The UK aid budget and support for refugees in the UK, 2022 to 2025

In 2021, citing the impact of the covid-19 pandemic, the government reduced aid spending from 0.7% of gross national income to 0.5%. From 2025, it will be further reduced to 0.3% by 2027 to pay for increased defence spending.

Due to a rise in aid spending on refugees in the UK (known as “in-donor refugee costs”), the value of aid spent overseas has been further reduced. This spending rose from 3% of aid in 2016 to a peak of 29% in 2022.

The government says it is seeking to reduce these costs. This briefing explains the international rules that apply on in-donor refugee spending, how the UK has applied them and how its spending compares to other countries, and the actions of the UK Government to reduce this spending.

What are the rules on aid spending?

Under international aid rules, many of the costs of hosting refugees can count towards the aid budget for the first 12 months refugees are in the UK. This includes basic subsistence costs, such as food and accommodation.

How much UK aid is spent in the UK?

Spending on in-donor refugee costs rose from £410 million in 2016 to £4,273 million in 2023 (rising from 3% of the aid budget to 28%). It has subsequently fallen to £2,827 million in 2024, but remains at 20% of aid spending. Most is spent by the Home Office, and while overall in-donor refugee spending fell 34% from 2023 to 2024, Home Office spend fell the least, by 19%.

Other aid, such as on scholarships and administration, is also spent in the UK. In 2023, this totalled £833 million (meaning around 33% of UK aid was spent in the UK, if this is added to the spending on in-donor refugees). Equivalent figures for 2024 have not been published.

What did the Conservative Government do?

The Conservative Government acknowledged that the costs of supporting those arriving from Ukraine, the resettlement of Afghans, and other asylum applications put a pressure on the overseas aid budget.

In March 2023, while recognizing the aid budget can meet these needs, the Independent Commission for Aid Impact (ICAI), an official body charged with monitoring UK aid spending, argued the UK was not adopting a conservative approach to its reporting, compared to other donor states.

Both the ICAI and Commons International Development Committee recommended the government introduce a funding floor or ring-fence to ensure a proportion of the UK aid budget is spent overseas.

In response to the committee’s recommendation, in 2023 the Treasury rejected it as “unaffordable” in current circumstances. The government instead announced an additional £2.5 billion in aid for 2022 to 2024 to help restrict the impact of in-donor refugee costs. This funding was classed as aid spending, and resulted in aid spending rising to 0.58% of GNI in 2023. While welcoming the funding, the ICAI said it would not cover all the costs.

How has the Labour Government responded?

The Labour Government, in office from July 2024, have not announced additional spending to compensate for aid spending on refugees. It says it is taking steps to control the asylum budget, including re-establishing a cross-ministerial board to manage aid spending, reducing the use of hotel accommodation by the Home Office, and addressing older asylum claims.

International Development Committee Chair Sarah Champion said the government should have gone further to control spending. The Conservatives and Liberal Democrats criticised the lack of additional funding. The reduction to 0.3% has increased pressure to bring these costs down. In 2025, the government announced that the Foreign, Commonwealth and Development Office will no longer be automatically required to reduce spending in-year (PDF) to meet unpredicted rises of spending on refugee costs or GNI changes (funding will instead be set at the start of each spending period).

How do other countries count this aid?

In May 2024, the Organisation for Economic Cooperation and Development (OECD) published a report on how members of the Development Assistance Committee (which includes most major donors, save for China) had used their aid budgets to support Ukrainian refugees (PDF). Spending across DAC countries has increased since 2020, but not as large as the UK.

The report said that the “vast majority” of donors were using funds additional to their originally planned international aid budgets. Some, including Australia and Hungary, did not count the costs towards their aid budgets at all, or only some limited spending (the case in Belgium and Netherlands, for example). In 2024, around 13% of all DAC aid was on in-donor refugee costs.

Update log

December 2024: updated with new FCDO statistics on spending and Labour Government policy

May 2025: updated with new FCDO statistics on spending for 2024 and Labour Government policy

October 2025: Updated with FCDO statistics on spending for 2024 and OECD comparisons