Supplementary memorandum submitted by
the Department for International Development (DFID)
ANSWERS TO THE INTERNATIONAL DEVELOPMENT
COMMITTEE'S WRITTEN QUESTIONS SECTION B 6 AUGUST 2007
PSA TARGETS AND
PERFORMANCE
16. Table 1.1 in the Annual Report (page
12) shows your assessment against each of your current six PSA
targets. What is your overall assessment of your performance?
Table 1.1 draws on a detailed assessment of
progress against sub-targets in Annex 4 of the report (p 287).
This states that we are "on course" to achieve Target
6, "broadly on course -minor slippage" in relation to
Targets 1, 2, 3, 5; while progress on Target 4 is assessed as
"major slippage—not on course".
A brief assessment of progress against each
Target is provided below.
AFRICA
Summary: Africa has seen much improved
economic growth which should have a positive impact on poverty,
albeit with a time lag. But performance is highly variable between
countries and also between sub-targets.
Detail: There remain considerable obstacles
to achieving PSA sub-targets. Weak governments with significant
human capacity and resource constraints mean slow progress. Some
states are very fragile or recovering from conflict. Major government
reforms are needed to achieve progress in some countries. The
delivery chain is complex and varied: progress is reliant on the
performance of partner governments and national and international
organisations. We are on course overall to achieve sub-targets
for primary school enrolment, under five mortality and aid effectiveness.
We are currently off-track for the proportion of people living
in poverty and the ratio of girls to boys in primary school. However,
recent faster economic growth in sub-Saharan Africa and accelerating
enrolment of girls could bring both of these sub-targets back
on track. Reducing maternal mortality remains off-track.
ASIA
Summary: There has been good progress
towards six of the nine sub-targets across the region. We are
ahead on income poverty targets and there has been good progress
in reducing under-five mortality rates, increasing the proportion
of births assisted by skilled birth attendants, and raising the
ratio of girls to boys enrolled in primary school. But challenges
remain, especially on HIV/AIDS, and increasing net primary school
enrolment.
Detail: Despite the above progress, tough
challenges remain, in particular in the areas of tackling HIV
and AIDS (where data are patchy), and increasing net primary school
enrolment. DFID is working with partner countries to develop and
implement programmes to address the challenges in these areas.
External factors have a significant impact on the likelihood of
achieving sub-targets, with an increase to the current level and
future risk of political instability in a number of the nine Asian
PSA countries—not only in Afghanistan, but in nearly all
the other South Asia programme countries (eg Bangladesh, Pakistan
and Nepal).
MULTILATERAL SYSTEM
Summary: Progress is good or reasonable
against all of the indicators supporting this target, except EC
flows to low income countries. Improving the effectiveness of
the multilateral system remains very challenging. Reform of the
key multilateral organisations involved in aid delivery (EC, UN
and World Bank) requires concerted and coherent action from across
the international system.
Detail: The current trajectory is positive
although getting UN General Assembly endorsement of the High Level
Panel on UN System-wide Coherence's set of recommendations to
reform the way the UN delivers development (both centrally and
at the country-level) remains a challenge. All of the main multilateral
organisations are engaged in a process of reform intended to improve
the quality of their aid. DFID has increased its understanding
of the strengths/weaknesses of key multilateral partners through
our Multilateral Development Effectiveness Summaries which will
issue very shortly. We are also attempting to promote a common
understanding of effectiveness issues across the donor community
through our work in various fora such as the Multilateral Organisations
Performance Assessment Network (MOPAN) and the Development Assistance
Committee (DAC) of the OECD.
TRADE
Summary: This target is reported in the
Annual Report as off-track, although prospects for meeting it
have improved over the last six months, due to the resumption
of the world trade talks.
Detail: The Doha Round of world trade
talks is the best opportunity to make progress towards significantly
increasing global trade, stimulating growth and helping to lift
millions out of poverty. Negotiations are currently underway in
the World Trade Organisation in Geneva and will move forward again
in the early autumn. Recent progress outside the Doha round has
been positive including working between the European Union and
the African, Caribbean and Pacific countries towards signing Economic
Partnership Agreements and on Aid for Trade, which helps poorer
nations build their capacity to trade through, for example, better
roads, marketing and storage. While optimistic, this progress
will not significantly reduce world barriers to trade by 2008
without the successful completion of the Doha round.
CONFLICT
Summary: Although global trends show
a downward trajectory in the numbers and magnitude of conflicts,
particularly in Africa, the effects of underlying instability
and the fundamental drivers of conflict remain a major obstacle.
The need for the UK to engage in conflict prevention, and the
UK's exposure to the consequences of conflict, will not therefore
diminish in the short to medium term.
Detail: In order to deliver a comprehensive
conflict prevention strategy, HMG is faced with a complex delivery
chain, reliant on coherent actions by multiple stakeholders (parties
to conflict, other governments and international organisations)
and on engaging increasingly in multilateral efforts. Co-ordination
of effort with those external actors is therefore key, as is co-ordination
of HMG policy and resources across relevant departments.
VALUE FOR
MONEY
Summary: We are on course to meet this
target.
Detail: (1) The proportion of DFID
aid to low income countries in 2006-07 is in line with the 90%
target. (2) Trends in project/ programme success rates are
positive, with a 13% improvement since the end of 2004-05 and
the latest figures show that we are achieving a 77% success rate.
Maintaining a sustained increase in the success rate of DFID's
projects and programmes requires concerted action by DFID country
offices in designing and managing projects and programmes.
17. PSA targets for Africa (target 1) and
Asia (target 2) include sub-targets for poverty reduction, primary
school enrolment and infant mortality set at different levels
for each of those two regions. What is the basis on which the
target levels are set?
Summary: We have a set of PSA targets
based on achieving progress against key MDGs in Africa and Asia.
For the 2003-06 PSA, the targets were set in terms of movement
from x% to y%. For the 2005-08 PSA, we have moved towards seeking
percentage point changes, rather than stating in the target what
the baseline is. This is because revisions in the international
sources, from where we obtain our data, have meant that the baseline
has not been consistent over time.
Detail: For the 2003-06 PSA, targets
were based on the targets individual PSA countries themselves
had set for the relevant indicators, scaled as appropriate to
cover the PSA period and averaged over our set of PSA countries.
However, not all countries set targets on all our indicators.
Targets were then assessed in terms of their "stretch"
and potential "achievability" and adjusted accordingly.
The targets were considered in terms of their relationship with
the overall MDGs and most were considered to be reasonable steps
along the way to achieving the MDGs.
For the 2005-08 PSA, our Africa targets are
drawn where possible from Poverty Reduction Strategies, sector
strategies and other plans acting as the current basis for donor
and government co-operation. There may not always be exact alignment
between national targets and a straight line progression towards
achievement of the MDG by 2015, and where one or other of these
targets is unrealistic we have made adjustments on our best assessment
of what is realistically achievable. Because of their conflict/post-conflict
status, it has not been possible to generate targets for DRC,
Sudan and Sierra Leone in setting the overall regional target.
However, baseline data are available for these countries and progress
will be included in reporting against the regional target. We
will highlight where progress in these countries is significantly
different from the overall trend. In all other cases where baseline
data were available, locally-generated targets have been produced.
For Asia, the PSA targets are based generally
on a straight-line progression over the period 2000-15 to achieve
the MDGs. As a check, we have reviewed national targets. Where
comparable targets exist we have found that in most cases they
are similar to the straight-line trajectory and we have therefore
maintained the straight-line approach throughout. Where there
is no MDG target figure for our PSA indicator, we have used internationally
agreed targets, as is the case for maternal mortality reduction
and for TB detection and cure rates.
18. Target 3(1), seeking a 70% share of EC
aid programmes focused on "low income countries", is
scored as "not on course/major slippage" (Annual Report
p295). Why is the European Commission so slow to move its aid
focus onto low income countries?
The share of EC aid going to LICs has increased
from 51% in 2002 to 56% in 2005. The UK has made much progress
in agreeing a shared vision for development co-operation in Europe
via the European Consensus on Development. However, the European
Commission do not have a low income focus target for their aid—given
the centrality of Neighbourhood and Pre-accession countries to
their spending. Given the differing views among member states
about approaches to aid allocation, the target of 70% for low
income countries was extremely ambitious.
The European Development Fund (EDF) focuses
heavily on LICs in the Africa, Caribbean and Pacific (ACP) countries.
Over 90% of EDF payments are allocated to LICs, to which DFID
contributed over £238m in 2006-07.
Development assistance spent via the main EC
Budget is spent via the "External Relations" heading,
and is focused heavily on the Neighbourhood countries and Pre-accession
countries. Many of Neighbourhood and Pre-accession countries are
middle-income countries (MICs). Funding commitments for the main
EC Budget have been decided until 2013, so pressing the EC further
to pursue the 70% LIC target is not feasible over in the immediate
future.
19. On PSA Target 4 (EU securing reductions
in EU/World trade barriers), the Annual Report gives only one
traffic-light assessment. Why have you not reported against each
of the four sub-targets of this Target (set out in the Technical
Note)? What is DFID's assessment of its achievements in relation
to the four sub-targets?
The technical note sets out four measures for
Target 4—they are not sub-targets. However, these measures
contribute to the overall traffic-light and narrative assessment
of our Target. We have agreed with Whitehall partners that target
reporting would be qualitative due to the lack of available data
to date on which to produce a quantitative assessment against
each measure.
20. On PSA Target 6(2) (growth in the proportion
of "successful" DFID bilateral programmes), programmes
are assessed in each of three groups—high risk, medium risk
and low risk. What is the meaning of risk in this context, and
what are the thresholds that separate high, medium and low levels
of risk?
Risk is defined as uncertainty, whether positive
or negative, that will affect the outcome of an activity or intervention.
The three levels—high, medium and low—have no specific
thresholds because they depend on the combination of a number
of risks and analysis of the probability and the impact of occurrence.
The Blue Book (Essential Guide to Rules and Tools) sets out where
risk must be explicitly analysed and mitigated during programme
design and monitoring and provides links to extensive guidance
on risk management, including the HM Treasury Orange Book Risk
Management—Principles and Concepts. Risks may be logistical
(failure of physical infrastructure), capacity (lack of skilled
people and management), environmental (floods, drought etc) or
technical (approaches not turning out as planned). Each risk is
assessed individually and mitigation measures designed to address
the most significant.
— The Technical Note for this
target notes that the department has assumed that risk has a clear
relationship with "the magnitude of the anticipated benefits"
of the programmes. What work has the department done, or taken
into consideration, which explores that relationship, and what
were the results?
The approval process for new programmes incorporates
an assessment of whether the benefits justify the risks. This
establishes the relationship between risk and the magnitude of
anticipated benefits in a particular programme. Monitoring during
implementation also considers the relative success for different
risk levels, but no programme studies have been undertaken to
evaluate the general relationship. Some specific thematic studies
have been undertaken and these are used to underpin DFID's approach.
A study of aid in post-conflict situations and fragile states
has demonstrated that particularly large benefits are possible,
and the Joint Evaluation of General Budget Support has shown that
the additional risk involved in routing aid through government
systems can be justified by the impact this has on strengthening
government systems.
— In the 1-5 scoring system, what
factors are taken into account? What account is taken of the cost
or cost-benefit ratio of the programme examined?
In scoring projects and programmes 1-5, DFID
takes account of how well projects and programmes are addressing
their objectives, whether money is being spent effectively and
how the recipients are benefiting. These factors are reviewed
annually. Heads of Department judgements about appropriate scoring
include taking account of cost-benefit analysis where feasible.
However, more of DFID's spend than formerly goes to Budget Support
and other innovative interventions, eg institutional-building
projects, which are less amenable to traditional cost/benefit
analysis. Work on developing accurate costings and assessing cost
per beneficiary takes place in recipient planning and spending
ministries that benefit from DFID budget support, and we need
to continue to develop partner government capacity in this area.
For other types of intervention, we are building the evidence
base from rigorous evaluation to feed into future Cost Benefit
Analyses. DFID continues to look at ways of improving its value
for money measurement, including through its follow up to the
Capability Review and the development of a new Investment Committee.
— 40% of high-risk programmes
were not scored as "successful", but rather were scored
three to five ("partially achieved" to "unlikely
to be realised", as described in the Technical Note). Similarly,
27% of medium-risk projects and 10% of low-risk projects were
also scored three to five. What analysis have you done of those
projects to identify causes of their relatively lower success
rate, and how have any results been applied to change the portfolio
of bilateral programmes?
The performance of DFID's projects and programmes
will vary according to, for example, the type of assistance being
given, the amount of risk involved and the stage of the project
or programme. Progress on all projects and programmes is monitored
annually against their aims and so project scores can and do change.
Once DFID's projects and programmes are completed, they are assessed
for their overall effectiveness, including an assessment of the
lessons learned. Lessons learned are used to develop new projects
and improve programmes going forward.
Also, country offices keep close track of poor
performing projects. All regional divisions monitor all programmes
that score three or below at regular time intervals. The responsible
DFID offices are required to describe the problems that have occurred,
the remedial action taken, and the progress made and lessons learned. In
some cases, this had led to early closure of poorly performing
projects.
— DFID's performance against this
PSA target uses a scoring exercise undertaken by DFID themselves.
What has the Department done to validate the assessments using
independent auditors?
In 2006-07, DFID commissioned an independent
review of the accuracy and consistency of scores over the last
three years. The review was able to validate the accuracy and
consistency of a sample of scores over the last three years. The
review noted that much of DFID's project monitoring is carried
out with the involvement of independent consultants and others
from outside the organisation. The review has identified a number
of areas where improvements can be taken forward and these will
be addressed as part of current work to improve our quality assurance
processes.
EFFICIENCY PROGRAMME
21. What is the Department's target for cashable
efficiency savings for March 2008, and what if any interim targets
does it have for 2006-07?
There are two streams of cashable savings in
DFID's efficiency programme. These are savings on administration
costs and on procurement with respective targets by March 2008
of £20 million and £10 million. These are the targets
for financial year 2007-08—the cumulative targets across
the three years of SR04 for administration and procurement savings
are £30 million and £19 million respectively. For financial
year 2006-07, targets for administration and procurement were
£10 million and £6 million respectively. By March 2007,
we had met both these interim targets.
22. To what extent have your reported efficiency
gains been (i) internally audited and (ii) externally audited,
and what were the auditors' conclusions?
DFID's Internal Audit Department reviewed our
efficiency programme for the first time in during May/June 2007,
to ensure our systems and processes are fit for purpose. One area
IAD covered in detail is the governance of the programme. Their
findings have not yet been finalised but we expect it to yield
positive lessons as we build our value for money programme for
CSR07.
The NAO has reviewed the government's efficiency
programme twice producing reports in February 2006 and 2007. In
2006, three strands of DFID's savings were scrutinised: use of
Programme Based Approaches; EC aid; and portfolio quality. In
response to the 2006 report, we have been working to improve our
evidence base and indicators and to have greater external scrutiny
of project scoring. The 2007 report did not look at any of DFID's
savings specifically. For the overall government's efficiency
programme, it found clear evidence of positive change across the
public sector but that some reported efficiency gains still carried
a significant risk of inaccuracy. DFID's recent internal audit
of its efficiency programme was, in part, a response to the recommendations
in this report.
23. The Committee would like an analysis
of the Department's reported efficiency savings according to whether
they are "provisional", "interim" or "final",
as classified by the Office of Government Commerce
The OGC classifies reported efficiency savings
as "preliminary", "interim" and "final".
For DFID's reported £434 million efficiency savings in 2006-07,
£353 million were "preliminary", £18 million
were "interim" and £63 million were "final".
The majority of the savings classified as "preliminary"
(£324.6 million) await finalisation of 2006-07 spend figures
to move to the "final" data classification. The remaining
£28 million savings also classified as "preliminary"
await finalisation of the outturn figures for the EC Budget which,
having a two year lag time means we can expect finalisation of
the 2006 budget in early 2008.
24. The Committee requests copies of the
Department's latest quarterly efficiency monitoring report submit
to the OGC. [We note that other committees have already requested
and obtained such documents, and like them we would, if the Department
requested, treat these as confidential]
A copy of all the documents in DFID's full quarter
4 2006/07 efficiency monitoring submission has been provided separately
as an appendix to this memorandum.
DFID BUDGET
25. The 2007-08 Main Estimates memorandum
(para 4) explains that DFID's £44 million Conflict Prevention
budget for 2007-08 is the net balance lying with the Department
once transfers are made from DFID-managed sub-budgets and to DFID.
The Committee would like a breakdown of what such start-of-year
Conflict Prevention transfers take place between the three departments
(DFID, MoD and FCO) for each of the Conflict Prevention expenditure
lines
The transfers between departments for 2007-08
are shown in Annex 1. The £44 million budget provision
held by DFID comprises a voted provision of £38 million which
leaves a £6.2 million balance in the Africa Conflict Pool
for future allocation. Decisions on allocation of this remaining
balance will be made later in the year; provision will then be
taken in the relevant Supplementary Estimate.
26. DFID's Spring Supplementary Estimate
added £94 million for International Finance Facility for
Immunisation (IFFIm) future liabilities, bringing the total provision
to £295 million for that year, when a bond for $1 billion
was issued in October 2006. Page 267 (Table 2) of the Annual Report
indicates that no further IFFIm provision is needed for bond issues
in 2007-08, and the Main Estimates Memorandum (para 12) states
that it is not known whether further IFFIm bonds will be issued
in 2007-08. This does not appear to tally fully with paragraph
9.30 of the Annual Report which describes a $500 million bond
issue at the end of 2006 and the prospect of a second $500 million
issue "by the end of 2007". Could the Department clarify
these apparent contradictions?
We regret that the figure for first borrowing
in 2006 in the Departmental Report was incorrect. This should
have been $1,000 million (about £500 million): the Estimate
provision was therefore made on the correct basis. The IFFIm Board
is still considering the timing of a further bond issue in light
of funding needs and market conditions (eg bond yields). No decision
has yet been made on this and when the Estimate was compiled we
thought it right not to anticipate a decision; if provision turns
out to be needed for a further bond issue in 2007 this will be
proposed in a supplementary Estimate.
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