The UK is cutting its GBP1.98 billion ($3.42 billion) pledge to an arm of the World Bank by 10% and reducing aid to some countries to help cover the cost of increased military spending.
Prime Minister Keir Starmer’s government on Tuesday said it would soften the impact of rolling back its commitment by accelerating the pace of the payments to the International Development Association, which extends low-interest loans to poor countries. That would allow the bank to generate income with the money more quickly, offsetting the effect of the cut, the government said.
The Foreign, Commonwealth and Development office said in a statement that it will also reduce funding to “underperforming” organisations and some countries in the future, without identifying any in particular.
The step comes as the UK’s budget is under pressure after rolling back on welfare reforms that would have saved it billions and joining other European nations that are boosting defence spending due to US demands and the war in Ukraine. To cover that expense, Starmer had previously said he would start dialling back the UK’s aid spending from 0.5% of its economy to 0.3%.
The IDA provides about GBP4 of loans to developing countries for every GBP1 it receives in contributions. Even after the cutback, the UK is still providing significant support for the IDA, given that it had increased its pledge by 40% before the reduction.
“The UK is moving towards a new relationship with developing countries, becoming partners and investors, rather than acting as a traditional aid donor,” Minister for Development Jenny Chapman said in a statement.
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Starmer’s decision to target the aid budget was controversial within his Labour party, which has long prided itself on a commitment to developing nations. Development minister Anneliese Dodds resigned in February in protest the cuts.
The UK will continue to play a key humanitarian role in Gaza, Ukraine and Sudan, the government said. It announced a new GBP60 million humanitarian aid package to support healthcare, food and water in Gaza on Monday, with Foreign Secretary David Lammy seeking to step-up pressure on Israel over its treatment of Palestinians.
