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Methodology note

Cap foreign aid at GBP 1bn: calculation note

Assumptions behind the Cap foreign aid at GBP 1bn scenario. Implementation detail is incomplete, so uncertainty is explicit.

View main policy page: Cap foreign aid at GBP 1bn

Central fiscal result

-GBP 6.5bn - Net fiscal impact in 2027-28

Low case: -GBP 10.0bn. High case: -GBP 3.0bn. Positive numbers are fiscal costs or borrowing pressure. Negative numbers are Exchequer savings or receipts.

Scenario and baseline

  • UK ODA is capped at GBP 1bn annually.
  • The baseline reflects the planned move toward 0.3% of GNI.
  • Unspecified exceptions are not assumed centrally.
  • No replacement security or refugee fund is included.

Affected population

  • Affected units are aid programmes, recipients and UK suppliers.
  • FCDO and multilateral programmes face the largest cuts.
  • Domestic aid contractors and charities lose work.
  • UK taxpayers receive the saving.

Gross impact

  • 2025 provisional ODA was GBP 13.0bn.
  • A GBP 1bn cap implies very large cuts before baseline adjustment.
  • Central saving is GBP 6.5bn in 2027-28.
  • Low saving assumes broad exemptions and existing cuts.

Fiscal build-up, central case

  • ODA programme savings: -GBP 7.5bn
  • Contract exit and transition costs: +GBP 0.5bn
  • Replacement diplomatic/security spending: +GBP 0.5bn
  • Administration and uncertainty: +GBP 0.0bn

Central net impact: -GBP 6.5bn in 2027-28.

Behaviour and pass-through

  • Low saving case assumes aid baseline has already fallen sharply.
  • Central case assumes most programmes are cut but obligations remain.
  • High saving case assumes few exemptions and rapid cancellation.
  • Macroeconomic effects are mostly outside UK GDP.

Phasing

  • 2026-27: -GBP 3.0bn. Preparation or partial implementation.
  • 2027-28: -GBP 6.5bn. Main scenario year.
  • 2028-29: -GBP 7.0bn. Behaviour and pass-through develop.
  • 2029-30: -GBP 7.5bn. Steady-state uncertainty persists.

Main source groups

  • S1: Reform page specifies GBP 1bn cap and claimed savings.
  • S2: FCDO provisional ODA shows GBP 13.0bn spend in 2025.
  • S3: OBR public-finance data sets fiscal context.
  • S4: Aid-growth studies show mixed recipient-country effects, not a UK fiscal offset.
  • S5: Exemptions were not specified clearly.