The unanswered question at the centre of the reset
In March 2026, the development minister, Baroness Jenny Chapman, announced a “development reset,” setting out a new approach for the UK’s international development policy.1 The new model is characterised by four shifts: from donor to investor, from service delivery to system support, from grants to expertise and from international intervention to local leadership.2 Together, these shifts signal a move away from a model centred primarily on aid transfers, toward one that emphasises country leadership and recognises official development assistance (ODA) as one source of development finance among many, including private investment, philanthropic capital, diaspora remittances and domestic resources.3
However, the government has said relatively little about what this new model means for the role of ODA, or how it should relate to the UK’s broader development finance toolkit. Clarifying how UK ODA will be deployed is critical to ensuring that limited resources deliver the greatest impact for the most vulnerable people. Building on the Center for Global Development’s policy note A Clear Vision for Official Development Assistance (ODA): Purpose, Principles and Priorities,4 we argue that the effectiveness of the development reset will depend on deploying the right instruments in the right contexts tailored to the development challenge, ensuring a clear link to poverty reduction, and adopting partner-country-led strategies.
Why the UK development model is changing
The UK’s development reset is happening in a very different development landscape from the one that shaped the original aid system. Today, extreme poverty is increasingly concentrated in sub-Saharan Africa and fragile and conflict-affected states, where most countries face high levels of insecurity, weak governance and are most vulnerable to climate shocks.5 Debt levels have hit record highs, with more than 3.4 billion people living in countries that spend more on interest payments than essential services.6 The introduction of the Sustainable Development Goals in 2015 expanded the development agenda beyond a poverty-focused development model toward one encompassing climate action, gender equality, governance, peace and other global public goods.7 As these priorities have grown, ODA has been stretched to address a much wider set of challenges than those for which the aid system was originally designed.8
Over the course of the last two decades the development ecosystem has also diversified. Traditional donors are now operating alongside multiple actors including philanthropic foundations, emerging providers, multilateral development banks and development finance institutions.9 This means that, particularly in middle-income developing countries, ODA is now a small part of a broader development finance landscape that includes public and private investment, multilateral lending, philanthropic capital, remittances, and a range of risk-sharing instruments such as guarantees and blended finance.10
In addition, development actors are now operating in a context of acute fiscal constraints and low appetite for international coordination. Many OECD countries are experiencing slower economic growth, rising public debt and growing pressure to meet domestic spending needs. Heightened geopolitical competition and a rise in security concerns have led to higher defence spending worldwide.11 These changes are placing aid budgets under strain, with several major donors cutting their aid spending or announcing future reductions.12 Meanwhile, equal partnerships, mutual interest investments, domestic resource mobilisation and private finance are shaping the current narratives around cooperation.13
As development priorities have grown, ODA has been stretched to address a much wider set of challenges than those for which the aid system was originally designed
The UK has faced these pressures in particularly sharp form. Despite a legal commitment to spend 0.7 percent of gross national income (GNI) on ODA,14 the government decreased the already-reduced aid budget from 0.5 percent of GNI in 2024 to 0.3 percent in 2027. This represents the sharpest cut among G7 countries.15 In real terms, UK ODA fell from approximately £19.4 billion in 2019 to £13 billion in 2025 and it is projected to fall further to around £9.2 billion in 2027.16 Meanwhile, a substantial share of the remaining budget is drained by in-donor refugee costs, humanitarian assistance and major multilateral funding rounds, leaving a historically small residual available for long-term bilateral development programming.17 The UK government has recently announced the allocation of £6 billion of ODA to international climate finance while seeking to generate a further £6.7 billion in investments and mobilisation of private finance, signalling a reliance on non-ODA resources to deliver climate objectives with a constrained aid budget. The 2020 merger of the Department for International Development into the Foreign and Commonwealth Office led to the erosion of technical expertise, evaluation capacity, transparency, and analytical capability within the development system,18 and the government has announced it will reduce its workforce by a further 25 percent by 2029.19
What the reset means for UK aid
The emerging UK model suggests a move toward investment, institutional partnerships and technical expertise. However, the legal and normative foundations of UK ODA remain unchanged. Under the International Development Act 2002, UK aid spending must contribute to poverty reduction.20 Indeed, in her first appearance before parliament, the development minister reaffirmed the purpose of international development as poverty eradication. This aligns with the OECD’s definition of ODA as concessional public finance intended to promote the economic development and welfare of developing countries.21 While the government has outlined four strategic shifts and recently published its aid allocation strategy, it has not yet set out a detailed plan for how ODA will be deployed. The following section unpacks what these announcements mean for the use of ODA.
ODA within the four shifts
From donor to investor reflects the growing prominence of private finance mobilisation within the UK’s development strategy. This is reflected both in the central role that the UK’s development finance institution, British International Investment (BII), has acquired over the past years and the decision to channel more capital through multilateral and regional development banks. This means that ODA is likely to be used more catalytically to crowd in private finance or de-risk investments. Nonetheless, the shift has raised concerns about the risk of diverting ODA away from its focus on poverty reduction and support for fragile contexts, given that the majority of finance from development finance institutions is directed towards middle-income countries.22 This raises the bar for justifying the use of concessional public resources with stronger additionality tests and clear evidence that investments translate into pro-poor outcomes.23
From service delivery to system support suggests that ODA will increasingly be used to support domestic institutions instead of financing parallel donor-run programmes. Two concerns regarding the role of ODA in relation to this shift are worth highlighting. First, premature withdrawal of grant finance for essential services risks undermining development gains.24 Second, effectiveness and value-for-money will become harder to measure as it will need to be assessed against complex, longer-term institutional outcomes. 25 This shift may also prove challenging in practice, as the UK has historically been a relatively weak performer in the use of partner-country systems.26
The emerging UK model suggests a move toward investment, institutional partnerships and technical expertise.
From grants to expertise suggests that ODA will be used to finance cooperation through technical exchange, research collaboration, institutional partnerships and advisory facilities. The government has specified that technical assistance will be done through Communities of Expertise which are aligned with the priorities of the Foreign, Commonwealth and Development Office (FCDO).27 In practice, this could limit the capacity to respond to locally-led demand and need and it could become a new rationale for outsourcing or soft tying (i.e., directing ODA toward UK-based providers rather than locally available expertise). It will require stronger evidence about how such partnerships advance development outcomes instead of becoming a channel to only serve UK interests.28
From international intervention to local leadership suggests that ODA may increasingly be channelled through local partners, from governments to local CSOs. While this is consistent with the aid effectiveness agenda, it requires a big change in the UK’s modus operandi. 29 Only five percent of UK bilateral ODA spent abroad was channelled through partner-country organisations in 2022, compared with 36 percent channelled through UK-based organisations.30 Moving towards genuine local ownership would require a reorientation away from the large centrally-managed contracts that have dominated UK bilateral aid, towards more flexible and locally driven funding arrangements, with a fundamental redesign of the UK’s ODA fiduciary and delivery systems. This represents a substantial operational challenge at a time of fiscal, institutional and staffing constraints.
The 2026/27-2028/29 ODA allocations
The recent aid allocation strategy suggests a bilateral portfolio focused around two broad engagement types.31
The first is humanitarian and fragility-focused allocation. The government committed around 70 percent of ODA resources (approximately £1.3bn) for fragile and conflict-affected states such as Ukraine, Gaza, Sudan, and Lebanon, by 2028/2029. At the same time, the government announced that £1.4bn would be allocated for humanitarian spending.32 It is unclear as to whether the funding for fragile and conflict-affected states will support longer-term stability and development or immediate emergency response and humanitarian assistance . Nonetheless, the scale of humanitarian assistance relative to the resources earmarked for fragile contexts suggests that long-term programming will be limited in fragile states. This risks locking UK engagement in the most fragile settings into a purely crisis-response frame, crowding out the sustained development investment that reduces humanitarian need over time.
The second type is “development partnerships,” to which the other 30 percent of the ODA budget is directed toward: this includes a mix of low-income and middle-income countries such as Ethiopia, Nigeria, Kenya, Tanzania, Malawi, Bangladesh, Pakistan, Indonesia and Egypt.33 While it is unclear what “development partnerships” involve, the four shifts suggest that they will be oriented primarily around catalysing international private finance and funding expertise. The income range of targeted countries varies considerably, from low-income to upper-middle-income, underscoring the need for a differentiated instrument approach. The UK’s development finance toolkit includes grants, guarantees, British International Investment and export finance.
These bilateral allocations are complemented with a moderate increase in multilateral funding that prioritises health-related funds – notably the Global Fund to Fight Aids, Tuberculosis and Malaria and Gavi the Vaccine Alliance – alongside the World Bank’s International Development Association.
How ODA shoud be deployed under the UK’s development reset
The success of the development reset will depend in part on whether concessional resources (i.e. grants, which do not require repayment, or loans provided at below-market rates or on more favourable terms than commercial financing) are deployed where they have the greatest development impact. As the UK’s development toolkit expands beyond traditional aid provision, greater clarity is needed about how ODA can be used most effectively without losing its focus on poverty reduction in partner countries.
Three principles should guide that deployment:
1. Match the instrument to the context and the development challenge
The appropriate instrument depends on the nature of the development challenge being addressed and the institutional context in which it arises. In fragile and conflict-affected states, and in low-income countries with weak institutions or those recovering from conflict, direct grant provision should remain the principal development instrument. The priority in these settings is financing essential public services and core state functions, such as healthcare, education and basic infrastructure, that are critical to human welfare but generate little financial return and cannot be financed through external lending without imposing unsustainable debt burdens. While such improvements are generally best achieved by supporting the partner-country’s programmes and systems, where institutional capacity is limited, ODA-funded programmes may need to be delivered through non-governmental or civil society organisations.
Under the development reset, there is a risk that UK engagement in fragile states becomes increasingly defined by humanitarian response rather than longer-term essential service provision. Humanitarian relief requires flexible and rapid grant disbursement, oriented toward immediate need. Essential service provision requires grants sustained over time, oriented toward system building and social protection and institutional resilience. The ongoing Ebola outbreak in the Democratic Republic of Congo illustrates why conflating the two is costly. While emergency humanitarian funding is essential for outbreak response, the severity of the crisis has been exacerbated by underlying weaknesses in health systems, disease surveillance, and community services that relief alone cannot address.34 The UK should therefore reserve a portion of its ODA for service provision in fragile states, distinct from humanitarian spend.
In those countries where partner governments are committed to reform and institutional conditions are stronger, the UK government should consider deploying ODA through a broader range of instruments. Guarantees and blended finance are best suited when viable investment is being blocked by high perceived risk, information gaps, or first-mover barriers.35 Grant-funded technical assistance remains appropriate to fund activities that do not yield a direct financial return, such as activities involving institutional strengthening, policy reform or capability building.
Under the development reset, there is a risk that UK engagement in fragile states becomes increasingly defined by humanitarian response rather than longer-term essential service provision.
2. Ensure a clear link to poverty reduction
According to its definition and UK government commitments, ODA should only be used to fund programmes that have a likely connection to poverty reduction. As the UK moves toward system strengthening, mobilisation and expertise-based models, that link becomes harder to trace and protect.36 Therefore, the government should ensure that ODA is deployed in areas where UK engagement can credibly make growth more inclusive and pro-poor, with explicit theories of change embedded in programme design.37
This matters particularly when ODA is used to catalyse private investment. Development finance institutions have struggled to demonstrate a direct link between their investments and poverty reduction outcomes, and the private finance they mobilise tends to flow toward commercially attractive markets rather than the most underserved populations.38 ODA should only be used for transactions where there is a clear market failure, a credible pathway to sustainability and evidence that the investment would generate outcomes that would otherwise not occur. British International Investment should also develop a clearer theory of change linking its portfolio to poverty impact and strengthen its evidence base accordingly.39 Without these safeguards, ODA resources risk being drawn toward partnerships shaped by investment opportunities, commercial interests, or diplomatic priorities rather than development outcomes.40
The UK’s climate finance approach illustrates the same risk. The recent announcements commit to using both ODA and non-ODA resources and signal a move toward a more investment-led approach. This is welcome since not all climate objectives require ODA, and ODA alone cannot meet the scale of climate finance needed. However, the government has not yet set out clearly how ODA will be used within this framework, and doing so requires a differentiated approach. Adaptation is primarily a development challenge concentrated in the poorest and more climate-vulnerable countries. Grant financing is essential to invest in areas like resilient food systems and climate-adaptive infrastructure, which can generate domestic social benefits but have limited financial returns. 41 Mitigation, by contrast, is often better suited to concessional lending, multilateral development bank finance, guarantees and private capital mobilisation, particularly in middle-income countries.42 The majority of the ODA-funded component of the UK’s international climate finance commitments should therefore be concentrated on adaptation and resilience in the poorest and most vulnerable countries, while mitigation financing should draw on non-ODA resources. The government should also strengthen reporting on the concessionality, grant-equivalent value and development outcomes of climate finance to ensure that climate objectives do not obscure trade-offs between adaptation, mitigation and poverty reduction.43
3. Adopt a partner-country-led strategy
The choice of instrument should form part of a coherent, partner-led strategy rather than a set of disconnected interventions. Where possible, the UK and its partners should work together to identify the most pressing development challenges and determine which instruments (ODA and non-ODA) are best suited to addressing them. A shared diagnosis of the problem should precede the selection of the tool. This would help ensure, for instance, that technical assistance delivered through Communities of Expertise is closely aligned with partner-country priorities and demand, rather than defined by what the UK has available to offer.
This approach also requires close coordination across UK development institutions and beyond. The shift toward an “investment” model implies closer collaboration between British International Investment and the FCDO. While mechanisms for collaboration already exist, achieving economic transformation at scale would benefit from a shared long-term vision in selected countries, underpinned by a clear understanding of which actors and resources are needed and how they complement one another. In practice, this could include greater pooling of British International Investment and FCDO technical assistance to maximise synergies and development impact.44
Where possible, the UK and its partners should work together to identify the most pressing development challenges and determine which instruments (ODA and non-ODA) are best suited to addressing them.
Effective cross-government coordination is equally important. With the ODA budget spread across multiple government departments, ensuring that all spending contributes to a shared mission with development and poverty reduction at its core, requires active governance, not just coordination by default. The relaunch of the ministerial ODA Board is a welcome step in this direction, but greater clarity is needed regarding its mandate and mechanisms to ensure accountability across government.45
Finally, the FCDO should strengthen coordination with other development actors at country level, including other donors, philanthropies, civil society organisations and investors. This is particularly important in the current context of widespread budget cuts and donor country withdrawals.46 Where country-led coordination platforms exist, the UK should actively engage in them;47 where they do not, alternative mechanisms should be established to promote complementarity and reduce duplication.
Conclusion
The development reset represents the UK government’s attempt to respond to a new reality, characterised by the smallest development budget in years, new geopolitical priorities and a contested international environment. It points toward a development model that is more catalytic, more partnership-based and more focused on systemic change than on direct service delivery. However, the government needs to be transparent about how it plans to implement the vision to maximise the impact of the development finance toolkit it has at its disposal.
We argue that the success of the development reset will largely depend on whether concessional resources are deployed where they have the greatest development impact. The three principles set out in this brief (matching instruments to problems and contexts, maintaining a clear link to poverty reduction, and adopting a partner-country-led strategy) provide a framework for translating the four shifts into effective practice. The underlying principle is that ODA should be used where it is genuinely irreplaceable, where its link to poverty reduction is explicit and where it supports partner-country ownership. With the UK’s reduced development budget, applying this discipline is the only way for it to retain credibility and influence.
Acknowledgements
This brief reflects the views of the authors, drawing on prior research and experience in their areas of expertise. The authors would like to thank Ian Mitchell and Samuel Hughes for their helpful comments.
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27. “Foreign secretary warns the world cannot wait any longer to reopen the Strait of Hormuz, as food security crisis looms for countries already on the edge,” Foreign, Commonwealth and Development Office, GOV.UK, May 19, 2026, https://www.gov.uk/government/news/foreign-secretary-warns-the-world-cannot-wait-any-longer-to-reopen-the-strait-of-hormuz-as-food-security-crisis-looms-for-countries-already-on-the-edg.
28. Independent Commission for Aid Impact (ICAI), UK Aid Under Pressure; OECD; “Untied Aid,” OECD, accessed June 7, 2026, https://www.oecd.org/en/topics/sub-issues/oda-standards/untied-aid.html
29. OECD, Risk Management and Locally Led Development: Understanding How to Better Manage Risks for Sustainable Impact, DCD (2023)48 (OECD Publishing, 2023), https://one.oecd.org/document/DCD%282023%2948/en/pdf.
30. Sam Hughes and Ian Mitchell, “The UK’s Poor Track Record on Locally Led Development,” Center for Global Development, April 10, 2024, https://www.cgdev.org/blog/uks-poor-track-record-locally-led-development
31. FCDO, FCDO Multi-Year Official Development Assistance Programme Allocations 2026–2027 to 2028–2029: Equality Impact Assessment (FCDO, 2026), https://www.gov.uk/government/publications/fcdo-official-development-assistance-programme-allocations-2026-2027-to-2028-2029-equality-impact-assessment/fcdo-multi-year-official-development-assistance-programme-allocations-2026-2027-to-2028-2029-equality-impact-assessment.
32. Hughes et al., “Assessing the UK’s International Development Reset.”
33. Foreign, Commonwealth and Development Office, “Official Development Assistance (ODA) programme allocations 2026/27 – 2028/29,” March 19, https://qna.files.parliament.uk/ws-attachments/1892825/original/ODA%20programme%20allocations.pdf
34. “Ebola Outbreak in DRC: What to Know and How to Help,” International Rescue Committee, June 3, 2026, https://www.rescue.org/article/ebola-outbreak-drc-what-know-and-how-help.
35. Mikaela Gavas and Laura Granito, “The EU’s Financial Toolbox: Matching Instruments to Policy Objectives and Context,” (Center for Global Development,2026) https://www.cgdev.org/sites/default/files/Brief-The%20EU%20financial%20toolbox%20-%20matching%20instruments%20to%20policy%20objectives%20and%20context.pdf.
36. Ibid; Vidya Diwakar, Tony Mwenda Kamninga, et al., Inclusive and Sustainable Economic Transformation: Ways Forward in Low- and Middle-Income Countries, ODI Report (ODI, 2025), https://odi.org/en/publications/inclusive-and-sustainable-economic-transformation-ways-forward-in-low-and-middle-income-countries/; Independent Commission for Aid Impact, UK Aid to India, Country Portfolio Review (ICAI, 2023), https://icai.independent.gov.uk/html-version/uk-aid-to-india-review/.
37. Samantha Attridge, “Three Things Development Finance Institutions Can Do to Help Reduce Poverty,” ODI (explainer), September 25, 2019, https://odi.org/en/insights/three-things-development-finance-institutions-can-do-to-help-reduce-poverty/.
38. Ibid.
39. Ibid
40. ActionAid International, Reclaim the Future Global Europe Instrument: Blended Finance and the Illusion of Development (ActionAid, 2026), https://actionaid.org/publications/2026/reclaim-future-global-europe-instrument-blended-finance-and-illusion-development; Michael McKenzie, “Non-ODA Support and the Future of Development Cooperation,” Development Intelligence Lab Policy Brief, 2026, https://cdn.prod.website-files.com/649a2383e9c878a2f62832b2/69b7592355e319967388d884_Non-ODA%20support%20and%20the%20future%20of%20development%20cooperation.pdf;
41. OECD, Scaling Finance and Investment for Climate Change Adaptation: Input Paper for the G20 Sustainable Finance Working Group (OECD Publishing, 2025), https://doi.org/10.1787/eeec8b52-en; Nancy Lee, Samuel Matthews, and James Reid, Does World Bank Climate Adaptation Finance Go to the Most Vulnerable Countries?, CGD Policy Paper 355 (Center for Global Development, 2025), https://www.cgdev.org/publication/does-world-bank-climate-adaptation-finance-go-most-vulnerable-countries.
42. OECD, Climate Finance Provided and Mobilised by Developed Countries in 2013–2022 (OECD Publishing, 2024), https://www.oecd.org/content/dam/oecd/en/publications/reports/2024/05/climate-finance-provided-and-mobilised-by-developed-countries-in-2013-2022_8031029a/19150727-en.pdf.
43. Jonathan Beynon, “What Now for UK Climate Finance?” Center for Global Development, March 4, 2026, https://www.cgdev.org/blog/what-now-uk-climate-finance
44. Samantha Attridge, “Donors, Implementing Agencies and DFI/PDB Cooperation: The Case of the UK: BII and FCDO,” (ETTG, 2022), https://ettg.eu/wp-content/uploads/2022/10/Donors-implementing-agencies-and-DFIPDB-cooperation-The-case-of-the-UK-BII-and-FCDO.pdf.
45. Independent Commission for Aid Impact, Management of the Official Development Assistance Spending Target (ICAI, 2026), https://icai.independent.gov.uk/wp-content/uploads/ICAI-review-The-UKs-management-of-the-ODA-target.pdf.
46. Sam Huckstep et al., “Charting the Fallout of Aid Cuts: Which Countries Will Be Hit Hardest, as Multiple Donors Cut Budgets?” Center for Global Development, June 12, 2025, https://www.cgdev.org/blog/charting-fallout-aid-cuts
47. Ahmed, Gavas, Casadevall-Belles, “A Clear Vision for Official Development Assistance”
