In November 2020, my Rt Hon Friend the Deputy Prime Minister and former Foreign Secretary delivered a statement outlining that, due to the impact of the COVID-19 pandemic on the economy and as a result the public finances, the UK would temporarily reduce the Official Development Assistance (ODA) budget from 0.7% of gross national income (GNI) to 0.5% from 2021, returning to 0.7% when the fiscal situation allows. With the UK having experienced the worst economic contraction in almost 300 years, it is with regret that we have had to take this temporary measure.
The International Development (Official Development Assistance Target) Act 2015 (“the 2015 Act") envisages situations in which a departure from meeting the target of spending 0.7% of GNI on ODA may be necessary: for example, in response to “fiscal circumstances and, in particular, the likely impact of meeting the target on taxation, public spending and public borrowing”.
The FCDO’s Annual Report and Accounts 2021-2022, published today, report that the 0.7% target was not met in 2021, on a provisional basis, and a statement was laid before Parliament, as required by Section 2 of the 2015 Act. This statement is in the same terms as that statement, which is published as an Unnumbered Act Paper.
In a Written Ministerial Statement on 12 July 2021, my Rt Hon Friend the former Chancellor of the Exchequer reaffirmed that the decision to reduce the ODA budget to 0.5% is temporary, and that the government is committed to the 2015 Act and to return to spending 0.7% of GNI on ODA once the fiscal situation allows. Consistent with the government’s fiscal rules, the government commits to spending 0.7% of GNI on ODA when the independent Office for Budget Responsibility’s (OBR) fiscal forecast confirms that, on a sustainable basis, we are not borrowing for day-to-day spending and underlying debt is falling, as set out in July 2021.
Each year during this Spending Review period SR21 from 2022-23 to 2024-25, the government will review, in accordance with the 2015 Act, whether a return to spending 0.7% of GNI on ODA is possible against the latest fiscal forecast provided by the OBR.
The House of Commons voted to approve this approach to returning to 0.7% on 13 July 2021.
This statement has also been made in the House of Lords