How UK ODA cuts were effectively more than doubled to at least £1.2bn in 2025

Since last year’s announcement of the cuts to UK Official Development Assistance (ODA) we have received and analysed drips of information, from the Spring Statement 2025, the Comprehensive Spending Review, the FCDO Annual Report and Accounts 2025/26 to ODA allocations for 2026/27 onwards. While the planned cut in UK ODA to 0.3% of Gross National Income (GNI) from 2027 has dominated the headlines, we have also been eager to bring to attention a lesser covered decision, of ending the FCDO’s status as ‘spender and saver of last resort’, and have warned that this could result in further stealth cuts to the ODA budget.

The provisional Statistics on International Development for UK ODA spending (SIDs) in 2025 (published in April) seem to have confirmed these concerns, as we have discovered from spending the last few months making inquiries about an important question: why was total UK ODA in 2025 at only 0.43% of GNI?

The connection between UK ODA and GNI – and why it matters

Historically, the UK’s ODA budget has been set based on a share of Gross National Income (GNI), at the legally required 0.7% of GNI during 2013-20, and later cut to 0.5% of GNI during 2021-24. Over this period, FCDO, as the largest spender of UK ODA, held the status as ‘spender and saver of last resort’. This has meant that the FCDO’s ODA spending was adjusted up or down with changes in forecast GNI and ODA spending in other departments to ensure that the UK hit the prevailing ODA budget target.

In recent years, this status has led to a fair degree of uncertainty for the FCDO and largely negatively affected its budget. Crucially, the FCDO had to regularly reduce its budget due to the Home Office overspending on in-donor refugee costs (IDRC) – costs associated with supporting refugees and asylum seekers in the UK.

However, within the Spring Statement 2025, the UK government announced it was ending this status and decoupling UK ODA budgets from changes in ODA spending in other departments and projected GNI. As a result, all ODA budgets until the end of Parliament (and the 0.3% of GNI budget from 2027/28) have been set based on the OBR’s GNI forecast for the years 2026/27-2028/29 available at the time of the June 2025 Spending Review (i.e. the OBR’s March 2025 forecast).

While this certainly creates a more stable budget for the FCDO, it also means that UK ODA would no longer see an uplift with improvements in GNI forecasts, and, should IDRCs be coming down more and faster than planned, this money would no longer be returned to the UK ODA budget or FCDO’s ODA programmes. We have warned that this could ultimately lead to stealth cuts to the UK’s total ODA budget, at a time when it is being cut to its lowest level since 1999.

And indeed, this is what has happened: the UK ODA budget in 2025 was much lower than expected.

How UK ODA in 2025 was much lower than expected

We knew from the Spring Statement 2025 that ODA in 2025/26 was supposed to be reduced by £500mn below 0.5% of GNI as the UK government gradually cuts back the budget to 0.3% of GNI by 2027/28. Speaking in front of the Foreign Affairs Committee in December 2025, Nick Dyer, second Permanent Secretary at FCDO, further explained that ODA in 2025/26 would fall to 0.48% of GNI. Some discrepancy between the figures for calendar year 2025 (as covered in the SIDs) and financial year 2025/26 are expected. However, given that the calendar year 2025 included 3 months of ODA at 0.5% levels (Jan-March) we would have expected UK ODA figures for 2025 to be slightly higher than the 0.48% set out in those announcements.

Yet, the SIDs reported that provisional ODA levels in 2025 were only 0.43% of GNI – well below the expected 0.48%, meaning ODA was more than £2bn below the level required to hit a spending target of 0.5% of GNI, rather than the £500mn set out in the Spring Statement 2025.[1]

Why was UK ODA so low in 2025?

We have approached FCDO to understand this better, and have been informed that this larger-than-planned reduction to 0.43% of GNI can be explained by higher-than-expected GNI in 2025 (and a lack of adjustment of ODA levels) and “through a combination in reductions to forecast IDRC spend and slippage between calendar and financial years of spend across departments including FCDO.” However, after an extended period of dialogue the UK government has not given us additional details, and the Treasury and Home Office have explicitly refused to share data they hold on planned ODA spending on IDRCs in 2025/26, which would allow us to understand the scale of the ODA underspend in this area.

This means we can only make assumptions about the extent to which each of these factors have contributed to this outcome, as presented below.

Higher than expected GNI: The decoupling of ODA from changes in GNI forecast has led to stealth cuts of more than £500mn because GNI in 2025 ended up higher than expected .[2]
Lower than expected IDRC: Our best guess is that higher than expected savings in IDRCs will have contributed at least £200mn to the overall cuts. While important to bring these costs down, this is only a small proportion of the overall reduction .[3]

Importantly though, this information confirms our concerns that reductions in IDRC will not be returned to the UK ODA budget or to FCDO’s ODA programmes. In a recent review, ICAI revealed that an agreement has been in place since July 2025 “that the Home Secretary can keep any ODA asylum underspends and recycle them into the regular Home Office budget” – risking the UK’s ODA budget falling below 0.3% of GNI. This is after former Foreign Secretary David Lammy confirmed to the IDC in July 2025 that he would ask the Treasury for an FCDO ODA increase if IDRC were to come down further and faster than planned.
Slippages between calendar and financial year: Our understanding is that the bulk of the £2bn reduction comes from reallocations between calendar and financial year (i.e. spend move from Q4 2025 to Q1 2026), which is not entirely a problem. For now, we will have to take the FCDO’s word for it, but these slippages should show up in ODA spending for 2026 and we will monitor this closely.

The UK no longer seems to have an ODA spending target

While we are still not totally clear as to why ODA has been reduced so heavily, what is apparent is that by removing the linkage between ODA levels and changes in GNI and by not returning the Home Office’s ODA savings to FCDO we no longer have a clear ODA target, and the UK ODA budget in 2025 was effectively cut by an additional c£700m beyond the stated £500mn.

Although the previous Conservative government cut the ODA budget from 0.7%, they still set a new ODA target of 0.5%, which they not only stuck to, but even topped up ODA to 0.58%, to make up for high IDRCs. However, the current government seems to have abandoned any spending target, raising real concerns that we might well slip below the intended 0.3% of GNI by 2027/28 – something that ICAI has warned of too. The volume of ODA at stake is significant, as if an additional c£700m had been available to the UK ODA budget it would have been sufficient to reverse the UK’s recent reduced pledges to GAVI (the vaccine alliance) and the Global Fund for Aids, TB and Malaria, as well as to reduce cuts to spending on humanitarian support and basic services.

This is a real concern and shows a lack of transparency on the real amount and impact of the decision to cut UK’s ODA budget and end the FCDO’s status as ODA spender and saver of last resort. We would have expected the government to report on this in a more transparent and accessible way. Instead, we chased the FCDO, Treasury and Home Office over months and were still not able to get the full picture. The FCDO has already been criticised by the IDC for failing to publish country allocations as part of the ODA cuts – instead only publishing these as part of the FCDO Annual Report on 16 July, laying bare the devastating cuts to the poorest and most fragile countries and showing why this issue matters to those most in need.

With a new Prime Minister and cabinet now in place, we urge the new government to commit to no further cuts to the UK’s ODA budget, and ensure that the apparent substantial ODA savings being made by the Home Office or other departments are returned to the UK ODA budget or FCDO’s programmes. This step will help to begin the efforts required to honour the Labour manifesto pledge to “rebuild Britain’s reputation on international development”.

The new government must also deliver on this pledge by seizing the opportunity provided by its upcoming G20 presidency (in 2027) to reform the global financial architecture, by tackling unjust debt burdens, creating a fairer tax system and reducing illicit financial flows – measures that would significantly improve the public finances of low- and middle-income countries to invest in their own development.

Footnotes:
[1] The 2025 GNI figure quoted in provisional SIDs (£3,021 billion) suggest that 0.5% of GNI is equivalent to £15.15bn, but instead ODA was only £13.04bn (0.43% of GNI).
[2] A planned £500mn reduction in UK ODA for 2025 below 0.5% of GNI, alongside an upward adjustment in line with GNI changes would have resulted in an ODA budget of £14.68bn – without adjustments and under OBR GNI predictions from March 2025 a £500mn reduction would have resulted in an ODA budget of £14.1bn. By decoupling ODA from changes in GNI forecast, the government has therefore cut an additional £500mn off an ODA budget of 0.5% of GNI.
[3] We know from its Main Estimates Memorandum that the Home Office was seeking an ODA budget of £2.26bn for 2025/26 and received only £2.05bn in 2025 meaning savings of around £200mn. It is important to note that the HO is not the only department spending ODA for IDRC, but is by far the largest spender accounting for 86% of all IDRC in 2025.
Alternatively, if we were to assume that the Government was planning to keep IDRC at the same levels as in 2024 we would have seen a reduction of £432mn. But neither of those savings can account for the full larger-than expected ODA cuts.

Bond’s analysis on this topic was first reported exclusively in the Financial Times on 14th August 2026.