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International Aid

Mr. Robathan: To ask the Secretary of State for International Development what progress has been made in discussions with (a) the World Bank and (b) other countries on developing indicators that will allow system-wide comparison of effectiveness of international aid; what indicators are in place; and what plans he has to introduce new indicators. [180592]

Mr. Gareth Thomas: The ultimate indicators of whether aid is effective are the Millennium Development Goals (MDGs). These were agreed by 150 countries in 2000; they represent an unprecedented commitment by these countries to work together to improve the well-being of the world's poor. If aid is effective, it will result in progress towards the MDGs. For this reason, the MDGs are explicitly included in DFID's Public Service Agreement, and we monitor progress towards the goals every year in our Departmental Report.

Sometimes DFID may want to compare the effectiveness of individual agencies' aid. The Development Assistance Committee (DAC) of the Organisation for Economic Cooperation and Development is the major forum where this happens. Only bilateral donors are members of the DAC, although multilateral donors such as the World Bank have observer status on some committees.

The DAC conducts periodic "peer reviews", where the development policies and efforts of individual DAC members are critically examined by other members. Each country is reviewed approximately once every four years. These reviews provide a qualitative indication of the aid effectiveness of various donor agencies. More specifically, the DAC has also elaborated a framework of 13 indicators designed to measure objective evidence of progress on harmonisation and alignment. Information against these indicators is currently being collected in developing countries.

As a contribution to the debate over what constitutes effective aid, DFID has also developed a framework to assess the effectiveness of multilateral institutions. The framework was developed in consultation with our multilateral and bilateral partners, including the World Bank.

DFID has no plans to introduce new indicators of aid effectiveness. Instead we will work with others, especially through the DAC, to refine and improve existing internationally accepted indicators.

Iraq

Angus Robertson: To ask the Secretary of State for International Development what estimate he has made of the number of non-governmental organisations operating in Iraq; and if he will make a statement. [180542]

 
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Hilary Benn: There is a large and growing number of emerging Iraqi non-governmental organisations (NGOs). DFID is providing £5 million project support to help with their development. Up to the handover of sovereignty about 1,800 organisations, local and international, had applied to register as NGOs with the Iraqi Ministry of Planning and Development Co-operation. DFID has helped to facilitate registration for international NGOs.

The number of international NGOs working in much of Iraq has been low for some months because of security concerns, although a number continue to operate through their Iraqi or regional staff.

Angus Robertson: To ask the Secretary of State for International Development what discussions he has had with representatives of non-governmental organisations on the security situation in Iraq after 30 June; and if he will make a statement. [180544]

Hilary Benn: DFID maintains close and regular contact with UK-based non-governmental organisations. The security situation in Iraq remains one of their central concerns.

Millennium Development Goals

Mr. Robathan: To ask the Secretary of State for International Development what (a) methods, (b) data sources and (c) data are used for allocating development aid between the alternative channels available to the Department; and how these are used to gauge the effectiveness of each channel in progressing towards the Millennium Development Goal on Poverty. [180588]

Hilary Benn: DFID conducts an annual resource allocation process in which Ministers decide how available resources should be distributed, setting planning figures for the financial years up to the end of the Spending Review period. Resource allocation is considered in the context of strategic priorities, performance against Public Service Agreement (PSA) targets, risk and the DFID's analysis of where aid will have the biggest impact.

DFID has developed a model to inform judgements the allocation of the bilateral aid programme between low-income countries. The model takes into account a number of criteria including poverty, population, and the policy and institutional environment. DFID also takes account of factors such as progress towards the Millennium Development Goals, other donor flows and conflict. DFID is currently considering proposals for a similar model for middle-income countries.

DFID has recently developed and is pilot testing a methodology for assessing the performance of multilateral institutions, focusing on the organisational systems that enable multilateral to achieve results on the ground. This will inform decisions on resource allocation, along with such issues as the agency's importance in contributing to poverty elimination and achieving the Millennium Development Goals and judgements about the outcomes being achieved.

DFID draws on a number of data sources to inform its resource allocation including data produced by the World Bank and the Development Assistance Committee (DAC) of the Organisation for Economic Co-Operation and Development (OECD).
 
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PRISM System

Mr. Robathan: To ask the Secretary of State for International Development whether the PRISM system allows projects to be ranked according to effectiveness in relation to achievement of the millennium development goals on poverty. [180551]

Hilary Benn: DFID's Performance Reporting Information System for Management (PRISM) records a series of Project Information Markers (PIMs) against every eligible project, which links the project's purpose to its contribution towards one or more of the Millennium Development Goals (MDGs).

The likely success of each project is also recorded in PRISM using an annual performance rating for purpose and outcomes for all eligible projects. This can be cross-referenced with the PIMs; which means that the projects can be organised by their contribution to the different MDGs and ranked according to their likelihood of success.

Project Risks/Benefits

Mr. Robathan: To ask the Secretary of State for International Development what the evidential basis is for the statement in the Technical Note to PSA 2003–06 that there is a clear relationship between the level of risk attached to a project and the magnitude of the anticipated benefits. [180555]

Hilary Benn: By their nature, there is an expectation that a higher proportion of low-risk projects will meet some or all of their objectives than is the case with medium or high-risk projects. Evidence from DFID's PRISM system bears this out: in the 12 months to end December 2003, 75 per cent. of low-risk projects were evaluated as successful, compared with 57 per cent. of medium-risk projects and 35 per cent. of high-risk projects.

However, where risks are managed sensibly, high-risk projects can have very high potential benefits, such as making an exceptional contribution to the achievement of the Millennium Development Goals (MDGs). High-risk work contributing to the peace process in Nepal and to reducing communal tensions in Indonesia would be two examples here. High risk, high return is commonly achieved with innovative or experimental projects, and even partial success on some high-risk projects will have a high impact on poverty. Examples of successful high-risk projects include: the Africa Private Infrastructure Financing Facility, Acholi Land Conflict Resolution (Uganda) and Guyana Enterprise Privatisation.

Clearly, it does not automatically follow that high risk means high potential return. However, given the nature of the environments in which DFID works, it is important that we do not follow only the safe options. A certain amount of risk-taking is inevitable and essential if DFID is to deliver on our demanding Public Service Agreement targets. In Sierra Leone and Nigeria, for example, a low risk approach would have implied a very low level of engagement.

Resource Allocation

Mr. Robathan: To ask the Secretary of State for International Development what progress has been
 
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made against the recommendations of the Strategic Review of Resource Allocation Priorities of January 2003, with specific reference to items 1, 2 and 4 of section 3.1. [180553]

Hilary Benn: DFID has made significant progress towards a resource allocation system that targets countries where aid will have the biggest impact. Resources are matched to objectives and priorities through an annual resource allocation round. This first considers broad priorities and allocates available resources between DFID divisions. Each division then reports on progress against its Directors' Delivery Plans (DDPs) and makes detailed resource allocation proposals. These are assessed to ensure that they set out a credible strategy for achieving Public Service Agreement (PSA) targets and objectives and that progress is being made. Programme allocations are based on assessment of the DDPs and their annual reviews.

In line with the Strategic Review of Resource Allocation Priorities (SRRAP) recommendations a model has been introduced to review country allocations to low-income countries in terms of poverty and policy and institutional performance. The tool is used only to inform resource allocation; the final allocation being subject to a wider set of considerations. DFID is considering extending the SRRAP approach to middle-income countries.

DFID is also developing an objective, evidence based system for assessing and monitoring multilateral effectiveness to inform financial allocations. This focuses on the organisational systems that enable multilateral to achieve results on the ground, including: corporate governance, strategic planning, resource management and operational management. The assessment will inform resource allocation, alongside assessment of the importance of institutions to achieving the Millennium Development Goals and of expected performance in achieving development outcomes.

A review of Administration Costs is currently considering options for improving the allocation and management of Administration Costs to ensure that these are as well targeted as possible on achieving priority objectives.

Mr. Robathan: To ask the Secretary of State for International Development what progress has been made on implementing the recommendations made in section 3.3 of the Strategic Review of Resource Allocation Priorities of January 2003. [180599]

Hilary Benn: As recommended, DFID has developed and is using a test of the relative effectiveness of multilateral to inform financial allocations. The approach focuses on the organisational systems that enable multilateral to achieve results on the grounds. Other factors are also taken into account in making financial allocations, including the size of the agency and the agency's importance in contributing to poverty elimination and achieving the Millennium Development Goals.

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