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£4.3 billion of the UK aid budget was spent inside the UK in 2023 to support asylum seekers and refugees. So-called in-donor refugee costs (IDRC) have spiked in recent years, and made up a massive 28 percent of the UK’s total Official Development Assistance (ODA) spend in 2023.
In this note we estimate what refugee costs might come to in 2024, and consider ways to reduce costs. We find that if the government continues to spend and report the same amount of ODA per asylum seeker and refugee as in 2023, then total refugee-related costs will remain high, at around £3.6 billion in 2024. This is around four times the amount the UK spent on humanitarian support in 2023, or on global health; and would be the largest area of UK ODA spend.
We also find that while the government is making progress in reducing the backlog in asylum applications, it is very unlikely to materially reduce ODA-relevant costs in 2024. We break down total IDRC into its three main components – support for asylum seekers, the Ukraine Scheme, and other resettlement schemes – and find that nearly all of the expected reduction is explained by much lower numbers of arrivals from Ukraine, with relevant costs set to fall from over £1 billion in 2022 and 2023 to £0.3 billion in 2024. The amount allocated to supporting asylum seekers will remain high, at around £3 billion (£3.1 billion spent in 2023).
In 2023, over £2 billion extra was provided by HM Treasury towards these costs. If no additional resources are provided in 2024, refugee spend would comprise over 25 percent of the 2024 ODA budget (the highest share in the G7) and require some £900 million to be cut from overseas aid (a 9 percent in-year cut). ODA excluding in-UK refugee spend would fall to around 0.37 percent of national income (GNI). There has been a suggestion that refugee spend may even increase in 2024. If so, this would imply per head costs have risen even higher than in 2023 when the UK already reported more than any other OECD country. If refugee costs remain at their 2023 levels, remaining ODA would fall to around 0.35 per cent, its lowest since 2003 (last year, it was 0.42 percent).
The remainder of this note outlines our estimates, based on data and assumptions on the number of asylum seekers and refugees supported, and the amount of ODA spent and reported per person.
Figure 1: UK ODA allocated to in-donor refugee costs (nominal GBP billions)
The number of asylum seekers and refugees supported
First, we consider the number of people arriving in the UK.
We consider the three main groups: asylum seekers (which include small boat arrivals), those arriving via the Ukraine Scheme, and those arriving via other resettlement schemes, such as the Afghan Citizens Resettlement Scheme (ACRS) and UK Resettlement Scheme (UKRS).
The OECD allows for the first-year costs of supporting these groups to be counted as ODA, with guidance to take a “conservative approach”. Since it is rare for these first-year costs to perfectly coincide with the calendar year in which a recipient arrives in the UK, we calculate the number of person-years of ODA-eligible support falling in each calendar year based on the within-year timing of an arrival. For instance, a person who arrived under the Ukraine Scheme in November 2022 would receive two person-months of ODA-eligible support in 2022, and ten person-months in 2023.
Figure 2 shows the number of ODA-eligible person-years of support provided by the UK to each of these three broad groups. To calculate this, we use data on arrivals until 2024 Q2 for asylum seekers and those on resettlement schemes, and until September 2024 for Ukrainians, and assume arrivals for the rest of the year remain at their last observed quarterly levels. There is some evidence that asylum applications are slightly higher in Q3 and Q4 since small boat arrivals began to increase rapidly, but for simplicity and to err on the conservative side, we assume these stay flat (see Figure 5 in the linked spreadsheet). In any case, arrivals in the final months are only a small part of 2024 costs as most of their costs will fall in 2025 (similarly, many of the costs borne in 2024 relate to arrivals in 2023).
We use two alternative methods for estimating the number of ODA-eligible person-years of support provided to asylum seekers, using separate data sources, presented in Figure 2 below. Panel A presents results from using applications data—specifically, quarterly data on the number of asylum applicants from ODA-eligible countries, assuming each will receive a full-year of support and adjusting for the within-year timing of their application. Panel B presents results based on those that receive support, using quarterly data on the number of first-year asylum seekers from ODA-eligible countries in receipt of Section 98 support (initial and emergency shelter) or Section 95 support (shelter and cash)—both of which the UK counts as ODA. Estimates based on asylum applications data may overstate the number of person-years of support provided if applicants are processed in under a year. Estimates based on the number of asylum seekers in receipt of support doesn’t have this weakness, but must be adjusted by the share of asylum seekers who are still in their first-year whose costs are therefore ODA-eligible—but this data is not publicly available and must be accessed via Freedom of Information (FOI) requests. (Additional points to consider are that applications data is more widely available to enable cross-country comparisons, and that it better enables projections of future support provided based on the lagged effects of old applications). Both Panels A and B use the same method to calculate the number of ODA-eligible person-years of support provided to arrivals under the Ukraine Scheme and other resettlement schemes.
Figure 2: Number of ODA-eligible person-years of support provided to asylum seekers and refugees by the UK
We estimate that the number of ODA-eligible person-years of support provided to those arriving under the Ukraine Scheme is set to fall significantly between 2023 and 2024: from 105 to 31 thousand. By contrast, the amount of ODA-eligible support provided for asylum seekers will remain broadly stable, as implied by both methods whose results are presented in Panel A and B. Other resettlement schemes continue to support a much smaller number of people compared to support for asylum seekers and Ukrainians.
ODA Spent per asylum seeker and refugee
Second, we consider the amount of ODA spent and reported per asylum seeker and refugee supported.
We have shown that the UK spends more ODA per asylum seeker and refugee than all other DAC countries. Here we provide a more detailed breakdown across recipient groups and years.
Figure 3 presents the results of dividing the total amount of IDRC ODA allocated to asylum seekers, the Ukraine Scheme, and other resettlement schemes (Figure 1) by the number of ODA-eligible person-years of support provided to each of these groups (Figure 2).
Figure 3: IDRC ODA spent per person-year of support provided (nominal GBP thousands)
Given that our two methods to calculate the number of ODA-eligible person-years of support provided to asylum seekers generate different results—for example: 98 versus 67 thousand in 2023 (see Figure 2)—it is no surprise that these also imply differing levels of ODA spent per person-year. Whilst both reveal a sharp increase since 2019, the method based on the number of asylum seekers receiving support implies a per person cost of £46.3 thousand in 2023, compared to £31.7 thousand as implied by the method based on asylum applicants. It can be noted that the higher estimate is closer to information from the Home Office from February 2024 that average hotel costs for asylum seekers were at £140 per person per night—i.e. £51.1 thousand per year, and this excludes other costs related to admin, health, and education.
The amount of ODA spent per person-year of support provided to those on the Ukraine Scheme is much lower, and fell from £15.4 thousand in 2022 to £10.2 thousand in 2023. The Independent Commission for Aid Impact reported that in January 2023 the Local Authority payment made under the Homes for Ukraine Scheme was reduced from its original level of £10,500 per person, of which 69 percent was ODA-eligible (i.e. £7,245), to £5,900 per person, of which 53 percent was ODA-eligible (i.e. £3,127). Still, our estimates suggest there may have been other reductions in cost, since the reduced Local Authority payment is not large enough to account for the overall decrease, particularly as it did not apply to those arriving under the Ukraine Family Scheme.
The amount of ODA spent per person-year of support provided to those on other resettlement schemes notably increased in 2023: up from 2021 and 2022 when a spike in the number of Afghans supported under the ACRS and ARAP depressed the level of spend per person; but also up on its fairly stable level until 2020, the period when the VPRS and VCRS were the UK’s primary resettlement schemes.
Estimating in donor refugee costs in 2024
The estimates of UK IDRC ODA in 2024 presented in Figure 1 assume that the amount of ODA spent per person-year of support provided remains at their last observed levels in 2023 (see Figure 3), and are based on our estimates of the number of ODA-eligible person-years of support provided (see Figure 2).
Two estimates are generated through the use of alternative methods to estimate the number of person-years of ODA-eligible support provided to asylum seekers. A slightly lower estimate comes from using data on asylum applicants, which shows a slight fall in the amount of support provided in 2024 (see Figure 2, Panel A). And a slightly higher estimate comes from using data on asylum seekers receiving support, which shows an unchanged amount of support provided in 2024 (see Figure 2, Panel B).
What about reducing the backlog in processing asylum claims?
The Government can report up to a year of support to asylum seekers and refugees as ODA and, given processing times for asylum claims, it reports a year of costs in nearly all cases. But as the government attempts to reduce this backlog and processing times, might this reduce the number of ODA-eligible person-years of support provided to asylum seekers in 2024 and beyond? In short, not for now. There is a substantial number of asylum applicants who have been waiting for longer than a year, and we assume the Government will focus on dealing with them before it starts reducing processing times for those waiting under a year (and whose costs can be counted as ODA).
As of March 2024, 34 thousand asylum seekers had been waiting over a year for an initial decision. This number was 15 thousand lower than in December 2023. If this pace of absolute reduction was maintained for the rest of the year, then the backlog of asylum seekers waiting over a year could be cleared in the last quarter of 2024. And if the pace of absolute reduction returns to that achieved in 2023 (27 thousand in a year), then the backlog would still exist at the end of 2024; and might be eliminated in mid-2025.
Figure 4: Number of Asylum Seekers Awaiting an Initial Decision for More than One Year
Conclusions—no policy change will trigger further cuts to UK Aid
With asylum and refugee arrivals and applications remaining high and no clear sign of a fall in the per head costs reported—the ODA-eligible costs of hosting will remain about £3 billion in 2024, and potentially beyond.
While the cost of hosting Ukrainian refugees has fallen by about £750 million, the additional £2 billion in ODA provided by the Chancellor in 2023 has so far not been matched. If the Government chooses to count refugee spend as ODA and reduces wider ODA spend to hold the envelop at 0.5 percent of GNI, it will mean further substantial cuts to ODA in 2024. In-UK refugee costs will continue to be the largest area of UK ODA spend and, based on spending in 2023 (which may need to be cut further) refugee spend of £3.6 billion will be over four times the UK’s spend on humanitarian or global health for the foreseeable future (in 2023, these were £878m and £764m respectively).
Disclaimer
CGD blog posts reflect the views of the authors, drawing on prior research and experience in their areas of expertise. CGD is a nonpartisan, independent organization and does not take institutional positions.