Management of the official development assistance spending target

Findings

• The system for managing the UK’s aid budget was not always based on clear priorities or evidence of good value for money between 2021-22 and 2024-25.
• Processes were too often focused on hitting a spending target rather than delivering against clear international development objectives.
• Combining ‘demand-driven’ spending on refugees in the UK – dependent on how many arrive in a given year – with ‘policy-driven’ spending on development projects overseas within the same budget has made UK aid less transparent and distorted policy choices.
• The UK has a broad approach to reporting domestic asylum costs as official development assistance (ODA), going further than comparable countries such as the Netherlands and Sweden. The UK is not following OECD advice to take a “conservative approach” to reporting these costs to minimise the impact on overseas aid.
• Reforms introduced in 2025 to ensure that Foreign, Commonwealth and Development Office (FCDO) programmes do not face cuts if other departments overspend are welcome, but it remains to be seen how they will work in practice.
• The re-establishment of a ministerial-level, cross-government Board bringing together all main ODA-spending departments is a positive step towards driving cooperation and value for money.

Recommendations

ICAI recommends that the UK government adopt a strategic, evidence-based and transparent approach to allocating the aid budget across departments, underpinned by a clear framework for achieving long-term value for money. Alongside this, the government should confirm the FCDO’s role as spender and saver of last resort has  permanently ended, with any future  ODA spending target no longer treated as both a ceiling and a floor. ICAI also calls for greater medium-term predictability in aid allocations, for example through multi-year rolling commitments.

On the treatment of asylum costs, ICAI recommends that the allocation, management and public reporting of in-donor refugee costs be separated from other forms of ODA, reflecting their distinct, demand-driven nature. Finally, the UK should work with the OECD Development Assistance Committee and other member countries to reduce the distorting effect of inconsistent refugee cost reporting practices on international aid statistics.