The UK is being warned it may no longer be able to take billions from its aid budget to pay the costs of asylum seekers in this country, sparking a Whitehall “scramble” over how to fill the financial black hole.
The international watchdog that sets the rules on what qualifies as aid has indicated that Suella Braverman’s Illegal Migration Act will mean that spending the money in that way will no longer count.
The Home Secretary‘s critics have accused her of a “massive own goal”. Three different departments are now battling to avoid paying detention and accommodation costs predicted to reach £9.6bn over three years, two separate sources say.
“There’s now a scramble between three departments to avoid responsibility for paying for this, if the costs can no longer be counted as ODA [Overseas Development Assistance],” said one source familiar with the row.
“The Treasury has told the Home Office it can’t have more money, the Home Office is saying it doesn’t have the budget for it, so it will have to come from the Foreign, Commonwealth and Development Office (FCDO) – but the FCDO is saying that, if it isn’t ODA, it won’t pay.”
There has been growing criticism of the use of the shrinking aid budget to pay the hotel and other bills of asylum seekers reaching the UK by small boat, and then stuck in a 50,000-strong backlog of applications.
Nearly a third of that budget – 29 per cent or £3.7bn – was spent in the UK in 2022, as permitted under rules laid down by the Organisation for Economic Co-operation and Development (OECD) in Paris.
But the new Illegal Migration Act bans anyone arriving without permission from applying for asylum, allowing them to be detained and deported instead, despite the plan to send many refugees to Rwanda being blocked in the courts.
The OECD believes the new legislation could lead to the Government falling foul of the rules.
It states that costs after asylum claims are rejected “are not reportable as ODA, as the individual no longer fits within the definition of a refugee”, meaning that the aid budget cannot be spent on them.
“The rules indicate such costs could not be counted as ODA, but the OECD has yet to examine the bill in more detail and confirm its position,” a spokesperson said.
So, if ministers want avoid the embarrassment of having the UK’s reputation as a big spender in international aid being further damaged, it is likely that they will have to find the money elsewhere.
The looming ruling is believed to have come as a shock to the Home Secretary. It is thought she was only alerted to the bill’s potential consequences after putting it to Parliament.
The controversy is also being investigated by the UK’s watchdog, the Independent Commission for Aid Impact (ICAI), which has already criticised a lack of grip on aid spending caused by the asylum backlog.
The amount diverted to domestic costs soared from £1.1bn in 2021 to £3.7bn last year – to double the average of other donor nations – leading to a 16.4 per cent cut in spending overseas.
“The OECD development assistance committee guidance is clear that refugee spending at home can only be recorded as ODA if it is used for humanitarian purposes and not any form of coercion,” said Tamsyn Barton, ICAI’s chief commissioner.
In theory, the Government’s migration clampdown should “stop the boats” and ensure all migrants are deported, meaning that the UK would no longer have to pay to house tens of thousands here. But in reality the accommodation bill is unlikely to disappear in the near future.
Former Conservative Cabinet minister David Davis said: “I have never been comfortable that so much of the aid budget is being spent within our own borders, so this move is rational.
“But it does look like Home Office error. I doubt the Home Office has agreed with the Treasury to replace this funding for what will be, in the short-term no doubt, a continuing flow of illegal migrants.”
Sarah Champion, the Labour chair of the Commons International Development Committee, said: “This is a massive own goal by Suella Braverman, which does nothing for the taxpayer, nothing for refugees and nothing for our international standing.”
Aid organisations said the Home Office must accept responsibility for the extra costs, to ease pressure on the FCDO which is cutting bilateral overseas aid spending by a further 16 per cent this year.
“This is another example of a system that is not fit for purpose and is not FCDO’s problem,” said Romilly Greenhill, UK director of the ONE campaign.
Gideon Rabinowitz, policy director at Bond, the network for aid groups, said: “The Home Secretary pushed through the Illegal Migration Act, and it should be the Home Office’s responsibility to pick up the bill.”
The Illegal Migration Act, passed earlier in July, has been condemned by the UN Refugee Agency for breaching “international human rights and refugee law” and for creating “sweeping new detention powers, with limited judicial oversight”.
The Refugee Council calculated up to £9.6bn will have to be spent on detention and accommodation costs over three years. The Home Office has declined to produce its own estimate.
Jeremy Purvis, a Liberal Democrat foreign affairs spokesperson, accused the Home Office of a “shocking miscalculation” over the Act’s financial impact on the department itself.
“In addition to real concerns about whether the Act will actually work, we now seem to have utter chaos at the heart of government over how it will be funded,” he said.
A Government spokesperson said: “The Illegal Migration Act is a key part of our work to deter people from making small boat crossings and means that people who come to the UK illegally can be detained and then swiftly returned to a safe third country or their home country.
“We report all ODA spending in line with the OECD’s rules – which allow funding to be spent on food, shelter and education for asylum seekers and refugees for their first year in the UK.”