Conclusions and recommendations
Fragile and conflict-affected states
1. We
note that closer working between departments should be assisted
by the Conflict Pool which brings together the Government's development,
diplomatic and defence interests. We trust the Pool will continue
to be used for conflict prevention. (Paragraph 9)
2. DFID is placing
an increased focus on working in fragile and conflict-affected
countries, which are often furthest from achieving the Millennium
Development Goals. In its reply to this report the Government
should state which countries will be receiving the increased spending.
The new focus will produce problems. There will be severe difficulties
in ensuring every pound is well-spent in war-torn environments
with corrupt and incompetent Governments and the greater focus
on fragile states is likely to lead to less assistance to some
countries with good governance where aid is likely to be well
spent. We are to undertake an inquiry into fragile states in 2011
and will examine these issues in more detail. (Paragraph 16)
3. Closer working
between DFID, the FCO and the MoD is welcome, especially in fragile
and conflict-affected countries. We do not expect this will lead
to the potential militarisation of aid and trust it will not.
We also welcome DFID's inclusion in the National Security Council
and expect it will lead to a more coherent approach to national
security. We support the establishment of the Joint Committee
on the National Security Strategy which will scrutinise the National
Security Strategy, including the work of the National Security
Council. (Paragraph 17)
Climate change
4. We
welcome the Government's policy of making climate change an integral
part of DFID's programmes and providing £2.9 billion funding
up to 2014-15 to help developing countries respond to climate
change. In its response to this report the Government should state
how much of this money will be ODA-compliant and how DECC is to
spend its share of the money. There should be a limit on the amount
of ODA spent helping developing countries respond to climate change,
and we are reassured that the funding allocated for this purpose
in the CSR is less than 10% of ODA. (Paragraph 19)
Development expenditure by other Government Departments
5. The
Permanent Secretary informed us that the share of the UK's ODA
which DFID spends will continue to increase. She expects it to
be 89% by 2014-15. This ensures that the majority of UK aid is
compliant with the International Development Act 2002 and is for
the purposes of poverty reduction. Spending by other departments
does not necessarily comply with the 2002 Act. DFID is transferring
sums to other departments, including somewhat surprisingly funds
for the papal visit. The Government should explain in its response
to this report what the funds transferred to the FCO for the papal
visit were spent on and how this was ODA-compliant. (Paragraph
26)
Research
6. Research
makes an important contribution both to DFID's work and to international
development more widely and it is important that DFID continues
to fund high quality independent research. DFID should seek to
stimulate research in institutions in developing countries, but
it must also recognise the expertise in UK universities and ensure
that the UK remains an important centre of research into international
development. We are concerned that at present UK research institutions
are unfairly disadvantaged compared to universities in other donor
countries. Research commissioned by DFID must be disseminated
more widely. Tenders for research should state that researchers
are expected to provide submissions to select committee inquiries
into relevant subjects and make their research available to the
public at large in order to increase transparency. (Paragraph
29)
Switching aid from bilateral to multilateral institutions
7. Increasing
spending through multilateral organisations would enable DFID
to accommodate the large increase in spending in 2013-14 without
a major increase in running costs, for example by making additional
payments to the World Bank. However, it would make little sense
to save on DFID's administration costs by spending money through
institutions with higher costs. Moreover it should also be noted
that increased spending through multilaterals may reduce the control
available to DFID. It can be argued that it also dilutes its influence
as a major international donor - a proposal which we will examine
further. The case for spending through multilaterals must come
from intrinsic advantages such as economies of scale and lower
transaction costs for developing countries. DFID has not taken
a decision yet and we await the Multilateral Aid Review for an
analysis of the costs and benefits. (Paragraph 34)
8. It is also uncertain
as yet what decisions will be made in respect of middle income
countries following the Bilateral Aid Review. We reiterate our
recommendation made in reports in the last Parliament that DFID
should have a strategy for its engagement with middle income countries,
especially those with large numbers of poor people, indicating
the role of bilateral and multilateral aid. (Paragraph 35)
Reviews of bilateral, multilateral and humanitarian
aid
9. We
welcome the Government's reviews of bilateral, multilateral and
humanitarian aid programmes and trust that they will lead to a
switch of spending to organisations and programmes which offer
better value for money. (Paragraph 38)
The Aid Transparency Guarantee
10. We
support the establishment of the Aid Transparency Guarantee. This
will help increase the effectiveness of spending on aid and empower
aid recipients in developing countries. (Paragraph 44)
The Independent Aid Watchdog
11. We
welcome the establishment of the Independent Commission on Aid
Impact to undertake independent evaluations of ODA spending. The
Commission will report to us and we will examine its programme
of work, propose subjects for evaluation and take evidence in
respect of some of the evaluations from the Permanent Secretary,
the Commissioners and those who undertook them. We will not take
evidence on all the evaluations since this would detract from
our own core functions and work. (Paragraph 51)
12. We note that the
Commission will only be effective if:
| a) | DFID designs programmes in such a way that they can be evaluated
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| b) | Evaluations are undertaken sensitively, taking account of the fact that the effectiveness of some programmes, for example those relating to governance, will only become apparent in the long term
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| c) | Evaluations are designed to be effective but do not impose unnecessary burdens on staff in the field - they should not involve excessive bureaucracy and form-filling for staff
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| d) | DFID ensures that it has mechanisms in place to learn from the evaluations. (Paragraph 52)
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Staffing Abercrombie House
13. The previous Committee visited Abercrombie House
during the last Parliament and we intend to do so during the course
of this Parliament. We will keep a watching brief over staff moves
to East Kilbride and at whether the balance between London and
East Kilbride is optimal. (Paragraph 65)
Use of technical cooperation
14. Over the next 4 years the Department will make
cuts in its administration costs of £34 million, equivalent
to 33% in real terms. These will include significant reductions
in the corporate budget as well as reduced expenditure on office
space, communications and travel. New technologies are enabling
reduced costs in some areas and there will continue to be reductions
in staff in back-office functions. We commend DFID for making
important administrative savings over the last 5 years and for
its plans to do more over the next period provided they do not
undermine DFID's ability to do its work effectively. The numbers
of HR staff have been reduced from 150 to 89 but this reduced
figure looks more than adequate. It makes obvious sense to reduce
the number of back office staff rather than vital frontline staff.
We welcome the decision to increase the number of policy staff
at East Kilbride as the number of 'corporate' staff there decreases.
It will be important to ensure that in reducing corporate functions,
key roles such as the ability to monitor and manage external suppliers
is not weakened. (Paragraph 81)
15. DFID's running
costs are to be reduced to 2% of its budget over the next 4 years,
but will increase by about 6% in real terms because of increases
in the total DFID budget. The increase in running costs together
with the reduction in administration costs will enable DFID to
employ perhaps 300-400 more frontline staff, according to the
Permanent Secretary. (Paragraph 82)
16. These additional
frontline line staff will be essential if DFID is to deliver effectively
its increased budget, especially if much of the increase is in
bilateral aid. It is important that these staff have the right
skills. Once the results of the bilateral review are known, we
recommend that DFID devise a strategy for how it will increase
the number of its staff in those countries where it intends to
have programmes. A wider range of staff will also be required
if DFID is to successfully take on a new role in conjunction with
the FCO and MOD. This will mean employing staff who have the ability
to influence policy as well as administer aid budgets. We agree
with DFID that it enhances in-country programmes to have locally-employed
staff and that it is important that such staff not only fill lower
grade jobs but are integrated throughout the DFID programme. We
commend DFID on its efforts to do this and encourage it to continue
to make sure "decision-makers" in each DFID office include
some staff-appointed in-country. DFID should focus, in particular,
on how this might be done in fragile and conflict-affected countries.
(Paragraph 83)
17. The use of external
suppliers to provide technical assistance fills an important skills
gap. However, we are concerned that the use of such suppliers
may affect the ability of developing countries to build up expertise.
In addition, DFID needs to ensure that it is selecting the suppliers
which are providing the best value for money and to examine whether,
as a major purchaser of their services, DFID could do more to
drive down fee rates. We will ask the new ICAI to examine whether
external suppliers are providing value for money. (Paragraph 84)
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