A fifth of the UK’s overseas aid budget is actually spent supporting refugees and asylum seekers here in the UK. The UK is due to spend £8.9billion on overseas assistance in 2027-28, but as much as £1.8billion will be spent on dealing with the immigration crisis, according to the Independent Commission for Aid Impact (ICAI).
The “eye-watering cost” was described as “indefensible” by Conservatives. Shadow Home Office minister Katie Lam said: “This broken system rewards delay and indecision, while the British taxpayer foots the bill. Those who have no right to stay here should not be languishing in hotels. They should be detained and deported within days, not years.
“We need a migration system that is firm, fair, and fast. Over the past 12 months, Keir Starmer has systematically dismantled every deterrent, while his joke of a migrant deal agreed with France last week will do nothing to stem the flow of migrants risking their lives to cross the Channel.”
Chancellor Rachel Reeves has announced plans to end the use of hotels to house asylum seekers by the end of this Parliament, after the National Audit Office said accommodation costs could hit £15.3billion over a 10-year period.
But progress in bringing down aid spending on refugee costs remains “slow”, the ICAI said.
According to ICAI calculations, asylum costs are expected to take up £2.2billion of total UK official development assistance funding for 2026-27, £1.8billion the following year and £1.5billion by 2028-29.
Total overseas aid spending is now expected to fall from £10billion in 2026-27 to £8.9billion the following year, before increasing slightly to £9.4 billion in 2028-29.
This means a fifth of the total aid spending in 2027-28 is expected to go towards asylum costs, before dipping to around a sixth in 2028-29.
ICAI commissioner Harold Freeman, who led the new report, acknowledged that the Government had already taken some steps to address “flaws in the system” but said further changes would likely be needed.
He said: “The UK’s development programme is at a turning point, with budget reductions coming against a backdrop of increasing global conflicts, climate threats and rising humanitarian needs.
“At the same time, UK asylum costs are likely to continue to absorb a significant proportion of our aid funding.
“The Government has already taken steps to address some of the flaws in the system for managing aid identified by past ICAI work.
“But further changes will likely be needed to maximise the impact and value for money of the remaining development budget.”
The Government has been contacted for comment.
Last year, the watchdog raised “value for money” concerns after some 28% – or £4.3 billion – of all UK aid in 2023 was spent on hosting refugees and asylum seekers in Britain under the previous Conservative government.
The amount of overseas aid spending on in-house refugee costs has risen dramatically since 2020, in part due to visa schemes for Afghan and Ukrainian people but largely linked to lengthy stays in so-called asylum hotels, the ICAI said.
It means the UK is really due to spend as little as 0.24% of the UK’s gross national income on international development. Sir Keir announced in February that he was reducing aid spending from 0.5% of gross national income to 0.3% in 2027, but Labour officially remains committed to increasing aid to 0.7% of national income when possible.