Appendix: Government Response
EFFECTIVENESS
[Paragraph 7] We very much welcome the increase
in DFID's budget over the Comprehensive Spending Review period
2008-11 as a significant step towards the target of 0.7% of Gross
National Income being allocated to development assistance by 2013.
However, we intend to monitor closely the extent to which this
increase in Official Development Assistance is accounted for by
real terms increases in DFID's budget and how much comes from
non-DFID ODA streams, particularly debt relief.
The budget for DFID announced in the Comprehensive
Spending Review accounts for around 87% of the UK's forecast official
development assistance over the three years 2008/09 to 2010/11,
as compared to 76% over the three years 2005/6 to 2007/8. Non-DFID
ODA projections for 2008-11 include important contributions to
development by other government departments—such as the
DEFRA contribution to the Environmental Transformation Fund, and
the MoD contribution to the Stabilisation Fund—as well as
CDC investments and debt relief. The trajectory of non-DFID ODA
has been volatile in recent years as a result of debt relief for
Nigeria and Iraq in 2005 and 2006 and CDC disinvestments in 2007.
In 2007/08, non-DFID ODA is projected to dip to only £104
million (after figures of £2,120 million and £2,123
million in 2005/06 and 2006/07), so it is potentially misleading
to use 2007/08 as a baseline for measuring the trend of non-DFID
ODA. DFID recognises the need to track both DFID and non-DFID
ODA volumes and will continue to publish details of the underlying
components of ODA in its Annual Report to Parliament.
[Paragraph 10] We welcome DFID's increased research
budget but are disappointed that the Department has not been able
to give us specific examples of its research directly influencing
policy decisions. International development is a rapidly changing
field where there will always be competing priorities for funding.
It is vital for DFID's effectiveness that it bases its funding
decisions on evidence rather than simply responding to the latest
trend. We hope that the new Research Strategy which is currently
being drawn up will focus on providing an empirical base for the
whole of DFID's work.
We agree that DFID's policy and programmes should
be based on evidence. A range of DFID's past research has directly
influenced policy decisions in DFID and international decisions
and examples of this are provided for the Committee at Annex A.
The new research strategy is informed by evaluations and learning
from our past and current research programmes and through public
consultations. The new strategy will place more emphasis on getting
research into policy and practice. More resources will be available
for managing the results of our research and for providing an
empirical base for DFID's work.
EVALUATING EFFECTIVENESS
[Paragraph 11] The merits of establishing a process
for sharpening DFID's focus on results are clear. But when we
questioned DFID about this issue, the form the process would take
remained rather vague. We look forward to seeing the fully worked
up Results Action Plan and expect it to represent a real step
forward in DFID's ability to assess its own effectiveness.
The Results Action Plan has been finalised and is
available on DFID's website. The Plan seeks to create a step change
in the way we use information, ensuring we achieve the maximum
impact from our development assistance, and that we are able
to demonstrate our effectiveness more clearly.
The plan sets out a comprehensive set of actions
under three broad themes: within DFID, with partner countries
and internationally. These aim to embed results into DFID culture
and systems, encourage partner countries to monitor and account
for their development policies and programmes, and establish an
international system with a clearer focus on the impact of its
interventions on the poor.
Ten priority actions have been identified as being
catalytic in speeding up progress. These will be included in
Divisional Performance Frameworks and their progress will be reported
annually to the Management Board.
INDEPENDENT ADVISORY COMMITTEE ON DEVELOPMENT IMPACT
[Paragraph 13] We welcome the establishment of
the Independent Advisory Committee on Development Impact. We plan
to invite its Chair to give formal evidence at an early stage
to enable us to understand more about how it will operate and
what the focus of its work will be in its first year.
DFID welcomes the IDC's positive reaction to the
creation of the Independent Advisory Committee on Development
Impact, which held its first meeting on 6 December 2007. The IACDI
Chair is available to appear before the Committee.
MECHANISMS TO MEASURE EFFECTIVENESS
[Paragraph 15] It is apparent from the example
of funding allocated for children affected by AIDS that DFID cannot
always effectively track its expenditure nor provide a guarantee
that it has reached its intended recipients. We understand the
problems presented when funding is channelled through multilateral
agencies but it is unacceptable that DFID cannot demonstrate that
dedicated funding targeted at a particular vulnerable group has
benefited those for whom it has been allocated. We expect DFID
to report back to us, in response to this report, on how it has
changed the mechanisms it uses to track project expenditure to
ensure funding reaches the intended beneficiaries.
DFID has systems for tracking that its aid is spent
for the purposes intended, including annual performance scoring
of projects.
Some DFID activities involve directly targeting resources
for a particular defined group of beneficiaries. But the nature
of much of DFID's (and other donors') programmes including budget
support and other sector wide activity mean that it is not always
possible to isolate specific flows to particular groups of beneficiaries.
In such cases, it is sometimes possible to make estimates of the
proportion of funding which benefits particular groups, but this
is an inexact science.
Where DFID has made a spending commitment which will
target a specific social group, we need to establish a clear methodology
for monitoring spending against the commitment.
DFID is currently reviewing the systems put in place
in advance of the period covered by the Taking Action Strategy,
in light of the recommendations from the interim evaluation of
the strategy. We will inform the Committee of our conclusions
about how to improve the tracking of spending against this particular
commitment.
More generally DFID is taking steps to improve the
quality of all its expenditure tracking systems. The main development
is the launch of the new ARIES system which will improve all DFID's
financial and performance management. As part of this development
DFID has undertaken a review of its input sector code system—the
main system used to track thematic expenditure. We aim to manage
all future spending commitments with direct reference to centrally
coded information on the ARIES system, to avoid proliferation
of specific monitoring systems for different spending commitments.
ASSESSING PROGRESS TOWARDS THE MILLENNIUM DEVELOPMENT
GOALS
[Paragraph 21] We welcome the new Delivery Agreement
for Public Service Agreement 29 which makes the assessment of
DFID's performance more meaningful by seeking to identify more
accurately DFID's contribution to progress towards aspects of
the Millennium Development Goals. We intend to monitor this over
the course of the Comprehensive Spending Review period and to
examine how the new Delivery Agreement feeds through into future
Annual Reports and Autumn Performance Reports. We also intend
to examine the rationale of and performance against the indicators
underlying DFID's Departmental Strategic Objectives.
DFID is currently developing a new framework to monitor
performance against this Agreement and the underlying Departmental
Strategic Objectives. The relevant indicators were published in
December. In advance of the Public Service Agreement (PSA) period,
DFID is undertaking further work, consulting the other Government
departments contributing to this PSA (Foreign & Commonwealth
Office, HM Treasury and the Department for Environment, Food and
Rural Affairs), to ensure that the methodology to be used for
monitoring progress against these indicators is as robust as possible
and helps to better measure HMG's contribution to international
poverty reduction. Once this work is complete, and baselines have
been established, DFID will publish further detail on the indicator
methodology.
TACKLING RURAL POVERTY AND THE ROLE OF AGRICULTURE
IN MEETING POVERTY REDUCTION TARGETS
[Paragraph 28] We support DFID's underlying aim
of focusing resources on the poorest people. We accept that urbanisation
is a factor which DFID needs to consider in allocating resources
but 75% of those living in poverty are in rural areas and this
figure is higher in the poorest countries. We are concerned that
funding agricultural development has "gone out of fashion"
and that DFID has moved its focus to other sectors. We believe
that improving the economic return on agriculture remains intrinsic
to reducing rural poverty levels, which in turn is necessary to
meet the Millennium Development Goal of tackling overall poverty
levels. DFID needs to recognise this in its funding allocations,
in the priorities it sets in its Country Assistance Programmes
and in the agreements in reaches with recipients of budget support
for priorities in allocating those funds.
We agree with the International Development Committee's
view that improving the return on agriculture is key to reducing
rural poverty. It is also a direct way of tackling hunger, promoting
sustainable growth at the national level, and underpinning peace
in post-conflict countries. But we do not agree with the notion
that agriculture has gone out of fashion. Despite other pressures
in recent years, agriculture remains an important element of DFID's
portfolio. Our bilateral engagement in the sector spans more than
20 countries, is supported by nearly 50 professionals, and spends
£120 million a year.
DFID reviewed its agricultural engagement in late
2007, and forthcoming country funding plans will take account
of its findings. However the level of DFID's bilateral funding
should not be the primary issue, especially when multilateral
agencies such as the World Bank and the EC are intending to increase
significantly the level of their own funding for agriculture,
as are a number of developing countries in Africa. DFID's comparative
advantage lies in our policy reform work, linked to the provision
of direct budgetary support. In the light of the review's findings,
we will seek to have stronger agricultural policy engagement in
a number of key "focus" countries.
Support to agriculture should not be seen in isolation.
Good agricultural outcomes can be achieved by investment in related
sectors such as infrastructure. The building of rural roads enables
farmers to market their crops. Better management of water resources
will be of increasing importance in coming years, especially in
parts of Africa, as rainfall becomes less predictable.
DFID will be carrying out a full evaluation of its
agricultural policy in 2008, and intends consulting stakeholders
widely in this process.
[Paragraph 31] We are encouraged to see from
DFID's consultation on its Research Strategy 2008-13 that one
of its four priority areas will be sustainable agriculture, especially
in Africa. We hope this signals a reprioritising of agricultural
research which has the demonstrated potential to bring tangible
benefits to poor farmers in developing countries.
The increased allocation to agricultural research
is further indication of the priority DFID gives to agriculture.
Equally importantly, DFID is working to ensure that the benefits
of such research quickly translate into practical benefits for
poor farmers and their communities. Our £37.5 million Research
Into Use Programme aims to get the best of past DFID research
into widespread use in sub-Saharan Africa and South Asia, assess
the impacts, and learn lessons on best practice.
EFFICIENCY
[Paragraph 40] We accept that DFID cannot be
exempt from efficiency targets set for the whole of Government.
The Department has made good progress in reducing administrative
costs, albeit predominantly in the less tangible form of non-cashable
rather than cashable savings. We are concerned, however, that
the need to reduce headcount and to make administrative efficiencies,
and under the Comprehensive Spending Review settlement to meet
a significantly higher cash-releasing efficiency target, will
act as a constraint on DFID working in the parts of the world
where its assistance is most needed: the poorest countries, often
fragile states, which have so far failed to benefit from the vast
volumes of international aid. DFID therefore needs to make some
very difficult choices about withdrawing from some countries,
or some sectors, so that it can focus development assistance where
it will have the greatest effect on poverty reduction. We look
forward to contributing to this decision-making process as part
of our future work.
We agree that DFID needs to make difficult choices
to ensure maximum impact on poverty reduction. In deciding the
allocation of resources over the CSR period, Ministers will draw
on analysis on where resources will make most impact, including
evidence on the benefits of aid to under-aided countries and fragile
states. An Investment Committee is now being established to give
greater assurance on the analytical work underpinning our investment
choices.
BUDGET SUPPORT
[Paragraph 43] We believe that the funding mechanism
offered by the Afghanistan Reconstruction Trust Fund is an interesting
development, particularly as DFID is increasingly likely to be
operating in fragile states of this kind. We will be exploring
this in more detail in our inquiry into DFID's programme in Afghanistan.
DFID welcomes the International Development Committee's
interest in the Afghanistan Reconstruction Trust Fund as a potential
model for funding mechanisms in fragile states, and will provide
information as requested by the IDC to assist with their enquiry.
GENDER
[Paragraph 49] We do not doubt DFID's commitment
to gender equality but translating this from policy to practical
implementation at every level is a complex task. We are not convinced
that DFID yet has the measures in place to achieve this but, as
the Secretary of State has acknowledged, the Millennium Development
Goals cannot be achieved without progress on gender equality.
We expect DFID to provide us with more information on the practical
steps it is taking to "up its game" in promoting gender
equality across its programmes in response to this report.
We welcome the Report's discussion of gender equality
and women's empowerment, underlining the critical importance of
these issues to the MDGs.
We believe that we have set out in the Gender Equality
Action Plan a comprehensive programme of institutional change
which will result in a significantly increased focus and impact
on gender equality and women's rights in our development assistance.
The Action Plan covers a three-year period in recognition of the
extent of the challenge both in terms of how we engage our developing
country partners on what can be sensitive issues, and in bringing
about the fundamental and lasting shift in approach within DFID
to how we address these issues across our work. We are committed
to its effective implementation.
To support this process, we have ensured that gender
equality issues are reflected in DFID's corporate performance
framework linked to our new PSA Delivery Agreement for 2008-11.
We have included an indicator under the objective of promoting
good governance, economic growth, trade and basic services which
states "increased access by women and girls to economic
opportunities, public services and decision-making".
Divisions across DFID, including each of the Regional Divisions,
are setting targets for achieving this indicator for which staff
and managers will be held accountable. This will promote a more
coherent and institutionalised focus on gender equality as part
of our ongoing work programme, and result in greater impact.
We will regularly review the Action Plan and revise
it in the light of progress made and new challenges. A report
on the first year's implementation of the Plan will be published
in April 2008. A copy will be forwarded to the Committee.
Further information on our work and plans under the
Gender Equality Action Plan are in the attached Annex B.
Following discussions on gender equality during the
separate enquiry on DFID's work in Vietnam, a gender audit of
the Vietnam programme has now been completed. A report on this
will be forwarded to the IDC separately.
CLIMATE CHANGE
[Paragraph 54] Although DFID has shown welcome
leadership in seeking to assist developing countries to deal with
climate change, this has not yet resulted in changes at country
office level, where the necessary assistance with adaptation and
mitigation can be given. The Environmental Transformation Fund
is a welcome and useful means of tackling climate change but we
are concerned that DFID is relying too heavily on operating through
multilateral bodies in implementing its climate change policy,
which risks climate change being obscured by the different priorities
of other aid agencies. We believe that DFID should demonstrate
its commitment to tackling climate change by seeking to ensure
as a matter of priority that its country office staff are properly
supported and resourced to implement this crucial area of policy.
DFID country offices play an important part in delivering
our objectives on climate change across the globe. For
example, we have conducted climate risk assessments in countries
such as China, India and Kenya and we are helping to build the
capacity of developing country governments to tackle climate change.
In Bangladesh, DFID has been working with the government on a
number of climate change projects since 2004, including helping
communities to prepare for disasters such as flooding and helping
the government prepare a comprehensive disaster management plan.
But we recognise that more needs to be done to support our country
offices to assist partner countries. DFID has built up its central
capacity and expertise on climate change at HQ, doubling our
staff numbers in the last 12 months. This will allow us to
support country offices and build up a network of climate change
experts across the world to tackle this issue.
But our country offices are only part of the solution—getting
the international system working effectively is critical to tackling
an issue as complex as climate change. Our enhanced capacity in
HQ will also help us shape the multilateral system to ensure that
the needs of developing countries are taken into account. This
will include helping to mainstream climate change mitigation and
adaptation into the services and products of the multilateral
development agencies.
Why is DFID spending
the Environmental Transformation Fund-International
Window (ETF-IW) through multilaterals?
It is likely that the majority of the ETF-IW
will be spent through the multi-donor trust fund administered
by the World Bank. In order to be truly transformational and
deliver on the mandate we have been given by the Prime Minister
and Treasury, the ETF-IW funds need to be supplemented and blended
with resources from other donors. Channelling the ETF-IW through
a multilateral fund is one of the most efficient and cost-effective
ways of achieving the greatest impact.
[Paragraph 58] We agree that assistance to developing
countries to adopt mitigation and adaptation strategies to deal
with climate change needs to be given sooner rather than later.
We therefore recommend that research funding allocated to climate
change under the new Research Strategy is set at a level which
reflects its urgency as a development issue.
Climate change research will be a high priority in
DFID's new research strategy (2008-2013). In the current Research
Funding Framework (2005-2007), climate change research is prominent
and accounts for an estimated 12% of spend in 2007/08. This includes
an estimate for climate change research funded through DFID's
Strategy for Research on Sustainable Agriculture, for example,
which covers research on the development of drought tolerant crops
and water management. By 2011 we estimate that climate change
research will account for at least 20% of spend, with the likelihood
of further increases to 2013.
GOVERNANCE
[Paragraph 62] DFID has clearly demonstrated
in the publication of its 2006 White Paper the importance it attaches
to effective governance as a means of tackling poverty. We agree
that without proper governance and accountability in developing
countries little real progress will be made towards the Millennium
Development Goals. The Governance and Transparency Fund offers
an opportunity to advance effective governance through small-scale
projects in a number of developing countries. This requires projects
to be selected against clear and specific criteria which reflect
DFID's objectives. We request that DFID supplies further information
on the allocations made from the Fund after funding decisions
begin to be made in December 2007.
As a result of requests from applicants to the Governance
and Transparency Fund and from the civil society sector more widely,
we took the decision to move the deadline for full proposals back
a month. The effect of this is that we do not now expect to make
decisions until some time in January. We will post full details
of all funded proposals on the DFID website and circulate this
listing around the more than 600 organisations and individuals
who registered an interest in the Fund over the past 9 months.
[Paragraph 64] We believe that DFID should lead
by example in working with national parliaments in recipient countries
to strengthen parliamentary scrutiny and to promote accountability
and transparency in the way DFID funding is allocated and used.
We welcome the steps already taken in this area and recommend
that DFID country offices actively seek opportunities to contribute
to public scrutiny by offering briefings and specific and detailed
information to parliamentarians and others in recipient countries.
We agree with this recommendation. We are helping
to promote accountability to parliament by increasing the amount
of DFID financial aid reported "on-budget", consistent
with the Paris Declaration on Aid Effectiveness. Where we deliver
budget support, our aid is allocated through the budget process
and subject to parliamentary scrutiny and domestic audit processes.
An increasing number of budget support programmes (for example
in Mozambique, Tanzania and Ghana) have also been designed to
reinforce domestic accountability, including to parliament, civil
society and the media.
Parliamentarians are a key group of domestic stakeholders
who are consulted in the development of DFID's Country Assistance
Plans. Many DFID country programmes also have proactive communication
strategies which help to inform a range of domestic stakeholders,
including parliamentarians, about the work that we do.
[Paragraph 66] We disagree with DFID's view that
the impact of individual programmes of parliamentary strengthening
is limited. Effective accountability and scrutiny and proper transparency
of course require contributions from a number of different elements
of society but parliaments and parliamentarians are uniquely placed
to provide leadership in this area and amongst the various stakeholders
in developing countries they are most likely to have the mechanisms
and resources available to perform a scrutiny role at the highest
levels. We believe that this should be reflected in DFID making
an increased level of funding available for parliamentary strengthening.
We strongly agree that parliaments play a critical
role in promoting strong domestic accountability and better governance
in developing countries. We will continue to support national
parliaments through a range of programmes including building their
capacity to organise themselves effectively, strengthening linkages
with the executive, national audit bodies and civil society, and
supporting MPs in performing their legislative, oversight and
representation functions and to improve their accountability to
their constituents.
The evidence from our recent stocktake of support
to parliaments suggests that individual parliamentary strengthening
programmes are most effective when part of an integrated package
of governance support. For maximum impact, efforts must also be
made to ensure that parliamentary development plans are owned
by the wider society. This will entail activities to strengthen
the demand-side for effective parliaments, working with civil
society, the media and—through civic engagement work—the
wider public. It will also require better understanding of the
informal power relations that influence how politicians actually
behave. Without this wider sense of ownership and understanding,
parliamentary strengthening efforts may not be sustained.
Consistent with this approach, DFID is supporting
a £10 million programme in Malawi to develop a more accountable
and responsive governance system which includes support to parliament,
the electoral commission, the media and civil society. We are
also providing £50 million for a multi-donor programme to
strengthen democracy and accountability in the Democratic Republic
of Congo, which includes a parliamentary strengthening component.
Similar deepening democracy programmes are also planned for Tanzania
and Uganda.
We are already involved in a number of activities
to strengthen UK and international efforts around parliamentary
development. Since the initial evidence was provided, a UK contact
group on parliamentary strengthening has been established with
participation from a range of relevant stakeholders from government,
parliament and the NGO sector. We have also moved forward with
a number of case studies looking at the impact of parliamentary
strengthening programmes and have commissioned a research programme
with the University of Cape Town to develop credible measures
of parliamentary effectiveness. In addition, we will be co-funding
with the World Bank Institute a Wilton Park conference on support
to parliaments later in 2008. Taken together, these activities
will contribute to an increased evidence base on parliamentary
strengthening activities, helping to ensure better quality programme
design in the future.
[Paragraph 69] We have observed in Ethiopia the
potential benefits to transparency and civil society capacity-building
that DFID can bring by incorporating accountability to local people
into its funding arrangements. We recommend that DFID continues
to promote good governance by ensuring that, as part of funding
agreements it makes with recipient countries, information is provided
to local people on how much the government is spending in their
area on essential services such as health, education, and water
and sanitation.
The promotion of good governance is an important
priority for DFID and demand-side accountability is regularly
included in government-led programmes which DFID supports. Information
on government spending on health, education, water and sanitation
is included in annual budgets which are generally published on
Ministry of Finance web-sites and in book form and are accessible
to the public at large. DFID also encourages the publication of
budget allocations at service delivery level where development
budgets are used to fund local programmes.
POLICY COHERENCE FOR DEVELOPMENT
[Paragraph 73] We welcome the new information
contained in the Annual Report on policy coherence for development
but believe it could be further enhanced. We appreciate that the
Annual Report is already a substantial volume and that adding
more detail could result in an unwieldy and less helpful document.
But we believe that to be meaningful, the information provided
on policy coherence needs to have much more emphasis on the effects
of policies beyond aid. It also needs to be more country specific
and to reflect the proper participation of developing countries
in assessing the effects on them of UK policies.
DFID shares the IDC's interest in obtaining more
evidence on the effect of UK policies beyond aid and is undertaking
research in relation to this. It is, however, widely recognised
that attributing the impact of the UK's policies at a country
level is challenging.
Specific measures proposed in the 2008 Annual Report
to respond to this IDC recommendation include:
- Reformatting of the relevant
chapter of the Annual Report to include separate sub-sections
on "impact", which will more explicitly spell out the
effect (where known) of UK policies.
- The inclusion of country level examples and case
studies relating to impact and to developing country participation
in assessing UK and international policies.
- The inclusion of a boxed summary update on DFID
ongoing research focused on developing a diagnostic tool to assess
the impact of global issues and external policies at a developing
country level.
Department of International Development
15 February 2008
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