The government will cut foreign aid spending to 0.3% to fund an increase to defence spending, Keir Starmer has announced.
The prime minister announced today in the House of Commons that the government will raise defence spending to 2.5% of GDP by 2027, and over the same period cut official development assistance from 0.5% to 0.3%.
The PM told MPs that the uplift to defence spending will mean the government will spend £13.4bn more on defence every year from 2027 and that it will be the "biggest sustained increase in defence spending since the Cold War”.
He said defence spending would rise to 2.6% of GDP when including spending on intelligence and the security services. Starmer also announced that the government planned to uplift defence spend to 3% of GDP in the next parliament.
Starmer had previously pledged to increase defence spending from 2.3% to 2.5% but had not given a timeline for doing so. He had also committed to increasing aid spending to 0.7% “as soon as fiscal circumstances allow”.
Starmer said the cut to overseas aid spend “is not an announcement I am happy to make”.
“I am proud of our record on overseas development, and we will continue to play a key humanitarian role in Sudan, in Ukraine and in Gaza, tackling climate change, supporting multi-national efforts on global health and challenges like vaccination,” he said.
The PM said the large amounts of the foreign aid budget that have been spent on in-donor refugee costs such as hotel accommodation will reduce as the asylum seeker backlog is cleared, diminishing the need to cut spending on overseas programmes.
“But nonetheless, it remains a cut, and I will not pretend otherwise,” he added. “We will do everything we can to return to a world where that is not the case and rebuild a capability on development. But at times like this, the defence and security of the British people must always come first.”
Labour's manifesto for last year's election committed to restoring ODA spend to 0.7% of GNI “as soon as fiscal circumstances allow" and “set out the path to spending 2.5% of GDP on defence”.
ODA was previously cut from 0.7% to 0.5% by Boris Johnson's government in 2021. It rose to 0.58% in Rishi Sunak's administration, under then-development minister Andrew Mitchell's watch.
Other G7 countries’ ODA as a percentage of GNI in 2023 was as follows: Germany 0.82%, France 0.48%, Japan 0.44%, Canada 0.38%, Italy 0.27%, and the United States 0.24%.
However, Donald Trump announced a 90-day freeze on most foreign aid spending hours after taking office to review alignment with his foreign policy priorities, and has laid off thousands of USAID employees.
David Lammy, the foreign secretary, warned earlier this month that this could be a “big strategic mistake”, and pointed to the UK's decision to merge the Department for International Development with the Foreign and Commonwealth Office.
Speaking to The Guardian on a trip to Kiev, Lammy said: “It’s widely accepted that the decision by the UK with very little preparation to close down DfID, to suspend funding in the short term or give many global partners little heads up, was a big strategic mistake.
Lammy said the UK "spent years unravelling that strategic mistake" and that development "remains a very important soft power tool".
"We were hugely critical of the way that the last government handled the decision," he said. "So I would caution US friends to look closely at what went wrong in the United Kingdom as they navigate this decision.”