Spending Review 2010

20 October 2010

The Chancellor has announced the UK's Spending Review and has outlined how the government will meet its promise to spend 0.7% of Gross National Income on aid from 2013, helping the billion people in the world who live in extreme poverty.

Over the course of the Spending Review period, DFID will increase resource spending by 35% in real terms, and increase capital spending by 20% in real terms. The department’s administration budget will be reduced by 33%.

Meeting the 0.7% pledge on Official Development Assistance (ODA) is in line with the UK’s international commitments to help those living in extreme poverty in our world. The Spending Review sets out how the ODA budget will increase every year between now and 2014, to deliver an ODA/GNI ratio of 0.56% in 2011 and 2012 rising to 0.7% in 2013 and 2014.

Development spending represents value for money in tackling global issues such as disease, migration, conflict and climate change and promoting economic stability and global prosperity. It is not only the right thing to do but also in the UK’s national interest.

Achieving maximum impact

With this increase in funds, DFID is changing the way it delivers, to achieve maximum impact:

• A new Independent Commission on Aid Impact will assess all ODA spending to ensure best value for money and effectiveness.
• DFID is becoming a leaner organisation – by significantly reducing back-office costs.  Running costs will account for only 2% of total spending by 2015, compared to a global donor average of 4%.
• DFID will redirect money from low-priority projects to programmes combating poverty. For example, DFID will phase out the low-value Development Awareness Fund.
• In order to focus aid where it is needed most, DFID will close programmes in China and Russia.
  

How we will meet our goals

Following the Spending Review, DFID will:

• Honour international aid commitments to support the Millennium Development Goals. For example, the UK will aim to halve malaria-related deaths in ten of the worst affected countries by 2014-15. 
• Deliver improvements in child and maternal health – the Goals which are currently the furthest off-track. UK aid will save the lives of at least 50,000 women in pregnancy and childbirth, and save 250,000 newborn babies.
• Make British international development policy more effective in boosting economic growth and wealth creation – vital when growth in average incomes accounts for about 80% of absolute poverty reduction in the long term.
• Improve the impact of British development in conflict countries, including through more integrated working across HMG, with a particular focus on Afghanistan and Pakistan. In line with the Strategic Defence and Security Review (SDSR), spending to support fragile states and conflict affected states will increase from 22% to 30% of ODA by 2014/15. Countries affected by conflict and fragility are the most off-track on the Millennium Development Goals: 22 out of the 34 coutries furthest from achieving the MDGs are in or emerging from conflict.
• Drive urgent action to tackle climate change by supporting low carbon growth and adaptation in developing countries. International Climate Finance will be £2.9bn over the Spending Review period.

Departmental Expenditure Limit (DEL)

1 In this table, Resource DEL excludes depreciation. Also, includes tri-departmental conflict pool settlement (DFID, FCO, MOD).

Official Development Assistance (ODA) 

*ODA projections include spending by other government departments, debt relief, and CDC investments, in line with OECD guidelines. ODA and the ODA/GNI ratio is reported to the OECD in calendar years

Commitment to help the poorest people of the world

The coalition government is motivated by a shared determination to erode the terrible inequalities of opportunity that we see around the world today. We are not prepared to stand by as a billion or more eke out an existence on less than a dollar a day or as women and children die needlessly in their thousands.

Progress has been made but there is a lot more to do. We are proud of the fact that we are keeping our promise to spend 0.7% of GNI on aid. We won’t balance the budget on the backs of the world's poorest people and while charity begins at home, it mustn’t end there.

We want to be the best, most transparent, cost effective aid organisation in the world, delivering life saving aid on behalf of the UK taxpayer.