Foreign Aid Should Not Be Spent On Migrant Hotels, Says Labour MP
A hotel in Altrincham, Cheshire, has been used to house migrants who crossed the Channel (Alamy)
4 min read
A Labour MP has urged the government to protect foreign aid money from being spent on migrant hotels as Keir Starmer faces a party divide over his decision to cut the overseas development budget.
On Tuesday, the Prime Minister told the House of Commons that the UK would pay for the uplift in defence spending – from 2.3 to 2.5 per cent of GDP by 2027 – in part through a cut to the UK's overseas aid budget.
UK spending on international development assistance will fall from 0.5 per cent of gross national income to 0.3 per cent, under the government's plans.
Starmer said it was a decision he was not "happy to make", but that the "general challenge" of boosting defence spending demanded "extremely difficult and painful choices".
The move immediately attracted strong criticism from across the Labour movement.
David Miliband, the former Labour foreign secretary and current head of the International Rescue Committee charity, said cutting the foreign aid budget represented a "blow to Britain's proud reputation as a global humanitarian and development leader".
On Friday, Anneliese Dodds resigned as international development secretary over the move.
Dodds warned Starmer that the reduction would make it "impossible" for the government to maintain current levels of support for recipients like Gaza, Sudan and Ukraine, as well as hand an advantage to Russia and China.
David Taylor, Labour MP for Hemel Hempstead, and founder of Labour Campaign for International Development, said that while he supported the increase in defence spending, he wanted ministers to look again at how the remaining aid budget is spent.
He told PoliticsHome that removing in-donor refugee costs — the costs of supporting refugees and asylum seekers in the first year they arrive in a donor country — from foreign aid spending would boost the reduced budget. Because these costs are considered to be humanitarian assistance, they fall under the Official Development Assistance (ODA) budget.
In 2023, in-donor refugee costs in the UK made up almost £4.3bn of ODA, which was 28 per cent of the total UK budget.
“I back the Prime Minister's pledge for more defence spending, integral to keeping Ukraine and the UK safe from evil tyrants,” Taylor said.
“Of course, I am heartbroken to see any aid budget cut.
"Consecutive Tory governments started a shameful trend of spending around a third of our aid budget domestically on refugee costs, meaning FCDO foots the bill for other departments, impacting our ability to deliver the development that saves lives and protects British interests.
“I will continue to advocate for this government to rectify the shameful Tory record and revisit its methodology for reporting in-donor refugee costs”.
Taylor added: "The last Labour government didn’t spend a penny on in-donor refugee costs and this should again be the ultimate goal."
President Trump praised Starmer's decision to raise UK defence spending when the pair met in Washington on Thursday (Alamy)
A government spokesperson told PoliticsHome that work to save money on asylum costs through efficiencies will mitigate the impact of the foreign aid cut.
“The UK government has a clear plan to reduce the costs of the asylum system and ensure the impact on overseas aid is reduced," they said.
The government's plan to reduce the costs of the asylum system includes reallocating 1,000 staff from the Rwanda scheme, increasing the rate of return, reducing the time people spend in the asylum system by speeding up processing. It has claimed it is on track to save £4bn across the next two years.
The Parliamentary Labour Party (PLP) is divided over whether cutting the aid budget to bolster the armed forces is a good idea.
Those on the right of the party, including the Blairite and Blue Labour wing, largely supported the move. “Bang on,” one MP added, “[and] very politically powerful.”
Supportive MPs also argue the move could have electoral benefits as Labour tries to win back supporters who have switched to Nigel Farage's Reform since the general election.
In an article for The House on Thursday, five Labour MPs elected in July 2024, and who all have military backgrounds, weighed in behind Starmer's "difficult" decision.
One Labour MP on the soft left of the party said the decision was smart politics – especially ahead of Starmer's visit to the US to meet President Trump on Thursday.
“The left have made perfect the enemy of the good,” he said, referring to the backlash the Prime Minister received from the socialist wing of the party.
Diane Abbott, the Mother of the House, argued it made people “less safe” as cutting the budget would exacerbate poverty and could potentially lead to protracted warfare.
The foreign aid budget has been used to pay for migrant hotels in the UK, particularly for those arriving on small boats across the Channel.
The government is on track to spend half of its new foreign aid budget on domestic refugees and migrant hotels, according to FT analysis.
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