At a glance
- The United Kingdom (UK) is the third-largest donor country, spending US$18.1 billion on net official development assistance (ODA) in 2017 (in current prices).
- The UK has met the United Nations (UN) target of spending 0.7% of gross national income (GNI) on ODA since 2013. While senior government leadership have reaffirmed their commitment to the target, which is mandated by law, it has grown increasingly controversial within the Conservative Party.
- The Department for International Development (DFID) is the main provider of the UK’s ODA, managing 72% of total spending in 2017, down from 86% in 2014. This is a deliberate strategy of the current government to allocate more ODA through other ministerial and cross-government funds, with DFID’s share expected to decline to 70% by 2020.
- The UK’s development strategy, ‘UK aid: tackling global challenges in the national interest’, outlines four priorities: 1) strengthening global security; 2) resilience and response to crisis; 3) promoting global prosperity; and 4) tackling extreme poverty.
- The strategy explicitly links “promoting global prosperity” with strengthening UK trade and investment opportunities and promoting global security with strengthening UK security, committing DFID to allocating at least half its budget to fragile states and regions.
- The UK prime minister announced in 2018 a new focus on Africa with a partnership promoting economic development and enhanced security, pointing to future ODA increases to Africa in these areas. The UK intends for the partnership to go beyond ODA, advancing diplomatic ties, trade, and private-sector investment.
- In 2019 the UK Treasury will conduct a Comprehensive Spending Review, which will set medium-term spending limits of all government departments starting 2020. The Spending Review offers an opportunity to shape policy objectives that DFID and other UK ODA-spending departments will commit to delivering with their budgetary allocations.
- Given the UK’s emphasis on greater cross-government allocation of ODA, there may be increasing avenues to shape UK development efforts through engagement with actors outside of DFID, such as the Foreign and Commonwealth Office and the Department of Business, Energy and Industrial Strategy.
- The UK is scheduled to leave the European Union (EU) on March 29, 2019. At present there is a high degree of uncertainty over the exact terms on which the UK will depart the EU, whether it will on time, and even whether there might be a second referendum on EU membership.
- How much ODA does the UK provide?
The UK is the 3rd-largest donor country; 0.7% target enshrined into law since 2015
The UK is the third-largest donor country, after the United States and Germany. Net ODA stood at US$18.1 billion in 2017 (in current prices) according to data from the OECD Development Assistance Committee (DAC). ODA has gradually increased since 2012 and expanded 3% between 2016 and 2017, driven by the UK’s commitment to spend 0.7% of its GNI on ODA. Most of this increased spending (US$405 million) went to multilaterals as core funding.
In 2013, the UK became the first G7 country to achieve the UN target of spending 0.7% of its GNI on ODA, and it has maintained this level since then. In 2015, the UK Parliament passed a bill enshrining the target in law under a conservative minority government after all three major parties endorsed it in their manifestos during the previous general election. Future growth of ODA will therefore move in step with economic growth, which is forecasted to be modest in the coming years.
Senior government leadership, including Prime Minister Theresa May and Secretary of State for International Development Penny Mordaunt, have reaffirmed the 0.7% commitment. However, Mordaunt has suggested using private-sector funding and disaster assistance to non-ODA-eligible countries to meet the target, and other prominent voices within the Conservative Party have publicly argued for relaxing the target. May used her first trip to sub-Saharan Africa in August 2018 to reiterate her commitment to the 0.7% target but on the condition that ODA also bolster UK trade and investment.
DFID is the main implementing agency for development assistance: According to the UK government’s ‘Statistics on International Development’, DFID managed 72% of the country’s ODA in 2017, down 14% in just three years. This is part of a deliberate strategy under the Conservative Party to allocate increasing shares of ODA through other ministerial departments and cross-government funds. According to the Parliament’s International Development Committee, DFID’s share of ODA spending is expected to further decline to about 70% by 2020. Other parts of the UK government that have emerged as significant channels of ODA are the Department of Business, Energy, & Industrial Strategy; the Foreign and Commonwealth Office; the Conflict, Stability and Security Fund; and the Home Office.
There is growing support within some parts of the Conservative Party for merging DFID with the UK’s Foreign and Commonwealth Office after the UK’s exit from the European Union (‘Brexit’), with full integration both at headquarters and in the field. Supporters argue this would reduce wasteful spending and better align development cooperation within broader foreign policy. Supporters of this approach have pointed to Australia and Canada as potential models for integration, while also noting that the UK itself has housed global development with its foreign ministry before.
Since 2013, the UK has maintained the 0.7% ODA/GNI target, which became law in 2015
Exactly how Brexit will impact UK development cooperation in the long-term is not clear, but the UK government has said that it is open to continuing to partner with the EU on key development matters particularly around humanitarian, security, and migration-related assistance, provided the UK is allowed a measure of oversight. This would likely happen through the UK contributing to EU facilities and trust funds that are already open to contributions from non-EU actors, e.g., the EU’s External Assigned Revenue Facility for humanitarian funding that allows European Free Trade Association countries to contribute.
Exiting the EU would have a direct impact on UK ODA spending; in 2017, 26% of its multilateral ODA went through the EU. The UK government has committed, under the assumption of a smooth and orderly exit, to maintaining its ODA funding to the EU’s European Development Fund (EDF) until 2020, when the EDF’s current funding cycle runs out. These and other rolling commitments mean the UK would continue to spend potentially between £3 billion-£4 billion (US$3.9 billion-US$5 billion) of its ODA through the EU until 2026. Provided the 0.7% target continues to be respected, any ODA funding return to the UK from the EU would be available for spending through other channels.
- What are the UK‘s priorities for global development?
The UK’s strategy directly links development cooperation with promoting national economic interests
The UK development strategy (‘UK aid: tackling global challenges in the national interest’), released in 2015 under a conservative minority government, highlights four strategic objectives for the UK’s development assistance: 1) strengthening global peace, security, and governance; 2) strengthening resilience and response to crisis; 3) promoting global prosperity; and 4) tackling extreme poverty (see more details in the box). The strategy explicitly links promoting economic development and reducing poverty in partner countries with strengthening UK trade and investment opportunities.
The strategy also commits the Department for International Development (DFID) to spend at least half of its budget on fragile states and regions. The commitment will not likely result in a major shift in funding, however, given that DFID was already achieving the target before the 2015 strategy (according to the independent organization Development Initiatives).
The priorities laid out in the 2015 strategy still form the basis of DFID’s Single Departmental Plan, last updated in May 2018, which reports performance against the priorities as well as ‘value for money’. Single Departmental Plans were introduced in 2015 and are long-term plans that are intended to provide a comprehensive, costed business plan, bringing together a department’s activities and spending in a multi-year plan. They are refreshed annually.
DFID secretary Penny Mordaunt has set out to focus within the UK Aid Strategy on the following priorities: 1) humanitarian assistance; 2) global health partnerships; 3) developing economies and human capital 4); security, rule of law, human rights, and tackling crime and corruption; and 5) connecting partner countries with expertise and knowledge from UK entities. Under Mordaunt, issues related to disabilities have also taken center stage, owing to her interest in disability rights and inclusivity. This has included hosting a global summit on addressing discrimination based on disability in July 2018 and DFID’s first-ever Disability Inclusion Strategy.
The UK’s four strategic priorities for development (as outlined in 2015 development strategy):
- Strengthening global peace, security, and governance: At least 50% of DFID’s annual budget will be spent in fragile states and regions; a Conflict Stability and Security Fund established.
- Strengthening resilience and response to crisis: £500 million (US$644 million in 2017 prices) ODA crisis reserve established to enable rapid response to emergencies.
- Promoting global prosperity: Prosperity Fund set up (£1.2 billion until 2023) to promote economic reforms and improve business climate in developing countries, in response to DFID Economic Development Strategy goal of a stronger role for UK development finance institution CDC Group, specialized in the private sector.
- Tackling extreme poverty and helping the world’s most vulnerable: Focus on eliminating extreme poverty by 2030, supporting the world’s most vulnerable people, and improving access to basic needs; particular focus on rights of girls and women.
The UK is a strong supporter of multilateral initiatives, particularly to health. It is the largest donor to Gavi, the Vaccine Alliance, and has announced it will host the replenishment pledging conference in 2020; the largest donor to the Global Partnership for Education; the third-largest donor to the Global Fund to Fight AIDS, Tuberculosis and Malaria; and among the largest funders of the Global Financing Facility.
Three review documents play a key role in shaping the UK’s bilateral and multilateral approaches to development funding. First, the Bilateral Development Review (BDR), published in December 2016, assesses the composition of DFID’s bilateral portfolio, geographic priorities, and delivery channels. The BDR highlights several priority areas, including global health, security, climate, disability inclusion, and migration.
The UK is a strong supporter of multilateral initiatives, particularly to health. It is the largest donor to Gavi, the Vaccine Alliance.
Second, the Multilateral Development Review (MDR), published jointly with the BDR, assesses the effectiveness of multilateral organizations and their approach to ‘value for money’. The MDR introduces performance agreements, which restrict the disbursement of funds if agencies do not meet pre-agreed performance targets. DFID plans to link 30% of its multilateral funding to UN development and humanitarian organizations that have demonstrated improved results. The MDR also points to the need for multilateral organizations to better coordinate their work to reduce duplication and competition, as well as to be more open about their management and budgets to improve transparency and accountability.
The Civil Society Partnership Review, the third key review, released in November 2016, assesses the role, funding options, and effectiveness of civil society organizations (CSOs) in the UK. The review outlines four new mechanisms for CSO funding, and a move away from unrestricted core funding to a more competitive and results-focused funding model, with an expanded network of CSO partners.
DFID spells out its private-sector approach through its Economic Development Strategy, released in early 2017. The strategy outlines five priority sectors for DFID’s work in this area: 1) infrastructure, energy, and urban development; 2) agriculture; 3) exports, manufacturing, and services; 4) extractive industries; and 5) economic inclusion. The strategy also outlines a stronger role for the UK’s development finance institution, the CDC Group, within the UK’s development programs. In line with that strategy, DFID announced in October 2017 that it would channel up to £703 million per year (US$905 million in current prices) for five years through CDC. The move followed the passage of legislation in February 2017 that quadrupled the total funding the CDC Group can receive from the UK government from £1.5 billion to £6 billion (US$7.7 billion).
- How does the UK spend its ODA?
UK’s mix of bilateral and multilateral spending is stable and aligns with DAC averages
The UK has long maintained a relatively stable ODA portfolio in terms of its ratio of bilateral to multilateral spending, and this trend has continued in the years since it first reached the 0.7% ODA/GNI target. In 2017, 37% of the UK’s ODA was core funding to multilaterals, not far from the 40% average among countries in the OECD’s Development Assistance Committee (DAC). Bilateral ODA and bilateral ODA channeled through multilaterals (‘earmarked funding to multilaterals’) were also in line with DAC averages, at 44% and 19% respectively. Owing to the UK’s commitment to the 0.7% ODA/GNI target, bilateral and multilateral ODA have steadily increased in absolute terms in line with economic growth but stayed largely stable as a proportion of overall funding for global development.
According to OECD data, CSOs implemented 20% of the UK’s bilateral programs in 2017, above the 17% average among countries in the OECD’s Development Assistance Committee (DAC).
Bilateral funding centered on humanitarian assistance and global health
Reflecting its strategic priorities (see ‘Key Question 2: What are the UK’s priorities for global development?’), the UK focuses much of its bilateral ODA on humanitarian assistance and global health, as well as security and governance.
Humanitarian assistance surpassed global health as the UK’s largest sector of bilateral support in 2015, the first year of a new ODA strategy that emphasizes security and fragile states/regions, but the sector was already growing rapidly. In 2017 the UK spent US$1.8 million on humanitarian assistance, 16% of overall bilateral ODA and up 6% from 2016. The related sector of Conflict, Peace, and Security has also seen rapid growth in recent years, more than doubling since 2014 to US$585 million in 2017.
The second-largest sector of bilateral funding in 2017 was global health, accounting for 15% or US$1.7 billion. This total represented growth of 24% over 2016. Other large sectors of bilateral ODA in 2017 were Government and Civil Society (US$926 million or 8%) and education (US$916 million or 8%), though education funding fell 28% from 2016, a year marked by several unusually large disbursements (e.g., to the Global Partnership for Education and the Girls’ Education Challenge) that may prove to be an outlier. Much of the increased spending on strengthening governance and civil society, as well as addressing conflict, peace, and security, was channeled through the Foreign and Commonwealth Office.
The UK prefers grants to loans for its bilateral ODA. In 2017, almost all (99.7%) of the UK’s bilateral ODA went as grants, in line with recent years.
Bilateral ODA focuses on poorest countries and sub-Saharan Africa
The UK currently allocates the largest share of its bilateral ODA to sub-Saharan Africa (on average 30% between 2015 and 2017), which is well above the average among DAC members (21% in 2017). Asia received the second-largest share (16%), slightly above the 2017 DAC average of 14%.
Overall, the UK’s bilateral ODA focuses on low-income countries (LICs). The largest share of bilateral ODA (33%) between 2015 and 2017 went to LICs, well above the DAC average of 24% in 2017. The UK’s development strategy, ‘UK aid: tackling global challenges in the national interest’, published in 2015, commits DFID to allocating at least half of its annual budget to fragile states and regions. However, the independent organization ‘Development Initiatives’ suggests that this target may not result in a major shift in funding, given that DFID was already achieving the target before the new development strategy.
The top recipients are Pakistan (US$543 million on average per year between 2015 and 2017), Ethiopia (US$439), Syria (US$407 million), Nigeria (US$398 million), and Afghanistan (US$346 million).
For a deeper understanding of funding at the recipient level, please consult data from the International Aid Transparency Initiative (IATI). IATI is a reporting standard and platform on which organizations and governments voluntarily publish data on their development cooperation, including more recent activity than is available through OECD data.
Data can be searched by recipient country, the ‘publisher’ (including funders that do not report to the OECD), and other filters. Click here for more information on IATI’s data. Click here to go directly to IATI’s ‘d-portal’, a user-friendly interface for data searches.
The UK is the largest donor to multilaterals; funding is determined by ‘value-for-money’ assessments
According to OECD data, the UK was the largest provider of core contributions to multilateral organizations in 2017. Core funding to multilateral organizations amounted to US$6.8 billion that year, corresponding to 37% of the UK’s total ODA.
The largest recipients of this funding in 2017 were the World Bank (US$1.8 billion or 26%), the European Union institutions (US1.7 billion or 26%), the International Monetary Fund (US$1.3 billion or 14%), and a host of multilaterals that includes Gavi, the Vaccine Alliance (US$258 million) and smaller multilaterals focused on immunization and drug purchasing; the Global Fund to Fight Aids, Tuberculosis and Malaria (US$408 million); and the Green Climate Fund (US$158 million). Overall funding for multilaterals was up 6% over 2016, with most of this increased spending going to the International Monetary Fund’s Poverty Reduction and Growth Trust (+US$348 million) and the World Bank.
The UK uses the Multilateral Development Review (MDR; see ‘Key Question 2: What are the UK’s priorities for global development?’) as an instrument to assess the effectiveness of multilateral organizations and their approach to ‘value for money’.
- Who are the main actors in the UK’s development cooperation?
DFID leads on strategy setting and funding decisions for the UK’s development policy
The UK currently has a minority government headed by the Conservative Party under Prime Minister Theresa May and supported by the Democratic Unionist Party (DUP) of Northern Ireland. The prime minister can exercise significant influence over development policy, for example through funding commitments for international initiatives, though the degree of involvement varies in practice.
The Department for International Development (DFID) leads on strategy setting and funding decisions for the UK’s development policy. DFID has been headed by the Secretary of State for International Development, Penny Mordaunt, since November 2017. DFID’s Executive Management Committee, chaired by the Permanent Secretary for International Development, Matthew Rycroft, since January 2018, oversees implementation and is accountable for ensuring that DFID divisions deliver results consistent with ministerial priorities. DFID has about 2,700 employees and implements programs in 28 priority countries through various regional programs (for more details, see question three: ‘How does the UK spend its ODA?’).
Programming of DFID’s bilateral funding is largely decentralized, as DFID’s country offices mostly manage program development. Programming is based on the Treasury’s Comprehensive Spending Review (CSR), which sets DFID’s budget normally for three to five years. Based on the CSR, DFID sets out high-level priorities in its multi-year Business Plan.
Reflecting the Business Plan’s priorities, DFID’s country offices develop Operational Plans (OPs), which guide DFID’s bilateral cooperation within the partner country. An OP includes indicative multi-year budgets for ‘strategic pillars’ (e.g., health), including ‘results targets’ to be achieved by the end of the OP period. Once the OP is finalized, country offices will still have an opportunity to make adjustments during the annual budget process, based on the overall multi-year budget framework set by the CSR and DFID’s Business Plan. In addition, DFID headquarters originates and manages programs that go beyond the scope of a single country, such as specific thematic and regional initiatives.
Other government departments: Recent conservative governments have prioritized allocating more ODA through other ministerial departments and cross-government funds, which has resulted in DFID’s controlling 72% of ODA in 2017, down from 86% in 2014. This elevates the importance of actors outside of DFID, particularly the Department of Business, Energy & Industrial Strategy, which largely funds climate-related projects; the Foreign and Commonwealth Office, which focuses on strengthening global peace, security, governance, and prosperity in support of the ‘UK Aid Strategy’ in 2017; and the Conflict, Stability and Security Fund, which funds action on (‘Key Question 5: 'How is the UK ODA budget structured?’).
THE UK'S DEVELOPMENT COOPERATION SYSTEM
Cross-government oversight: While DFID is responsible for how it spends ODA, the UK has several cross-government groups that exercise oversight. The Cross-Ministerial Group, co-chaired by the Chief Secretary to the Treasury and the Secretary of State for International Development, scrutinizes ODA spending from a ‘value-for-money’ standpoint across all government departments. The Senior Officials Group on ODA, a director-level group co-chaired by the UK Treasury and DFID, monitors spending relative to the 0.7% ODA/GNI target and promote collaboration across government to help ensure it is reached. The last group, announced in March 2018, is a Ministerial Committee overseeing governance of cross-government spending and is chaired by the Minister for the Cabinet Office.
Parliament: The UK Parliament is composed of the House of Commons and the House of Lords. Within the House of Commons, ‘select committees’ review the work of ministerial departments. The International Development Committee scrutinizes DFID’s policies and spending and monitors organizations that receive DFID funding. In recent years the International Development Committee has called upon DFID to take more active oversight over ODA spent by other departments and warned against its economic development strategy focusing too closely on national interests, among other issues. Reporting to the International Development Committee but sitting outside of government is the Independent Commission for Aid Impact, which produces in-depth reviews of the UK’s development governance, policy, and financing.
In addition to select committees, All-Party Parliamentary Groups (APPGs) are influential in policymaking, bringing together members of Parliament, the private sector, and civil society organizations (CSOs) on key policy issues, including on international development (e.g., the APPG on the UN Global Goals for Sustainable Development, the APPG on Global Education, the APPG on Global Health, the APPG on Malaria and Neglected Tropical Diseases, and the APPG on Agriculture and Food for Development).
Recent conservative governments have prioritized allocating more ODA through other ministerial departments and cross-government funds
Civil society: CSOs in the UK play a strong role in implementing development funding and shaping the agenda. They frequently engage with the government through formal and informal consultation processes. Bond, the UK’s membership body for development CSOs, has more than 400 and has been key in maintaining the UK’s strong commitment to development. DFID provides funding to CSOs, both through its country offices and as direct funding through DFID headquarters.
Academia, think tanks, and the media: Academic institutions (e.g., the London School of Economics, Sussex University’s Institute of Development Studies, and Birmingham’s International Development Department) and think tanks (e.g., the Center for Global Development and the Overseas Development Institute) play a significant role in the UK’s development policy. British medical journals (e.g., ‘The Lancet’, ‘The BMJ’, ‘PloS Medicine’) place a strong emphasis on global health issues. The online version of the newspaper ‘The Guardian’ has a designated section on development topics.
- How is the UK ODA budget structured?
DFID manages 72% of the UK’s ODA; this share is expected to decline to 70% by 2020
The Department for International Development (DFID) is the primary funder of the UK’s ODA. According to the UK government document ‘Statistics on International Development’, DFID contributions accounted for 72% of ODA in 2016. Most of the remaining 28% is managed by other government departments, including the Department of Business, Energy, & Industrial Strategy (5.4%); the Foreign and Commonwealth Office (4.5%); the Conflict, Stability and Security Fund (3.9%); and the Home Office (2.4%).
The remaining ODA is not attributed to a particular department or ministry. In 2017 this included the UK’s contributions to the International Monetary Fund’s Poverty Reduction and Growth Trust (5.2%) and European Union contributions to global development funding (3.2%). According to the UK Parliament’s International Development Committee, the UK government expects DFID’s share of ODA to further decline to about 70% by 2020.
DFID plans to spend £10.4 billion (US$13.4 billion) through its various programs in fiscal year (FY) 2018-19 (see table below, based on data from ‘DFID’s Annual Reports and Accounts 2017-2018’). It is important to note that the spending plan is indicative. This means that DFID has the authority to make changes to its allocations and distribute funds to different programs and divisions throughout the year.
Overview: DFID's budget for FY2018-2019
Regional Programs 3,964 5,104 East and Central Africa Division 1,341 1,727 Asia, Caribbean and Overseas Territories Division 1,148 1,478 West and Southern Africa Division 787 1,013 Middle East and North Africa Division 688 886 Policy, Priorities, International Organisations and Humanitarian 6,072 7,819 Economic Development Division 2,147 2,765 International Relations Division 1,722 2,217 Policy Division 1,421 1,830 Research and Evidence Division 426 549 Conflict, Humanitarian, Security and Stabilization Division 356 458 Conflict, Stability and Security Fund 104 134 Non-Departmental Public Bodies 27 35 Other Central Programs 72 93 Crisis Reserve (central reserve) 200 258 Total DFID (not including cross-government funds) 10,439 13,442
- What are important milestones in the UK’s annual budget process?
Annual budgets run from April to March; final annual spending is determined in autumn
The UK’s budget process is different to that of many other donor countries, as government departments determine annual spending for budget lines based on a multi-year budget process.
The budget process usually begins with the Comprehensive Spending Review (CSR), which sets expenditure limits for government departments for the following three to five years and is led by the UK Treasury. The CSR development process is thus an important opportunity to shape the UK’s overall long-term funding levels for development. The next CSR will take place in 2019. The last CSR coincided with the creation of the UK’s current global-development strategy and contained explicit targets drawn from the strategy that the Department for International Development and other parts of the UK government committed to delivering within the CSR period. It is unclear whether DFID and Treasury are preparing a new strategy or not for the forthcoming Spending Review.
The UK’s financial year runs from April to March:
- Chancellor presents annual budget to Parliament: Usually in March, the Chancellor of the Exchequer (Chancellor) presents the budget speech to Parliament, detailing spending limits for each ministerial department. After the budget speech, members of Parliament debate, for four consecutive days, different policy areas such as health, education, or defense. These debates are known as the ‘Budget Resolutions’.
- DFID adjusts budget based on budget speech: Following the Chancellor’s budget speech, the Department for International Development (DFID) begins annual resource allocation rounds (RAR) to adjust allocations of its annual budget to align with the budget ceiling set by the Chancellor. DFID can also reallocate funding at this point to adapt to changing demands and to the speed with which different projects are implemented. RARs are conducted again at the end of the year following the Chancellor’s Autumn Statement (see below). Even after the RAR, the budget can be adjusted throughout the fiscal year as divisions respond to new priorities or unexpected delays in program delivery.
- Parliament debates and adopts the annual budget: Between May and June, members of Parliament debate the budget resolutions and scrutinize the budget. However, Parliament does not amend any allocations within DFID’s budget, as it is not subject to parliamentary approval. The parliamentary International Development Select Committee debates and scrutinizes UK development policy, which can influence DFID policy and funding decisions, even if the committee has no power to decide on allocations.
- Chancellor makes Autumn Statement: The Chancellor’s Autumn Statement in November provides an update on funds available for ministerial departments. DFID makes final adjustments to its annual budget for the current fiscal year based on the Autumn Statement.