Cut overseas aid by £7bn: calculation note

Central fiscal result

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

Low case: -£7.0bn. High case: -£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 £5bn annual net saving by 2028-29.
• High-saving case uses the party's £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: £7bn annually.
• Central saving: £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: -£5.3bn
• Exit and contract costs: +£0.2bn
• Administrative transition: +£0.1bn
• Domestic receipt effects: £0.0bn

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

Behaviour and pass-through

• Low case assumes the full £7bn is additional to current plans.
• Central case assumes some overlap with the existing aid reduction path.
• High-cost case assumes only £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: -£1.0bn. Preparation or partial implementation.
• 2027-28: -£3.8bn. Main ramp-up year.
• 2028-29: -£5.0bn. Target-year central estimate.
• 2029-30: -£5.0bn. Continuation at steady-state assumptions.

Main source groups

• Foreign, Commonwealth and Development Office, "Provisional UK Official Development Assistance spend 2025" (2026): Provisional 2025 ODA was about £13bn, with in-donor refugee costs a large component; anchors possible aid savings.
• House of Commons Library, "UK aid: Reducing spending to 0.3% of GNI by 2027/28" (2026): The government plans to reduce aid to 0.3% of GNI, yielding large defence-funding savings; shows the baseline already includes aid cuts.
• Office for Budget Responsibility, "Economic and fiscal outlook: March 2026" (2026): The OBR forecast sets the macro, borrowing and receipts baseline used for broad fiscal context; prevents treating tax cuts or spending changes as self-financing.
• Ramey, "Can Government Purchases Stimulate the Economy?" (Journal of Economic Literature, 2011): Evidence on government spending multipliers is mixed and depends on slack, monetary policy and financing; useful for defence, policing and public-sector cuts.
• Barro and Redlick, "Macroeconomic Effects from Government Purchases and Taxes" (Quarterly Journal of Economics, 2011): Government purchases can raise output temporarily, but multipliers vary and taxes create offsetting costs; relevant to public spending cuts, defence and policing.
• Conservative Party, "Our Plan for Britain" (2026): Used to define the pledge wording, policy scope and implementation scenario being modelled.