Britain has cut almost $2 billion from its foreign aid budget by cutting the amount spent on accommodation for asylum seekers across the country, new figures reveal.
Prime Minister Keir Starmer is now aiming to cut the bill further and soften the blow of aid cuts ordered in February to pay for increased defence spending. The newly-released figures show 20 per cent of the UK's £14.07 billion ($18.03 billion) development budget is spent on asylum seekers, eating into its room for manoeuvre.
The UK is one of several European countries to have reported a fleeting rise and fall in aid spending because of the cost of accommodating asylum seekers at home, analysis by The National shows. Under international rules, that only counts as foreign aid for 12 months after a person arrives.
But some including Britain are now preparing to go in the opposite direction with substantial cuts to aid. The Netherlands recently announced it would reduce foreign aid by €2.7 billion ($2.96 billion) within two years, while in Germany there are discussions on scrapping both the Development Ministry and a target of spending 0.7 per cent of GDP on aid.
Britain in 2021 dropped its commitment from 0.7 per cent to 0.5 per cent to make up for the costs of Covid-19. Mr Starmer is now lowering that to 0.3 per cent.
Charities are dismayed at the planned cuts, but if Britain will not change its mind it should “at the very least ensure that the remaining limited budget is used for its intended purpose”, said Gideon Rabinowitz of advocacy group Bond.
“We welcome the reduction in the amount of UK aid spent domestically on asylum costs, but this figure remains far too high,” he said.
“As the government slashes the UK aid budget, continuing to spend £2.8 billion ($3.58 billion) of UK aid in the UK on escalating asylum accommodation costs is unsustainable, poor value for money and comes at the expense of essential development and humanitarian programmes tackling the root causes of insecurity and displacement.”
UK figures
The new figures show Britain spent £14.07 billion ($17.97 billion) on aid last year. About 20 per cent of it went on asylum seeker costs incurred in the UK. The year before, it was 28 per cent.
Foreign aid has been spent in Britain to look after people from Afghanistan and Ukraine, and to rent out hotel rooms for people who cross the English Channel. The small boat crossings are a highly sensitive issue in British politics, and hotels were attacked during UK race riots last summer.
The drop of £1.44 billion ($1.84 billion) in last year's asylum bill more than accounted for Britain's total aid cut of £1.28 billion ($1.63 billion). Experts think the fall might be down to a smaller backlog of cases, and the 12-month rule kicking in after many Ukrainians arrived in Britain in 2022 and 2023.
Ministers are certainly keen to crow about any sign that they are clamping down on the use of asylum accommodation. Mr Starmer called it a “ridiculous use of money” inherited from the previous Conservative government.
“As we are clearing that backlog at a record pace. There are efficiencies that will reduce the need to cut spending on our overseas programme,” he told MPs in February. However, he conceded that “it remains a cut, and I will not pretend otherwise”.
The figures also show that the Home Office's asylum costs fell by less than other departments, suggesting it still has a sizeable bill. Helen Stawski, Oxfam's head of policy in the UK, said they showed Britain's development efforts “already diminished” even before Mr Starmer's defence spending announcement.
“If the government continues to spend this volume of aid in the UK, once the aid budget has been slashed further, there will be little left to spend on what it’s intended for,” she said. “This will mean more children without enough to eat, more women dying in childbirth, more people facing poverty and more lives lost.”
International comparison
Britain is not the only country facing this issue. In Austria, Canada, and Italy, apparent surges in the aid budget from 2022 were matched by a much larger slice going on “in-donor refugee costs”.
A Swedish civil society group, Concord, spoke of a foreign aid “inflation bubble”. Austria also spoke of a temporary rise and fall when paying for Covid-19 vaccines.
Germany's most recent figures show it spending 19 per cent of aid on asylum seekers at home. Without that money, it would have missed the 0.7 per cent target.
A leaked draft of a German coalition agreement currently being negotiated in Berlin shows one version in which the 0.7 per cent target would be scrapped and the Development Ministry abolished. Another version would stick to 0.7 per cent and merely seek to “reduce overlap”.
In Ireland, almost half of aid spending in 2023 went on supporting Ukrainian refugees. Without that, aid spending was not even 0.4 per cent of GDP.
With US aid now under severe threat from President Donald Trump and efficiency envoy Elon Musk, Britain and other European states will find themselves facing growing calls to make more cuts. But as Mr Starmer's example shows, filling an American void in Nato spending defence is likely to prove a higher priority.
Global state-owned investor ranking by size
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The specs
- Engine: 3.9-litre twin-turbo V8
- Power: 640hp
- Torque: 760nm
- On sale: 2026
- Price: Not announced yet
The specs
Engine: Dual 180kW and 300kW front and rear motors
Power: 480kW
Torque: 850Nm
Transmission: Single-speed automatic
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THE BIO: Martin Van Almsick
Hometown: Cologne, Germany
Family: Wife Hanan Ahmed and their three children, Marrah (23), Tibijan (19), Amon (13)
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Name: Lamsa
Founder: Badr Ward
Launched: 2014
Employees: 60
Based: Abu Dhabi
Sector: EdTech
Funding to date: $15 million
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2019: Trump calls Khan a “stone cold loser” before first state visit
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Timeline
2012-2015
The company offers payments/bribes to win key contracts in the Middle East
May 2017
The UK SFO officially opens investigation into Petrofac’s use of agents, corruption, and potential bribery to secure contracts
September 2021
Petrofac pleads guilty to seven counts of failing to prevent bribery under the UK Bribery Act
October 2021
Court fines Petrofac £77 million for bribery. Former executive receives a two-year suspended sentence
December 2024
Petrofac enters into comprehensive restructuring to strengthen the financial position of the group
May 2025
The High Court of England and Wales approves the company’s restructuring plan
July 2025
The Court of Appeal issues a judgment challenging parts of the restructuring plan
August 2025
Petrofac issues a business update to execute the restructuring and confirms it will appeal the Court of Appeal decision
October 2025
Petrofac loses a major TenneT offshore wind contract worth €13 billion. Holding company files for administration in the UK. Petrofac delisted from the London Stock Exchange
November 2025
180 Petrofac employees laid off in the UAE
