Spending Review 2010: Press release

20 October 2010

This Spending Review meets the government's commitment to spend 0.7% of Gross National Income (GNI) on Official Development Assistance (ODA) from 2013. This is in line with the UK's international commitments to help those living in extreme poverty in our world. The aid budget will maintain its share of GNI for 2011 and 2012, and then increase to meet the 0.7% target from 2013.

Over the course of the Spending Review period, the Department for International Development 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%.

Department for International Development

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

*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

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.

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

• A new Independent Commission for 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%. However, funding to deliver aid on the front-line will increase – to ensure DFID has sufficient flexibility to manage resources effectively.
• DFID will redirect money from low-priority projects to programmes combating poverty. For example, DFID will phase out the low-value, UK focussed, Development Awareness Fund.
• In order to focus aid where it is needed most, DFID will end bilateral aid to China and Russia.

The Department's increase in spend will:

• Honour international aid commitments to support the Millennium Development Goals. For example, DFID 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 Government, and with a particular focus on Afghanistan and Pakistan. In line with the Strategic Defence and Security Review, spending to support fragile states and conflict affected states will increase from 22% to 30% of ODA by 2014/15.
• Drive urgent action to tackle climate change by supporting low carbon growth and adaptation in developing countries. International Climate Finance will be £2.9 billon across Government over the Spending Review period.

In addition, the Department for International Development will be adopting ideas suggested through the Spending Challenge process to improve efficiency across Whitehall. These include selling surplus Government equipment through an online e-auction site, and working with the Efficiency and Reform Group to cut costs by centralising the Department’s procurement of commonly used goods and services.

Secretary of State for International Development, Andrew Mitchell, said:

"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 people eke out an existence on less than a dollar a day or as women and children die needlessly in their thousands. We are proud of the fact that we are keeping our promise to spend 0.7% of GNI on aid. However, in the current financial climate, we have a particular duty to show that we are achieving value for money. Results, transparency and accountability will be our watchwords and will define everything we do."