Blair and Brown Didn’t Use the Aid Budget to Pay for Refugees in the UK, So Why Are Starmer and Reeves?

In-donor refugee costs—the cost of supporting refugees and asylum seekers within the UK—now account for almost 30 percent of the UK’s entire foreign aid budget. In the autumn budget, the new government did not provide any additional resources for this (though Rachel Reeves’ Conservative predecessor had provided £2.5 billion); and instead implemented further cuts to overseas aid to cope with this pressure.

But barely any refugee hosting was counted as aid before 2014: despite the UK hosting significant numbers of asylum seekers. What would have happened if it had been?

In this blog, we look back at asylum arrivals from 1990; and find the UK supported very similar numbers of asylum seekers in past years but did not report these costs as Official Development Assistance (ODA). Had the UK reported similar per-head costs as now (after deflating for lower prices then), it would have amounted to over two-thirds of the aid budget during the 1990s. In three different years (1991, 1999 and 2000) the UK would have spent more on hosting refugees than it did on ODA.  If those governments followed the current policy and funded these costs from the ODA budget, then aid would have fallen to zero in each of those years, including the year 2000, when the Blair and Brown government played a lead role in agreeing the United Nations’ Millennium Development Goals.

We urge the Chancellor and Prime Minister to recognise that the UK being the largest recipient of its “overseas” aid is simply absurd.  The Chancellor has just confirmed she accepts Parliament’s 2021 vote on “international aid”. That vote was to reduce spend to 0.5 per cent of GNI on “overseas aid” and at the coming spending review we urge the Chancellor to set out a pathway to remove domestic refugee costs from that budget by the end of the Parliament.

Historical asylum applications

Much attention has been paid to the recent spike in asylum seekers coming to the UK. The number of asylum applicants from ODA-eligible countries rose from 20-40,000 a year during the 2010s to 98,000 in 2022, and only slightly fewer (89,000) in 2023. This was driven in large part (though not solely) by increased crossings of the channel in small boats (these arrivals now account for around half of the total). Adding to this the large number of Visas issued to those fleeing Ukraine (almost 155,000 arrivals under the Ukraine Visa Schemes in 2022), and a smaller number from Afghanistan, this has led to the largest arrival of people in the UK since at least 1979.

But spikes in asylum applications are not new. In 1991 asylum applicants almost doubled in a single year, to some 73,000 (see figure below). And they more than doubled between 1997 and 1999, this time staying high until 2002. During this period asylum was primarily granted to people from Afghanistan, Iraq, and Somalia. In fact, the spike at the turn of the millennium was similar in size to the current one.

Figure 1. Total Asylum Applicants from ODA-eligible countries to the UK (thousands)

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Counting refugee hosting costs as ODA

Member countries of the Development Assistance Committee (DAC) have been able to report the first-year costs of hosting refugees as ODA since 1988. These comprised a small share of ODA until 2015-16 when exceptional numbers seeking refuge arrived in Europe (especially from Syria). Following this, the DAC issued clarifications on the reporting rules, and emphasised the need for a “conservative approach”.

What refugee hosting costs did the UK report historically?

The UK only began to record refugee-hosting costs in noticeable volumes after the aid budget increased to 0.7 percent of Gross National Income in 2013, and as the 2015 strategy allocated aid spend outside the Department for International Development. Before 2014, refugee hosting amounted to just £145 million in total (at 2024 prices) across the 25 years since 1990—and just £9 million before 2009—comprising effectively zero percent of UK ODA in any particular year.

But this wasn’t for a lack of asylum seekers supported, as Figure 1 makes clear. Although policies supporting asylum seekers differed, this raises the question: how much aid could have been recorded, or diverted, if the current policies were in place?

To estimate this, we assume an annual spend per asylum seeker, and apply it to the historical numbers supported from ODA-eligible countries (Figure 1). In recent years there has been a spike in this spend per person, largely due to accommodation costs. We estimate that the government is currently spending £53,700 a year per asylum seeker to cover their ODA-eligible first-year costs (based on a reported average hotel cost of £51,100 plus £2,600 for admin and health costs). This compares to an average of £7,000 reported between 2017 and 2019.

If past hosting costs were equivalent to the current level of £54,000 a year per asylum seeker (we deflate these costs historically) for example, this amounts to just over £30,000 per head in the year 2000).

Figure 2 shows the actual costs reported as ODA of hosting asylum seekers and what could have been reported if policy and costs were as they are now, or if they were based on the per head costs reported in 2017-19. Figure 3 compares this to the level of ODA provided, as a share of GNI.     

Figure 2. UK Actual & Counterfactual IDRC (£ billion, 2024 prices)

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Figure 3. UK Actual & Counterfactual IDRC vs ODA (%GNI)

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Note: For years 2002-13, estimates have been adjusted to account for the timing of arrivals. For instance, if a person applied for asylum in Q4 2005, 1.5 person-months of ODA-eligible support would be attributed to 2005, and 10.5 person-months to 2006. Due to data limitations, this adjustment was not made for the years 1990-2001, which are as shown in Figure 1.

These results show that, if the UK government had reported as much ODA per person as it does currently, then refugee-hosting would have amounted to over half of the ODA budget for most of the 1990s and early 2000s (amounting to under half in only 1992 and 1993 of the whole period 1990 to 2003). In 1991, 1999 and 2000, refugee hosting costs would have exceeded the entire ODA budget. Had the then-Government treated the ODA budget as a fixed envelope, it would have spent the entire budgets on refugee hosting (these were £3.9 , £3.8 and £5.3 billion expressed in 2024 prices). . 

Even if refugee hosting costs had been recorded at their lower 2017-19 level, they would have amounted to roughly a tenth of the ODA budget for much of the 1990s and early 2000s, with a peak of 19 percent in 1999.

In 1999 and 2000, the UK was led by the Labour government of Prime Minister Tony Blair and Chancellor Gordon Brown. In September of 2000, the UK played a lead role in agreeing the Millennium Development Goals which aimed to halve extreme poverty by 2015. It would have been inconceivable to have raided the UK’s 0.32 percent of GNI ODA budget to host asylum seekers.

Conclusion

Before 2014, the UK recorded close to zero refugee hosting costs as ODA. Our analysis shows that, had the UK taken the current Government approach of not only counting this spend, but also reducing foreign assistance while doing so would have meant the UK cutting its entire budget in three separate years, including 2000: the year of the United Nations Millennium Declaration. The absurdity of this situation illustrates just how detached the UK’s approach to counting refugees as ODA has become.

The main objective of ODA is to enhance the welfare of developing countries. We think hosting asylum seekers is a very valuable thing for countries to do; but not does not meet that test. For the UK, Parliament voted “to spend 0.5 percent of gross national income on overseas aid”.  

Prime Minster Keir Starmer and Chancellor Rachel Reeves should follow the example of Blair and Brown, and set out a pathway to reduce, and then eliminate refugee hosting from being counted towards the UK’s aid spending target.