Government rejects watchdog’s recommendation for a cap on aid spent supporting refugees in the UK

11 Jul 2023

The government has rejected a recommendation from the aid watchdog for a cap on the proportion of the aid budget that can be spent on refugee costs in the UK.

The official response to the Independent Commission for Aid Impact (ICAI) rapid review of UK aid funding for refugees in the UK, which the government published two months overdue, rejected two of the independent scrutiny body’s six recommendations.

ICAI’s review, published in March 2023, with an update on spend levels published in April, noted that aid spend on the first-year costs of asylum seekers and refugees – known as ‘in-donor refugee costs’ – was around £3.7 billion in 2022, an estimated 29% of the UK’s total aid spend that year, double the average of other OECD donor countries.

As well as recommending a cap on the proportion of the aid budget that can be spent on refugee costs at home, as Sweden has proposed to do for 2023-24, ICAI advised that the government should revisit its methodology for reporting such costs with the aim of producing a more conservative approach to calculating and reporting them.

The government rejected both recommendations, saying that while it acknowledged refugee costs in the UK had put pressure on the aid budget, it would “continue to strike an appropriate balance between fiscal responsibility and its development objectives when managing these pressures”. The response added that all UK Official Development Assistance (ODA) spend is reported in line with the OECD Development Assistance Committee’s (DAC’s) rules.

The government accepted ICAI’s recommendation that the Home Office should strengthen its management of asylum accommodation and support contracts, and consider resourcing activities by community-led organisations and charities.

It partially accepted ICAI’s recommendation that the government should ensure aid-funded refugee support in the UK is more informed by humanitarian standards, with a key focus on gender equality and safeguarding. ICAI’s recommendation that the Home Office should strengthen its learning and be more deliberate, urgent and transparent in how it addresses findings and recommendations from scrutiny reports was also only partially accepted.

ICAI Chief Commissioner, Tamsyn Barton, who led the review, said:

“We are pleased that the government is finally committing to ensure better value for money in high-value private sector contracts providing accommodation and support services for asylum seekers. More funding for community-led organisations and charities would also be welcome. But so far, we are not seeing in this response the signs of a long-term plan.

“We are disappointed that the government has rejected two of our critical recommendations, to address the absence of a spending cap and to adopt a more conservative approach for calculating the costs of supporting refugees during their first year in the UK through the aid budget. Without a cap on spending, and with the FCDO absorbing the costs incurred by other departments, the risk of wasting taxpayers’ money is greatly increased.

“It’s not a good sign that the government only partially accepts our recommendation to learn from watchdogs like the National Audit Office. It’s also puzzling that the government appears not to consider it necessary to integrate gender equality and safeguarding into services for refugees and asylum-seekers – since there too its response is only partial acceptance.

“Overall we saw how pressure from the government’s handling of the costs of refugees resulted in the limited humanitarian response to emergencies such as the floods in Pakistan and the famine in Somalia. The government’s approach represents a significant loss in the efficiency and equity of humanitarian aid and risks damaging the UK’s global reputation.”