House of Commons - International Development

Select Committee on International Development Second Report

I. IDENTIFICATION OF INQUIRIES CARRIED OUT INTO:

1. DFID's primary objective is to halve the proportion of people living in extreme poverty between 1990 and 2015. The international community has adopted this objective as a Millennium Development Goal. This objective, along with the other Millennium Development Goals drives DFID's policies, programmes and spending decisions and forms the primary aim of DFID's new 2003-2006 PSA. The Committee's actions over the past year have closely followed the objectives contained in DFID's Public Service Agreement (PSA).

2. DFID's PSA requirement for a poverty focus stands in marked contrast to the political priorities of the EU's aid programme and its focus on the near abroad. Around 25% of DFID's budget is absorbed by its contribution to European development assistance. Our inquiry into the effectiveness of the Reforms of European Development Assistance addressed DFID policy proposals in two specific areas. The first concerned progress in achieving a greater impact of EC external programmes on poverty reduction and in particular on working for agreement to increase the proportion of EC Official Development Assistance (ODA) to low income countries to 79%. The second area related to DFID's aim of enhancing the impact of the money spent by the EC on development assistance. Our findings suggested that significant improvements have been achieved in the management of European development assistance; Country Strategy Papers herald an improvement in programming and the devolution of project management to in-country Delegations will speed delivery. However, the geographical allocation and poverty focus of EC development assistance remains a cause of concern.

3. DFID has a policy to increase the impact of key multilateral agencies in reducing poverty and effective response to conflict and humanitarian crises. During the last year, the Committee has carried out two inquiries into humanitarian crises. In both cases— Afghanistan, and southern Africa—the response by not only DFID but the multilateral agencies has been the key aspect of the inquiry. After a highly critical appraisal of the performance of the UNHCR for its lack of contingency planning and coordination in Kosovo, the Committee was pleased to note the effectiveness with which the agency had tackled the refugee situation in relation to Afghanistan.

4. Our inquiry into Financing for Development[1] was a retrospective on the United Nations conference held at Monterrey, Mexico in March 2002. The aim of the conference was not solely to increase aid but rather to mobilise and increase the effective use of financial resources in order to meet the MDG targets. Evidence was taken from the Chancellor of the Exchequer alongside Clare Short, during which the Government's proposal for an international development trust fund came under scrutiny. The inquiry thus represented a cross-departmental scrutiny exercise of a major multilateral initiative.

5. The Committee held one-off evidence sessions in two further areas in respect of policy proposals. These sessions were on the New Partnership for African Development (NEPAD)[2] and on the Government's restructuring of CDC Capital Partners[3] following the decision to abandon the proposed public private partnership.

6. In addition, as part of the Quadripartite Committee on Strategic Exports, we examined the progress of the Export Control Bill[4] and its implications for the future of the export control regime. We were particularly interested to ensure that under the new Act, strategic exports will not be allowed seriously to undermine developing countries' sustainable development.

7. The Committee is regularly informed of DFID's policy proposals and, through consultation papers, is able to track their evolution and decide whether an input from the Committee is appropriate. During the last year the Committee has chosen to make its input into policy proposals through the recommendations contained in the reports following its major inquiries. For the future, however, the Committee plans where appropriate to hold the occasional evidence session on the subject matter of DFID consultation documents. This will require DFID giving the Committee sufficient notice of its plans to put various areas of policy out for consultation.

Areas seen by the Committee as requiring examination because of deficiencies

8. The Committee's major inquiry of the session "Global Climate Change and Sustainable Development"[5] addressed perceived deficiencies within DFID but also within the international donor community in responding to climate change. The inquiry sought to examine the extent of current knowledge within DFID and the extent to which DFID was prepared to respond to the challenge presented by global climate change. We established that DFID did not have a policy on climate change per se but set it alongside other environmental issues and concluded that DFID needed to mainstream climate change through all its development policies. The inquiry also addressed the limitations of previous development assistance aimed at increasing energy access.

9. The inquiry into DFID's Departmental Annual Report 2002[6] offered the opportunity to examine the way in which DFID integrates the cycle of development policy and practice; to test the criticism that DFID has a "missing middle" and is an organisation which, though it has plenty of strategies, is not a strategic organisation. The evidence session and report addressed DFID's resource allocation process and the potential tension which results from having sectoral targets but geographical resource allocations; the wide range of DFID's country engagements; and the increasing use of direct budgetary support in place of the more traditional programmes and projects approach.

10. The Quadripartite Committee's report into the Annual Report for 2001 on Strategic Export Controls[7] addressed a range of issues relating to the export control regime which the four Committees regarded as in need of improvement. Of particular interest to us was the interpretation and application of criterion 8 of the Consolidated EU and National Arms Export Licensing Criteria, the "sustainable development" criterion. Deficiencies in this regard, and concerns about the marginalisation of DFID in the licensing process, were brought to light by the case of BAE Systems' application to export an Air Traffic Control system to Tanzania. Inter-departmental discussions resulted in the Government announcing improved procedures for assessing relevant export license applications against criterion 8 on July 31^st. In addition, as part of the Quadripartite Committee we continued to press for a system of prior parliamentary scrutiny of licensing decisions.

Departmental actions

11. The Committee questioned witnesses—particularly DFID and NGO witnesses—on specific departmental actions as and when they arose during the course of the year. For example, on the reasons for DFID's selection of partner countries and in particular its engagement with what it saw as "reformers" in Nigeria. In Malawi, the Committee has questioned the timing of DFID's response to the food crisis and the impact which DFID's withdrawal of targeted seed inputs may have had. In addition to questions during evidence sessions, the Committee has maintained a flow of correspondence with DFID about issues of concern as they have arisen. The Committee sees its scrutiny role extending beyond DFID to the multilateral bodies through which DFID spends so much of its budget. In both correspondence and in informal private meetings, the Committee has raised questions on actions taken by the World Bank, the European Commission, the World Food Programme and the governments of countries in receipt of food aid.

12. The Secretary of State represents the UK at the Autumn Meetings of the World Bank. As in previous years, the Committee took evidence from Clare Short on the outcome of the discussions.[8] On this occasion the focus was on implementing the Monterrey consensus on development financing, and on debt relief.

Associated Public Bodies

13. DFID has no associated public bodies. The Commonwealth Development Corporation was transformed from a statutory corporation into a public limited company in 1999. For the time being it remains wholly government-owned. The Committee held an evidence-only scrutiny session with CDC[9] in July and, following major changes to its organisation, repeated the exercise in December,[10] on the latter occasion also taking evidence from Clare Short. These sessions questioned CDC's withdrawal from its traditional support for agriculture and examined whether CDC would be able to complement DFID's poverty-focussed development strategy in view of its remit both to operate in poor countries and also to attract private capital by securing commercial rates of return on its investments.

Major appointments

14. The Committee has not had the occasion to interview any new appointees to major posts in the last year. As DFID has no associated public bodies, the Secretary of State makes very few major appointments. The heads of multilateral organisations such as UN agencies are appointed by the member governments and as such the Secretary of State does have a role to play. We have questioned her on the way in which such appointments are made though we have not pursued any individual cases. The Committee has held two informal meetings with the new Director of the World Food Programme in the context of the inquiries which were underway at the time.

Implementation of legislation and major policy initiatives

15. The International Development Act came into force on 17 June 2002. It sets the statutory framework for DFID's activities and in particular the requirement that development aid must have a poverty focus. The task of the Committee therefore is to hold DFID to account for the goal of poverty reduction now established in the Act and more specifically for the achievement of the goals set out in the new Public Service Agreement.

16. The MDGs have for some time now been effectively "mainstreamed" into DFID, and the congruence between the MDGs and the daily business of the Department has recently increased further with the new Public Service Agreement. The MDGs and the new PSA can therefore be expected to drive major DFID policy initiatives. The Committee uses the MDGs to guide its work and to ensure that DFID's actions accord with them.

17. As part of the Quadripartite Committee on Strategic Exports, we have monitored the progress of the Export Control Bill through Parliament, and noted the importance of the associated secondary legislation and guidance notes.

18. Extent to which systematic structure is in place for meeting the indicative tasks listed, and response of department?

The Committee has been kept well informed of policy initiatives by the Department, and conducts inquiries into these as and when appropriate. A similar approach applies to the investigation of areas of possible deficiency, which tends to be on a topical basis. The Department has been helpful and cooperative in response to the Committee's inquiries.

1 Fifth Report of Session 2001-02, Financing for Development: Finding the Money to Eliminate World Poverty, HC 785. Back

2 Minutes of Evidence, Session 2001-02, Africa, NEPAD and the G8 Africa Action Plan, HC 1107. Back

3 Minutes of Evidence, Session 2002-03,CDC Capital Partners, HC 194. Back

4 Fourth Report of Session 2001-02, Strategic Export Controls: Annual Report for 2000, Licensing Policy and Prior Parliamentary Scrutiny, HC 718. Back