Labour explores stopping ‘raids’ on UK overseas aid budget

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Labour is exploring legislation to stop “ongoing raids” on the UK’s overseas aid budget by Whitehall departments, as the main opposition party seeks to bolster its commitment to development spending ahead of the general election.

Lisa Nandy, shadow international development secretary, said that if Labour won power it could codify in law the work of the official development assistance “star chamber” committee, which scrutinises spending of the aid budget across government.

“We’re looking at some of the mechanisms at the moment to see whether we can strengthen that, possibly through legislation, to prevent those ongoing raids by other government departments,” Nandy told the Financial Times at an event in Washington DC this week, although a Labour spokesperson said there was no firm commitment to using legislation.

Official data this month showed Britain used £4.3bn — or 28 per cent — of overseas aid in 2023 in the UK itself on costs associated with dealing with refugees and asylum seekers.

That figure was a rise of £600mn on 2022, and more than burnt up increases in the aid budget, where spending went from a targeted 0.5 per cent to 0.58 per cent of gross national income in the 12 months to December.

The government has been hit by ballooning costs in the asylum system in recent years after a surge in the number of people entering the country over the Channel and a slowdown in the processing of claims.

Shadow home secretary Yvette Cooper has suggested that if Labour wins the election expected this year, it will hire more Home Office caseworkers to process claims more quickly.

Under international rules, money spent within your country on support for refugees can be classified as aid because it constitutes a form of humanitarian assistance.

But NGOs have warned that the rise in such spending is hitting emergency support programmes abroad, and the Independent Commission for Aid Impact, the aid watchdog, has said it is “inequitable and inefficient” to use “so much of the aid budget on UK asylum hotels”.

Nandy said the ICAI had “found that [official development assistance] is some of the worst spent money in the country — the Home Office isn’t responsible for it as it’s not their budget and so the deals are appalling”.

“We want to spend our own money where it is intended, so over time — as [Cooper] reduces that backlog — returning it over to its original purpose,” she added.

Based in the Foreign, Commonwealth and Development Office, and co-chaired by development minister Andrew Mitchell and chief secretary to the Treasury Laura Trott, the ODA “star chamber” committee was set up at the end of 2022 to monitor leakage in the foreign aid budget.

In addition to the Home Office, the Department of Health and Social Care and the Department for Energy Security and Net Zero have used ODA funds in recent years.

The UK’s current ODA target is 0.5 per cent of GNI. For the previous, UN-recommended target of 0.7 per cent target to be restored, the Office for Budget Responsibility, the fiscal watchdog, must indicate that Britain is sustainably not borrowing for day-to-day spending and that the ratio of underlying debt to gross domestic product is falling.

Nandy said a Labour government would restore the 0.7 per cent target “as soon as we can” but would not commit to it before the election.

“Growing the economy is the absolute first essential precondition for any other commitments that we make,” she added.

The main opposition party — which has a lead of roughly 20 points over the governing Conservatives, according to polling — has previously said it would spend a bigger share of the aid budget on the poorest countries.

But Nandy said it would aim to stick to agreements with middle-income recipient countries.

“Our overarching first ambition is to restore Britain’s reputation as a reliable partner,” she said. “So what we’re not going to do is come into office and tear up the commitments that have already made and leave countries high and dry.”


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