The Foreign Secretary recently set out how the UK plans to cut aid to 0.23 percent of GNI (this figure excludes domestic refugee costs). Last year, we called for the radical simplification of aid as a practical way to get more out of limited foreign assistance budgets. Here, we set out how the UK can apply radical simplification as it makes cuts to its development aid, reduces staff, and seeks to implement its four strategic shifts:
- From donor to investor
- Service delivery to system support
- Grants to expertise
- International intervention to local solutions
These shifts require trading breadth of skills for depth of knowledge. Funding clinics, for example, requires good project management, while advising a government on reprioritizing health spending requires specialist knowledge, including on the relative cost-effectiveness of alternative approaches. It is impossible for the Foreign, Commonwealth & Development Office (FCDO) to have this depth of expertise across all topics, even within a single sector. Therefore, the FCDO should select a few topics where it builds credible expertise. Otherwise, it risks giving bad advice—or hiring consultants who do.
We take each FCDO shift in turn and identify a few well-evidenced, cost-effective topics FCDO should protect and prioritize in line with its comparative advantage.
1. The FCDO should invest in innovation
Low- and middle-income countries (LMICs) need much more investment, ranging from foreign direct investment to research and development (R&D) that meets their needs. The UK has relatively limited aid resources: its official development assistance (ODA) was about 0.046 percent of the total GDP of LMICs in 2024. It is unrealistic for the UK to think it can influence the magnitude of investment in LMICs through direct investment.[i] Instead, the UK should invest in innovation—the main driver of growth. It should target innovations which meet the specific needs of LMICs and offer high social returns, but which are neglected by the private sector because they cannot capture those returns.
Examples include:
- Regulatory innovation to make it easier for the private sector to invest in LMICs, such as:
- advocating for smarter data-driven risk categorization within Basel III, including recognizing infrastructure as a distinct asset class.[ii] This approach could enable banks to develop assets that attract greater participation from institutional investors, including UK pension funds, enabling them to diversify their portfolios, which would be a win for the UK and LMICs,
- pushing for greater debt transparency (e.g., only enforcing sovereign debt contracts that meet transparency standards) and exploring the expanded use of debt suspension clauses to help poor countries handle exogenous shocks,
- supporting the development of local currency bonds which would reduce exposure to exchange rate risk and deepen local financial sectors.These regulatory innovations would take advantage of the UK’s strengths in financial services.
- R&D into new medical and agricultural innovations for diseases and crops specific to LMICs. The social return is very high, saving millions of lives, and plays to the UK’s strengths. Both the R21 malaria vaccine and the AstraZeneca Covid-19 vaccine were developed at Oxford and are examples of partnerships with LMICs, as they were manufactured by the Serum Institute of India. The FCDO has a long tradition and expertise in supporting agricultural innovation which has delivered high returns. The UK should also build on its leadership on the $1.5 billion advance market commitment for the pneumococcal vaccine by extending innovative financing to new areas such as diagnostics for neonatal sepsis, helping save lives and combat antimicrobial resistance.
- Social science innovation. One of the best ways to support health, tax, and education systems is to fund R&D into how to most effectively improve them. For example, UK–funded social science R&D reduced corruption in India’s largest social assistance program, saving 24 percent of the funding. When scaled up, it saved an estimated $1.5 billion a year.[iii]Shifting to an “investor” approach should involve prioritizing innovation rather than steep cuts to the R&D budget—the Foreign Secretary should reconsider.
2. The FCDO should specialize in supporting systems that deliver evidence-based programs
As the UK spends less, it intends to transition from service delivery to system support, “working alongside countries as they build their own education, health and economic systems.” This can generate a lot of positive impact cheaply if done well, but too often “supporting systems” means expensive consultants giving questionable advice or buying computers for ministries.
To avoid this, FCDO must radically simplify: it should specialize in “supporting systems” on a few topics where there is strong evidence about what works well in which contexts and build FCDO expertise on the relevant evidence. A key advantage in specialization is that FCDO can learn over time which “experts” know the evidence and work well with partner governments. Examples include:
- Helping countries build shock-responsive social protection systems that proactively respond to weather forecasts. Countries could use these systems to deliver cash to households before climate-related disasters like floods strike—giving families time to move to safety. This would build on the UK’s support for the Hunger Safety Net Programme, which is transitioning to ownership by the Government of Kenya, and aligns with the Foreign Secretary’s commitment to invest “in climate action that protects people and prevents future crises.”
- Harnessing artificial intelligence to get weather information to farmers—with potential benefit-cost ratios exceeding 100:1,
- Helping countries introduce structured pedagogy or TaRL (Teaching at the Right Level) into government curricula, that aligns teaching instruction with students’ actual learning levels.[iv]
These examples illustrate what effective use of UK expertise for systems support would look like: helping countries deliver cost-effective, evidence-based programs to large populations, with governments chipping in their own resources. This implies a three-part test for whether UK expertise is working:
- Is the government delivering evidence-based programs?
- Are they reaching large numbers?
- Are governments contributing their own resources?
This approach also requires sustained investment in generating and synthesizing evidence, and translating findings into actionable guidance for policymakers. UK expertise is well placed to help: its National Institute for Health and Care Excellence and academic centers are recognized leaders in evidence-based priority setting in health and cost-effectiveness. The UK also played a pivotal role in establishing the Global Education Evidence Advisory Panel and its smart buys.
3. The FCDO should focus limited grant aid on the poorest countries
The Foreign Secretary intends to prioritize fragile and conflict-affected states including Ukraine, Gaza, Lebanon, and Sudan. Countries such as Yemen, Somalia, and Afghanistan will face direct grant reductions, and country and regional bilateral spend allocated to sub-Saharan Africa is expected to decrease by 8 percentage points. As FCDO implements cuts over the coming years, we urge it to protect its country-allocable aid resources for poor countries, especially those classified as low income. Current low-income countries (LICs) will be badly hit by climate change and have low levels of human capital—they will need more support than LICs of the past. Poverty is increasingly concentrated in these countries where economies have remained stagnant—progress here is crucial to ending poverty.
In our first blog on radical simplification, we warn against the risk of “Christmas tree” projects seeking to pursue multiple objectives at once. For the poorest countries, the right way to combine these agendas is to put development objectives first—not narrow, short-term commercial interests. Given the small size of these markets today (sub-Saharan Africa accounts for less than 2 percent of global GDP) relative to their future potential, this is taking the “long view of the investor.” Achieving project simplification will require changing bureaucratic incentives by reducing review times for simple projects.
4. The FCDO should simplify multilateral support
The UK should simplify its multilateral support by concentrating resources on a smaller number of institutions: those that are essential to the system, aligned with UK priorities, and where UK contributions are highly leveraged. The World Bank, where UK funding helps shape billions in development spending, fits this description; and the continued commitment to IDA and GAVI is welcome. Gavi, focused on vaccines—one of the most cost-effective health interventions—is well aligned with UK priorities and essential to the global health system.
The UK should also push the multilaterals it supports to simplify, focusing on delivering core mandates. CGD’s Tough Times, Tough Choices series offers concrete recommendations: the World Health Organization should prioritize global functions over country support; Gavi should focus on delivering vaccines to the poorest countries, not promoting manufacturing or systems support (best done by the World Bank).
Radical simplification is still relevant for the UK
The four shifts define how the UK intends to deliver aid. But questions remain about how to maximize impact and navigate the trade-offs that come with a smaller budget. Radical simplification offers a guiding logic: focus investments on innovations where social returns exceed private returns; support systems that scale cost-effective, evidence-based interventions; concentrate limited grant aid on the poorest countries; and push multilateral partners to simplify, too.
_______________________________
[i] UK ODA in 2024 was approximately £14 billion (~$18 billion in 2024). The total current GDP of low and middle income countries in 2024 was approximately $39 trillion.
[ii] Project finance in LMICs can attract risk weights of up to 130%. This far exceeds what empirical data on default and recovery rates would justify (Rojas-Suarez, 2025)
[iii] This paper reports the nationwide scale-up resulted in a persistent 19% reduction in program expenditure. The appendix reports program total program expenditures in 2016-17 were $7.95 billion. 19% of $7.95 billion is approximately ~$1.5 billion.
[iv] Rachel Glennerster, notes a conflict, she is Chair of the Board of TaRL Africa which is a Kenyan NGO which does exactly this.