PolicyLens

Methodology note

Cut overseas aid by GBP 7bn: calculation note

Scenario assumptions behind the Cut overseas aid by GBP 7bn estimate. The figures are illustrative and exclude unrelated Conservative pledges.

View main policy page: Cut overseas aid by GBP 7bn

Central fiscal result

-GBP 5.0bn - Net fiscal impact in 2028-29

Low case: -GBP 7.0bn. High case: -GBP 2.0bn. Positive numbers are fiscal costs or borrowing pressure. Negative numbers are Exchequer savings or receipts.

Scenario and baseline

  • Model further aid savings against the 0.3% GNI path.
  • Central case assumes GBP 5bn annual net saving by 2028-29.
  • High-saving case uses the party's GBP 7bn claim.
  • Excludes any separate defence-spending increase.

Affected population

  • Affected population is overseas aid recipients and UK delivery organisations.
  • Direct programmes include bilateral, multilateral and in-donor refugee costs.
  • Indirect exposure includes diplomatic, security and humanitarian partners.
  • Domestic household effects are limited compared with recipient-country effects.

Gross impact

  • Party saving claim: GBP 7bn annually.
  • Central saving: GBP 5bn after existing baseline cuts and commitments.
  • Administration costs are small relative to programme cuts.
  • No UK GDP multiplier is scored.

Fiscal build-up, central case

  • Programme spending cut: -GBP 5.3bn
  • Exit and contract costs: +GBP 0.2bn
  • Administrative transition: +GBP 0.1bn
  • Domestic receipt effects: GBP 0.0bn

Central net impact: -GBP 5.0bn in 2028-29.

Behaviour and pass-through

  • Low case assumes the full GBP 7bn is additional to current plans.
  • Central case assumes some overlap with the existing aid reduction path.
  • High-cost case assumes only GBP 2bn is genuinely additional.
  • Aid cuts may reduce long-run global resilience, not scored fiscally.
  • Domestic GDP effects are treated as small.

Phasing

  • 2026-27: -GBP 1.0bn. Preparation or partial implementation.
  • 2027-28: -GBP 3.8bn. Main ramp-up year.
  • 2028-29: -GBP 5.0bn. Target-year central estimate.
  • 2029-30: -GBP 5.0bn. Continuation at steady-state assumptions.

Main source groups

  • con-plan-2026: Conservative live policy page; used to identify current pledge wording.
  • fcdo-oda-2026: FCDO provisional ODA statistics; current aid-spending scale.
  • commons-oda-2026: Commons Library aid briefing; current 0.3% GNI reduction path.
  • obr-efo-mar-2026: OBR March 2026 forecast; fiscal and macro baseline.
  • ramey-2011: Government spending multipliers; informs behavioural and incidence assumptions.
  • barro-redlick-2011: Spending and tax multipliers; informs behavioural and incidence assumptions.