UK aid spending set to fall by around 42% as major shifts in development priorities take effect, watchdog finds

16 Jul 2026

• UK aid is expected to fall by approximately £6.5 billion (42%) over four years, according to ICAI’s analysis of government spending plans.
• In longstanding UK partner countries such as Kenya, Tanzania, Rwanda and Malawi, traditional aid programmes are being sharply reduced.
• Humanitarian aid dominates in those countries that continue to receive direct support from the UK.

UK aid spending is expected to fall by around 42% – or £6.5 billion – from a record high in 2023 to a historic low in 2027-28, according to a report by the Independent Commission for Aid Impact (ICAI).

In an analysis of Foreign, Commonwealth and Development Office (FCDO) spending plans, the aid watchdog notes that traditional bilateral development programmes – long-term funding for sectors such as health, education and governance in specific countries – are being phased out in many places.

A group of eleven longstanding UK partners including Kenya, Tanzania, Rwanda and Malawi will see their allocations reduced sharply, in some cases by 80-90% over three years, to around £5 million per year by 2028-29.

This follows the 2025 decision to reduce official development assistance (ODA) spending to 0.3% of gross national income in order to fund increased defence spending. ICAI notes that, while a return to the UN target of 0.7 remains government policy “when fiscal circumstances allow”, there is no evidence of planning for a return to this level in the latest spending figures or accompanying government statements.

As the budget falls, UK aid will increasingly focus on humanitarian assistance and support for countries facing conflict and crisis, ICAI finds. The government has committed to directing the majority of country-level funding to fragile and conflict-affected states, including around £1.4 billion per year to countries in most humanitarian need.

ICAI Commissioner Liz Ditchburn, who led the report, said:

“These spending plans lay bare the extent of the aid reductions and how the UK is profoundly reshaping its approach to development. Direct financial support to many countries is being scaled back, with bilateral aid dominated by humanitarian assistance, while the UK bets on expertise, investment and partnerships to fill the gap in more stable countries. Whether this approach delivers the intended results remains to be seen. As the UK’s aid watchdog, we will be scrutinising how these changes are managed and whether they deliver impact and value for money.”

The report also finds that sharing expertise, as well as development finance and investment, will be central to the UK’s approach. British International Investment (BII) – which invests in businesses in developing countries and reinvests returns – will continue to play a major role as other forms of aid are reduced. ICAI notes that while BII has had some success diversifying its portfolio in recent years, it still focuses more on larger markets in middle-income countries than the poorest.

The report adds that despite the overall reduction in ODA, the UK has committed around £6 billion to international climate finance (ICF) over the next three years, representing around a fifth of the total aid budget. This succeeds the previous commitment to spend £11.6 billion in ICF in the five years to 2025-26. While the £6 billion pledge is a lower amount per year, it will make up a higher share of a reduced overall aid budget, ICAI notes.

Funding to top priority countries – Ukraine, Sudan and Palestine – is protected from budget reductions, the report says. Meanwhile, some other countries facing long-term humanitarian crises (Afghanistan, Democratic Republic of the Congo, Myanmar, Somalia, South Sudan and Yemen) receive 25-30% reductions in 2026-27.

A previous ICAI report in May 2026 described the increasingly challenging circumstances facing developing countries, with armed conflict at its highest level since the Second World War and climate change compounding the difficulties of fragile states.

The UK’s future spending plans continue to be influenced by aid being diverted from overseas priorities to support refugees in the UK (known as ‘in-donor refugee costs’). Under rules outlined by the Organisation for Economic Cooperation and Development (OECD), some of the costs of supporting refugees and asylum seekers in their first year in the UK can be counted as ODA.

The UK’s in-donor refugee costs rose sharply in 2022 and 2023 to a peak of £4.2 billion (28% of all UK ODA), before gradually declining, ICAI notes. Although not stated explicitly, current plans appear to be based on the assumption that the government will spend between £1.5 billion and £2.2 billion of ODA a year supporting refugees in the UK between 2026-27 and 2028-29. This would represent 22%, 20% and 16% of total UK ODA over this period.

The publication of three-year ODA allocations provides greater predictability than in recent years, ICAI finds, having outlined in the past how continuous budget uncertainty can be as disruptive to the UK’s aid programme as funding reductions.