14 Devolution of the management of EC
external aid
| (26563)
8905/05
—
| Special Report No. 10/2004 concerning the Devolution of EC external aid management to the Commission Delegations
|
| Legal base | Article 248 EC; —
|
| Deposited in Parliament | 19 May 2005
|
| Department | International Development
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| Basis of consideration | EM of 2 June 2005
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| Previous Committee Report | None
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| To be discussed in Council | To be determined
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| Committee's assessment | Politically important
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| Committee's decision | Not cleared; further information requested; relevant to any debate on external assistance
|
Background
Section 1.94 14.1 Aid from the European Community and EU Member
States together accounts for 55% of world Official Development
Assistance (ODA). The European Commission alone is the second
largest provider of grants and humanitarian aid in the world.
The EU has historical partnerships with many regions, both in
its neighbourhood and throughout the developing world. Around
19% of EC aid resources are funded by the UK, amounting to around
a quarter of the Department for International Development's budget,
and £1 billion in 2003. Spending this money with due diligence
is important. So, too, is spending it effectively.
Section 1.95 14.2 In May 2000 the Commission announced a major
reform of the management of its external aid programme. The main
objectives were to make radical improvements in the speed and
quality of EC external aid, while ensuring robust financial procedures.
A key component is the extensive devolution of aid management
tasks and responsibilities to the Commission Delegations around
the developing world. They became responsible for project preparation,
contracting, and financial and technical implementation, and received
substantial extra human and technical resources. Devolution also
had important consequences for the central services of the Europe
Aid Cooperation Office in Brussels, with their role moving away
from direct management of projects towards monitoring and supporting
Delegations.
The Court of Auditors' report
Section 1.96 14.3 The Court of Auditors visited ten Delegations
as well as the central services in October 2003-May 2004, to examine
whether the Commission has managed the devolution process successfully
and whether devolved management is starting to achieve the intended
results. The Court of Auditors' Special Report No. 10/2004 contains
its findings, which can be summarised as follows.
Section 1.97 14.4 Noting that devolution of aid management
responsibilities to 78 Delegations constituted a major reorganisation
of the Commission's external aid services, the Court judged that
implementation has been a considerable achievement, with almost
all Delegations operating under devolved management by summer
2004. The Commission's management of the devolution process "can
be considered reasonably successful, at least as far as the Delegations
themselves are concerned". But, although in general Delegations
were reasonably well prepared to operate under devolved management,
there were problems with filling posts and a continuing need for
training. And the preparation of the headquarters' services was
found to be "less well planned, lacking both analysis and
consultation". Delegations still require considerable support
in adjusting to their new role, and central services were finding
it difficult to provide this, with thematic expertise becoming
thinly spread across geographical directorates due to reductions
in HQ staffing: "Although HQ services have developed a number
of monitoring instruments and have provided substantial support
to Delegations, there is scope for improvement in both areas".
Section 1.98 14.5 After less than two years of devolved management,
the Court judged it too early to see the envisaged improvements
in the speed and quality of EC external aid. And incomplete performance
indicators made it difficult to measure progress against the main
objectives. However, in the majority of Delegations visited there
were "signs that devolved management is on the right path
to achieving the intended results". The speed and quality
of project management were benefiting from the increased operational
capacity in the Delegations and from having the finance and contracts
staff available on the ground, with better problem-solving capacity
within the Delegations, increased contacts with beneficiaries
and other relevant parties, and a better understanding of local
conditions, risks and opportunities. Robust financial management
procedures were generally ensured but not yet sufficiently developed
in respect of the financial monitoring of implementing organisations.
Section 1.99 14.6 The Court's overall interim verdict is that
"for the time being, problems in recruiting staff with appropriate
expertise and using this expertise in an optimal way, difficulties
experienced by HQ in providing support to Delegations, as yet
inadequate financial information systems and complicated procedures
are limiting the expected results of devolution in terms of increased
speed and improved quality of project management".
Section 1.100 14.7 The Court's main recommendations are:
"? appropriate
indicators should be introduced, relating to both speed and quality
of aid, which measure progress from year to year and against standards
to be set;
· the
actual costs of devolution should be monitored against the estimated
costs;
· the
Commission should ensure that its recruitment procedures, salaries
and other conditions of employment can attract staff with the
appropriate expertise to fulfil the increased staffing needs of
its Delegations;
· thematic
expertise present within HO services should be organised in order
to provide good quality support to Delegations in an efficient
way;
· HQ's
monitoring and support role should be further developed, notably
by improving the financial information systems and addressing
outstanding training needs;
· the
Commission should increase its efforts to try to reduce delays
in project implementation, particularly delays in making payments,
which occur outside the Delegation;
· in order
to optimise the results of devolution, the Commission should continue
to pay particular attention to the simplification, harmonisation
and clarification of financial and contractual procedures."
The Government's view
Section 1.101 14.8 In his Explanatory Memorandum
of 2 June 2005, the Secretary of State for International Development
(Mr Hilary Benn) says:
"? The
UK has fully supported the Commission's reforms, and in particular
the devolution of aid management to EC Delegations…
· The
report's conclusion that the process of devolution has been a
success is welcomed, and the UK shares the view that it is an
achievement to have devolved management to almost all of the 78
Delegations in less than three years.
· The
report points to certain staffing problems which deserve careful
attention. In particular, it is of highest importance to continue
to monitor the quality as well as quantity of Delegation staff,
and ensure that Delegations systematically use the right skills
mix. This is of fundamental importance to making the Commission's
programmes more responsive to the needs of the countries in which
it works. Equally, HQ must be able to provide adequate substantive
support in response to Delegations' needs. The Commission has
responded that further re-organisation in HQ is underway to address
this. This is welcome.
· It is
not yet possible to draw conclusions about the impact on overall
effectiveness of EC aid. This report was prepared at a relatively
early stage of the process, and before most of the last 'wave'
of devolutions had even begun. Another assessment will be needed
at a later stage.
· The
report is able to make preliminary comments related to speed of
implementation, but unable to draw any conclusions about the quality
of aid, particularly in the absence of a full results-oriented
monitoring system. The Commission is in the process of developing
more sophisticated monitoring tools to enable a better view of
the qualitative aspects of its aid. The UK will continue to follow
this closely, and discuss effectiveness with the Commission both
at HQ and country levels, in line with our commitment to promote
a more effective, country-led approach to development.
· One
issue which is not addressed by the Court of Auditors is that
of increased devolution of financial authority. Whilst devolution
to date has decentralised the implementation process to the field,
it has not given more authority to Delegations to take financial
decisions without approval from HQ. The UK continues to believe
that this is an important constraint on efficiency, since it can
lead to long decision-making chains, and constrains local responsiveness.
The UK will continue to encourage the Commission to consider this
efficient devolution, alongside parallel improvements in performance
monitoring."
Conclusion
Section 1.102 14.9 The previous Committee's
Report relating to the Special Framework for Assistance for Traditional
Suppliers of Bananas gives a clear indication why the changes
need to be made.[49]
So it is no doubt right not to discourage the Commission and Delegations
from pressing on. But there is nonetheless a notable lack of
urgency running through both the report and the Minister's comments.
Three years into the process, conclusions cannot be drawn as to
the impact on either effectiveness or quality. To have the Secretary
of State also saying that the quality, quantity and mix of skills
is fundamental to making the Commission's programmes more responsive
to the needs of recipients strongly suggests that there is still
a long way to go to true devolution and the more effective outcomes
that are the main reason for the changes. A somewhat more reassuring
response might therefore have been expected. What further reorganisation
is needed in the Commission? When will the assessment be carried
out? If the lack of financial authority on the part of Delegations
is an important constraint on efficiency and responsiveness, is
not more required than merely encouraging the Commission to "consider
this efficient devolution", especially when the UK is providing
nearly 20% of the funds? We ask for the Minister's observations
on these points.
Section 1.103 14.10 Our predecessors were
minded to recommend the Commission's proposals on new Instruments
for external assistance for debate when the Government considered
that discussion in the relevant Working Groups and with the European
Parliament had reached the stage when it would be worthwhile.[50]
We consider that this document would be relevant to that debate.
Section 1.104 14.11 In the meantime, pending
a response to our observations, we shall continue to keep the
document under scrutiny.
49 (26259) 5132/05; see HC 38-xi (2004-05), para 8
(15 March 2005). Back
50
(26041-5); HC 38-i (2004-05), paras 9 and 13 (1 December 2004)
and HC 38-v (2004-05), para 2 (26 January 2005). Back
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