---

The UK aid budget and support for refugees in the UK, 2022 to 2026

In 2021, citing the impact of the covid-19 pandemic, the government reduced aid spending from 0.7% of gross national income (GNI) to 0.5%. From 2025, it will be 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.

This spending continues to be high (18% of aid spending in 2025), but the government says it is committed to reducing 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?

UK aid spending on in-donor refugees 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 £2,403 million in 2025 (PDF) but remains at 18% of aid spending. The Independent Commission for Aid Impact (ICAI), which monitors UK aid spending, has projected in-donor spending may still be 20% of the aid budget in 2029. This would mean the proportion of UK aid spent overseas would be 0.24% of GNI. The government says it does not recognise the figure.

In 2025, the UK was the third largest spender of in-donor refugee aid globally, by volume (PDF), behind the US and Germany. By proportion of aid, the UK was seventh globally. Countries can count this aid differently (see below).

How has the Labour Government responded?

The Labour Government have not announced additional spending to compensate for aid spending on refugees or that it would set a minimum floor for the proportion of UK aid spent overseas. However, in 2025, it announced that Foreign, Commonwealth and Development Office (FCDO) budgets will no longer be changed in-year if other departments overspend or underspend their aid allocations (like the Home Office on asylum costs). Budgets will now be set at the start of each spending period. Any underspend will not be automatically transferred to the FCDO; instead a negotiation can take place.

The government says it is addressing in-donor-refugee costs by introducing new sanctions to target those facilitating irregular migration, new in-country funding to reduce migration, driving down the use of hotels by the Home Office, and speeding up the processing of asylum applications.

The International Development Committee has said the use of aid to meet in-donor costs is the “antithesis of [a] proactive and strategic approach to aid” and the level of aid spent overseas should be protected. In 2023 the ICAI said the Home Office had “not effectively overseen the value for money of its large-value asylum accommodation and support contracts”.

How does the UK’s accounting compare?

In 2026, ICAI argued that while UK spending is in line with Organisation for Economic Cooperation and Development (OECD) reporting requirements, the government has adopted a definition of costs that is “now more expansive than those of many other donors”. It has called on the UK to talk to other donors to improve the consistency and coherence of reporting these costs.

It noted other donors may not include these costs at all (such as Australia), do not include costs incurred for failed asylum applications (Belgium), or set a limit on the proportion of aid that can be spent in the donor state (Sweden).

A 2024 OECD report (PDF) found the “vast majority” of donors were using additional funds to their original overseas aid budgets. It said while spending across donors had increased since 2020, it was not as large as the UK.

What did the Conservative Government do?

Under the conservative government, both the ICAI and International Development Committee recommended the government introduce a funding floor or ring-fence to ensure most 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.

Update log

Septemeber 2026: Updated with FCDO statistics on spending for 2025, OECD comparisons, actions of the UK Government, and recommendations of the ICAI and International Development Committee.