UK on collision course with Joe Biden over cuts to aid pledge
Britain is on a collision course with Joe Biden and other prominent international allies as it prepares to unveil a dramatically reduced contribution to a major global fund to tackle deadly diseases, the Observer understands.
All countries are being asked to improve on their last contributions to the Global Fund, set up to tackle malaria, tuberculosis and Aids in the world’s poorest countries. Most G7 countries have already announced plans to do so, and Biden raised the issue during talks with Liz Truss last month. Britain gave £1.4bn to the fund during the last pledging round in 2019.
Now Britain is being asked to find £1.8bn for the fund over the next three years but is thought to be considering a contribution in the region of £800m – less than half the requested amount. It is likely that Britain will be the only major world power not to increase its donation.
Several sources have told the Observer that the UK’s overseas development assistance (ODA) budget is now in disarray because so much of it is being spent on the accommodation and other costs related to asylum seekers and refugees in Britain. Experts believe more is now being spent within the UK than in the poor nations that need it.
The aid bill for the programmes to help those from Ukraine and Afghanistan alone is said to run into billions. Officials have been raising concerns for some time that the Home Office’s failure to control housing costs is effectively draining the aid budget. However, it is only now that ministers are beginning to get a grip of the costs that are actually being racked up.
Because the aid budget is fixed at 0.5% of gross national income, the huge costs of the domestic asylum-seeker programmes mean that cuts will have to be made in other areas of aid spending. The first major casualty is set to be the Global Fund contribution.
Andrew Mitchell, the new international development minister, who had been a leading advocate for Britain’s overseas aid work as a backbench MP, is now going through a detailed audit of Britain’s aid budget and is said to be trying to prioritise the UK’s Global Fund contribution. However, he now has severely limited resources at his disposal as a result of the chaotic way in which the aid budget has been allocated.
Officials battling for the UK government to make a large contribution have been arguing that Britain has a strong
record as a central player in the fund, with two-thirds of the money spent in Commonwealth countries. The US has already committed to contributing $6bn to the Global Fund over the next three years, a 30% increase on its last donation. Canada, Germany and the European Commission have also increased their pledges by 30% as requested.
It comes after two former government advisers said that they believed that the UK was now spending more of its foreign aid budget in Britain than in poor countries, once contributions to bodies like the World Bank are excluded. As much as £4bn is now being spent domestically, they believe, largely on costs related to asylum seekers and refugees. The Home Office has been paying millions a day to house some in hotels with funding taken from the foreign aid budget.
Stefan Dercon, former chief economist at the Department of International Development, told the Observer: “You can’t squeeze everything into development while claiming you don’t do it on the back of the poor. You have to just admit that and be honest. The Home Office has no incentive to be careful. There are concerns within the FCDO [Foreign, Commonwealth and Development Office]. These eye-watering costs are terrifying, because you end up giving a blank cheque to one department on your own budget. Unless something is done, it’s going to be a disaster. This is billions, and that’s why the concern is there.”
Ranil Dissanayake, policy fellow at the Center for Global Development thinktank and another former government adviser, said: “We should be generous to refugees who arrived on our shores, and we should support them. But those things aren’t the same as what we think of as development – helping other countries to improve their economies, lifting people out of poverty, feeding people, giving them healthcare and improving education. All of that stuff is getting squeezed. This isn’t terminal. They really can turn this around. It requires that they make a choice to stop using the aid budget as a kitty for the rest of government.”
A spokesperson for the FCDO said: “Across government, there are significant pressures on the 0.5% ODA budget due to the costs of accepting refugees from Afghanistan and Ukraine as well as wider migration challenges. How many refugees arrive in any particular period is not certain, so there is not a fixed cost. We remain one of the largest global aid donors, spending more than £11bn in aid in 2021, and UK aid has recently gone towards those in need in the Horn of Africa and Pakistan.”