing to spending more money. The answer lies in the budgets for response to natural disasters, conflict and climate change – the humanitarian budget – and how it is used. The British public responds generously to emergency appeals, having given £2.5bn since 1963, and polls show that across party affiliations this is the most popular type of aid.
Yet in recent years the UK government spends most of what is badged as “humanitarian” aid on so-called “In Donor Refugee Costs” in this country, which mostly go to the companies contracted to provide accommodation to asylum seekers waiting for decisions, often in hotels. These costs, never counted as aid under Blair and Brown, have ballooned since the pandemic as many more were put in hotel accommodation and a backlog built up under the Conservative government.
Most taxpayers are shocked at the billions being spent but have no idea that these costs are charged to the aid budget. At the peak proportion in 2022, almost 29 per cent of the aid budget was spent this way, wreaking havoc with any spending plans. This happened because the government wanted to make it look as though they were contributing as much as possible to the UN target for aid spending.
Now Labour is succeeding in cutting costs, mostly by reducing the asylum backlog – the government said £1 billion had been saved since the election even before last week’s announcement that the number of asylum seekers living in hotels has halved in a year. This suggests the expectation that the government will save £400 million from aid diverted to asylum accommodation costs in 2027-28, rising to £700m the following year, is too cautious. Bigger savings are coming.
To ensure the 0.3 per cent aid pledge is met through spending on saving lives and reducing poverty abroad – as the public would expect – these savings should be allocated to a “crisis reserve” to enable the UK to respond quickly to emergencies such as the devastating floods in Nepal.
At its peak £500m was kept aside for this purpose, and it was needed almost every year. Right now, humanitarian need is greater than ever, but the resources available are simply not sufficient to meet that need.
There has never been a convincing reason to count required costs in caring for asylum seekers at home as foreign aid – it was simply political expediency.
An analysis by ICAI, the foreign aid watchdog, suggested as much as £600m in one year which could have helped the world’s poorest may have instead paid for empty hotel rooms. This ought to be a national scandal. What’s more, the government’s latest plan to make asylum seekers pay back the costs of their accommodation shows the reality: this is not really aid at all.
Burnham now has a rare political opportunity to make everybody happy: those who worry aid money is wasted, and those who oppose the government’s cut to aid spending. And he could take a moral lead as the UK takes on the G20 presidency in 2027.
There are few budgetary win-wins in the current tight fiscal situation. The prime minister should not hesitate to seize this one.
Dr Tamsyn Barton is a former chief commissioner at the Independent Commission for Aid Impact (ICAI)
This article has been produced as part of The Independent’s Rethinking Global Aid project
