The Comprehensive Spending Review – a disappointing conclusion for UK ODA after months of speculation

Yesterday, the long-awaited Comprehensive Spending Review (CSR) concluded and was published following its presentation by the Chancellor of the Exchequer to Parliament.

Since the Prime Minister announced his government’s short-sighted decision to slash the UK’s aid budget from 0.5% to 0.3% of gross national income (GNI) by 2027 to fund an increase in defence spending, the development sector has been scrambling for details that will help us understand where the cuts will fall and the scale of the impact.

While yesterday’s CSR publication doesn’t answer all of these questions, the process leading to it and the CSR itself do appear to draw a line under the fact that this government does not understand the importance of UK ODA for partners and the UK’s standing in the world, nor has it heeded the calls of the sector to ensure it is taking all action required to mitigate some of the worst impact of the cuts.

Key takeaways from CSR

We still don’t know where the cuts will hit exactly, though plans for 2025/26 will hopefully become clearer with the FCDO Annual Reports and Accounts for 2024/25 expected in July and future plans coming later in the year.

However, the CSR did provide some more clarity on overall ODA budgets for the coming years, and departmental allocations until the end of parliament, with allocations for FCDO and Home Office of particular interest. In line with previous announcements on the sequencing of ODA cuts, departmental ODA will fall from £13.8bn in 2024 to £10bn in 2026/27, £8.9bn in 2027/28 and then slightly increase to £9.4bn in 2028/29.

Importantly, the CSR lays bare the devastating impact of the cuts on the FCDO’s ODA budget. In 2024/25 the FCDO still had a programme budget of £9.3bn, which will fall to £6.8bn in 2026/27 and £6.19bn in 2027/28 when the full budget cuts hit – a decrease of over £3bn. These cuts will be devastating for the poorest countries and the world’s most marginalised people. Meanwhile the FCDO’s non-ODA budget seems to be largely protected in cash terms, suggesting the government has prioritised protecting diplomatic budgets over life-saving programmes. However, it is also the case that from 2026/27 the FCDO’s share of the total ODA budget will begin to increase, reaching around three-quarters in 2028/29. The CSR also confirms that FCDO will sharpen its focus on humanitarian emergencies, global health, and the climate and nature crisis, underpinned by economic development, with multilateral investments being prioritised across those issues.

We already knew from the Home Office’s Main Estimates Memorandum that the department was seeking an ODA budget of £2.26bn for 2025/26 to cover in donor refugee costs (IDRCs), which was a similar level to 2024/25, and suggests that IDRCs overall are unlikely to fall much this year. Although, the CSR documents did not state the level of planned IDRCs (and the Treasury has refused to share these figures with Bond), they suggest that ODA spend on these costs will fall slowly and are expected to be around £2.5bn in 2025/26, while likely to remain at around £1.6bn in 2028/29.  

Over 100 NGOs and refugee charities recently called on the UK government to bring these costs down rapidly by ending the use of costly hotels for housing asylum seekers, and to stop using the aid budget for these costs, warning that the already diminished aid budget would be stretched even further. The Chancellor’s promise made during her CSR statement to end asylum hotels by the end of parliament is welcome, but it clearly lacks urgency and is contradicted by planned levels of ODA on IDRCs set out in the budget.

However, in another blow to the ODA budget, the CSR confirmed that the government has decided to end the FCDO’s role as the Government’s aid ‘spender and saver of last resort’. While this does offer greater predictability, it also means that the FCDO will henceforth no longer benefit from savings made by the Home Office spending on asylum seekers nor upticks in GNI.  This funding will instead be returned to Treasury- a potential further stealth cut to the aid budget.

The government has failed to fully mitigate the impact of the cuts

Sadly, though, this is in line with decisions and announcements made by the government since the aid cuts, which have continuously been at odds with calls from civil society to mitigate the worst of the impact of the cuts. This includes our call to protect the ODA budget at 0.5% of GNI for 2025 and 2026 so that additional resources would be available for vital development needs in the lead up to 2027, which the Chancellor declined in her Spring Statement by frontloading the cuts to start immediately.

The government also ignored our call for a transparent process for assessing the impact of the cuts and deciding what to prioritise within the remaining budget. Strikingly, we are yet to see an impact assessment for the cuts. When speaking in front of the International Development Committee Minister for International Development Baroness Chapman indicated that the impact assessment was still underway and would inform the FCDO allocation process.

However, some major decisions have already been made without an impact assessment. The minister indicated that humanitarian, health and climate funding would be prioritised, potentially at the expense of funding other critical programs such as those covering gender and education. The decision is even more baffling given that the equality impact assessment of the aid cuts in 2021 found they disproportionately affected women and girls, people with disability and other vulnerable groups. At a time when we’re facing significant rollback of the rights of women and girls this is also clearly at odds with the call to prioritise support for the ‘leave no one behind’ principle within the remaining budget.

What next?

The long wait for the CSR is over, though many questions on where exactly cuts will fall in the FCDO and on overseas development programmes remain to be answered. FCDO officials stated in recent weeks that these decisions will be made over the coming months. It is vital these decisions are made transparently and that they are informed by consultation with development partners, information from assessments of potential impact, and based on approaches that protect the most marginalised groups. We also urge the government to reconsider significant cuts proposed to education and gender programming.

With the CSR confirming that the government has significantly reduced its ODA commitments, it is vital that it steps up support for global development through other policies and international actions. A key opportunity to do this is through supporting ambitious proposals on global economic reform being discussed ahead the upcoming Fourth Financing for Development (FfD4) Conference happening in Seville, Spain, from 30 June to 3July. The FfD4 Conference would be an important space for it to actually listen to and support proposals by low- and middle-income countries, helping to deliver on its manifesto commitment to display “genuine respect and partnership with the global South”.

As of now, the UK has systematically blocked ambitious proposals tabled by LMICs through the FfD4 process, which attempt to address the escalating debt crisis faced by 54 countries. Without action, debt burdens will continue to drain vital public finances in many LMICs, diverting funds from healthcare, education, social protection, and climate action. At a time when the UK has drastically reduced its aid budget it is crucial that the UK supports proposals tabled by LMICs.

Without decisive action in solidarity with the countries most affected by this unjust debt crisis, the Labour government would break yet another of their manifesto pledges to tackle unjust debt burdens and further erode trust in the UK as a reliable development partner. The upcoming FfD4 Conference is a crucial opportunity for the UK to demonstrate real commitment to the global financial architecture reform proposals tabled by LMICs that can bring about real world changes they need.