(Bloomberg) -- More than a quarter of the UK’s international aid budget is spent domestically on asylum seekers and refugees, putting further pressure on the amount sent overseas for support, a government watchdog said. 

The UK spent £4.3 billion ($5.4 billion) on hosting migrants in 2023, with more than half of that going on accommodation for asylum seekers, the Independent Commission for Aid Impact said on Wednesday in a report. That’s a 16% rise in a year, with the total accounting for 28% of the foreign aid budget.

While the total includes money spent on programs to welcome refugees from Ukraine and Afghanistan, the figures suggest that efforts to house refugees — at a cost of £2.5 billion — in the UK are eating into the already depleted amount sent abroad to aid global development. 

Prime Minister Rishi Sunak slashed the amount Britain sets aside for international aid to 0.5% of national income from 0.7% from 2021 when he was chancellor, a move that prompted warnings that the UK’s global influence would wane while also eroding important programs in poorer nations.

His government is currently trying to stem the arrival of asylum seekers in small boats from France by pushing controversial legislation through Parliament that will allow the UK to deport them to Rwanda.

The ICAI said that some of the costs of supporting asylum seekers and refugees counts as official development assistance under international aid rules. However, it added that the use of the money raised questions over taxpayer value-for-money and the UK’s development goals.

Allowing the Home Office to spend an “unlimited amount” on hosting asylum seekers and refugees, with the costs falling to the Foreign Office budget, sets the “wrong incentives,” ICAI Chief Commissioner Tamsyn Barton, said in a statement. “Using so much of the aid budget on UK asylum hotels, rather than on supporting people nearer home, is inequitable and inefficient.”

The reduction in aid was billed as a temporary measure when Sunak announced it in late 2020 to help fix the UK’s pandemic-battered public finances. It is now due to remain frozen until at least 2028. 

A UK spokesperson said the UK spent more than £15 billion last year including on humanitarian aid in Gaza, in Sudan and in earthquake-hit Turkey and Syria. “Last year’s budget was boosted by additional funding to support refugees in the UK, who have escaped oppression and conflict overseas, including from Ukraine and Afghanistan” the spokesperson said. “We will continue to ensure our aid budget delivers value for money for British taxpayers.”

The Home Office said Wednesday the process of ending the use of hotels to house migrants is continuing, with about 150 due to have closed by May.

(Updates with government comment in penultimate paragraph.)

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