Modernised aid budget will focus on impact, value for money and transparency
Source: gov.uk (2025-07-21)

New figures published today show how the international aid budget will deliver value for money for the British taxpayer and maximum impact for the most vulnerable overseas.

new figures released today (Tuesday 22 July) set out how the government will spend the aid budget in 2025 to 2026, prioritising areas where Britain can make the biggest difference

the new approach means the UK will prioritise spending through the most impactful multilateral organisations like the World Bank and Gavi, the vaccine alliance, while working to drive reform of these institutions

Development Minister Baroness Chapman today confirms UK support for the World Bank’s International Development Association, with the fund expected to benefit 1.9 billion people in next 3 years

New aid funding figures published today (Tuesday 22 July 2025) show how the international aid budget will deliver value for money for the British taxpayer - and maximum impact for the most vulnerable overseas. The cut in the aid budget to 0.3% of Gross National Income from 2027 means every penny must count if the UK is to make progress on its biggest development priorities: to tackle humanitarian, health and climate crises.

Today’s aid figures, published in the FCDO’s annual report (https://www.gov.uk/government/publications/fcdo-annual-report-and-accounts-2024-to-2025) and the first to be released since the cut was announced in February, give an indication of the new approach the Development Minister Baroness Chapman will take. They follow a comprehensive line-by-line strategic review of aid conducted by the minister, which focused on prioritisation, efficiency, protecting planned humanitarian support and live contracts while ensuring responsible exit from programming where necessary.

The pivot will see global organisations with a proven track record of impact, like the World Bank and Gavi, prioritised to deliver better results for the UK taxpayer and the world’s poorest people.

The UK will also continue to play a key humanitarian role supporting those in crisis, including in Gaza, Ukraine and Sudan, and will hold a reserve fund to respond to future crises at pace.

However, underperforming multilateral organisations will face funding cuts in future, and as the UK moves to spend less on aid, bilateral support to some countries is also dropping.

While bilateral support for some countries will drop, the UK will instead increasingly share expertise, like that of our world leading scientists and financial sector. It will focus on tackling the climate crisis, health threats and humanitarian emergencies, creating stability and growth to help deliver the Plan for Change (https://www.gov.uk/missions) at home. The National Security Strategy (https://www.gov.uk/government/publications/national-security-strategy-2025-security-for-the-british-people-in-a-dangerous-world) published earlier this year said British interests are best served through effective multilateral cooperation.

As part of its growing support for impactful multilateral organisations, the UK today confirmed it will honour a pledge to the International Development Association (IDA) – the World Bank’s fund for the poorest countries – having agreed a new way to make payments that reduces costs to UK taxpayers and provides the same value to the Bank. IDA is expected to benefit 1.9 billion people in the next 3 years.

Minister for Development Baroness Chapman said:

We are modernising our approach to international development. Every pound must work harder for UK taxpayers and the people we help around the world and these figures show how we are starting to do just that through having a clear focus and priorities.

The UK is moving towards a new relationship with developing countries, becoming partners and investors, rather than acting as a traditional aid donor. We want to work with countries and share our expertise – from world leading science to the City of London – to help them become no longer dependent on aid, and organisations like the World Bank and Gavi are central to how we can work with others to solve some of the biggest challenges of our time: humanitarian disasters, pandemics and the climate crisis.

The UK’s support for the multilateral system will come with a renewed push for its reform to maximise efficiency and impact for people on the ground. It follows UK funding announced for another multilateral organisation Gavi, the vaccine alliance, last month (https://www.gov.uk/government/news/uk-partners-with-gavi-to-help-save-up-to-eight-million-lives-by-2030), which will help save up to 8 million lives.

The World Bank support was originally announced last November, but all UK aid funding was subsequently reviewed following the 0.3% announcement in February this year. Every £1 the UK invests in the World Bank’s IDA fund, enables £4 of finance for developing countries. The IDA fund is expected to benefit 1.9 billion people in next 3 years.

The World Bank President Ajay Banga today welcomed the UK’s funding commitment. He said:

We are grateful to the United Kingdom for honouring its pledge to IDA. In a time of tight budgets and growing global risks, this is not just generosity - it’s strategy. Every taxpayer pound is multiplied many times over through the Bank’s ability to mobilise capital and partner with the private sector.

These resources help create jobs in developing countries - jobs that build self-reliant economies, reduce the drivers of instability, crime, and migration, and grow the middle class. In turn, they create future consumers of UK products and investment opportunities that strengthen the UK economy over the long term.

The UK’s new approach aligns with recent calls from Global South leaders for a move away from traditional aid to a focus on investment and partnerships, including from the African Development Bank, and the former Kenyan President.

Alongside the figures released today, the government has also published an equality impact assessment (https://www.gov.uk/government/publications/fcdo-official-development-assistance-programme-allocations-2025-to-2026-equality-impact-assessment), which found plans to reduce the aid budget will “protect against disproportionate impacts on equalities” overall.

The government will publish indicative multi-year allocations for 2026 to 2029 in the autumn, providing an even clearer picture of the UK’s future direction in international development.

Background
- The full ODA spending allocations were published in the FCDO’s annual report and accounts (https://www.gov.uk/government/publications/fcdo-annual-report-and-accounts-2024-to-2025) on 22 July 2025.
- The equality impact assessment (https://www.gov.uk/government/publications/fcdo-official-development-assistance-programme-allocations-2025-to-2026-equality-impact-assessment) was published alongside the annual report and accounts.
- The UK announced last November it would pledge £1.98 billion to the World Bank’s IDA21 – from July 2025 to June 2028. All UK aid funding was subsequently reviewed following the decision to reduce the aid budget in February. We have now agreed to accelerate our payments to the Bank, reducing their need to borrow from markets. This means that while the UK will provide the Bank with around 10% less cash in total, the Bank will regard our contribution as equivalent to our original pledge. A number of other donors accelerate their payments to provide early support to the Bank and to increase the value of their funding in the same way.
- The Foreign Secretary announced new humanitarian support for Gaza on Monday 21 July 2025 (https://www.gov.uk/government/news/uk-pledges-lifesaving-aid-for-gaza).
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