The UK's aid budget is set to fall by 42% between 2023 and 2027-28, with many longstanding partner countries facing cuts of 80-90% to their bilateral funding, according to a new report from the Independent Commission for Aid Impact (ICAI).

The watchdog's UK aid spending to 2029 report said the government's three-year spending plans mark a 'historic reduction' in UK official development assistance (ODA), with total aid falling from £15.3bn in 2023 to a planned £8.8bn in 2027-28 as spending is reduced to 0.3% of gross national income (GNI).

This financial year alone, UK ODA is expected to fall by around £3.1bn, or 24%.

ICAI said there is no evidence in the spending plans that the reduction to 0.3% of GNI is being treated as temporary, despite the government's commitment to return to the statutory 0.7% target when fiscal conditions allow. Current forecasts suggest this is unlikely to happen before 2029 at the earliest.

The report identifies a significant shift in how UK aid will be delivered, with 'traditional' bilateral development programmes being phased out in favour of knowledge-sharing partnerships, multilateral funding and investment through British International Investment (BII).

A group of 11 longstanding UK partner countries, including Kenya, Tanzania, Rwanda and Malawi, will see their annual bilateral allocations progressively reduced to £5m by 2028-29.

According to ICAI, many of these countries will experience funding reductions of between 80% and 90% over the next three years.

The watchdog has said that while some countries have transitioned to lower-middle-income status, others, including Malawi, Rwanda, Mozambique and Sierra Leone, remain low-income countries with significant development needs.

It also points out that British International Investment has yet to identify investment opportunities at scale in many of these countries.

At the same time, UK bilateral aid will become increasingly focused on humanitarian assistance. The government plans to spend around £1.4bn annually in countries facing the greatest humanitarian need, with 70% of country allocations directed to fragile and conflict-affected states by 2028.

Countries receiving more than £10m in UK funding by 2028-29 will all either be experiencing humanitarian crises or hosting significant refugee populations.

ICAI said this represents a major strategic change but noted that overall regional allocations will remain broadly similar, as reductions in development programmes are offset by increased humanitarian support.

The report also highlights a greater emphasis on climate finance, with around £6bn committed over three years, representing 21.2% of the UK's aid budget, and continued investment through multilateral institutions including the World Bank and African Development Bank.

---