Government response
The Coalition Government welcomes the opportunity
to respond to the IDC report into recent events concerning the
Global Fund. The UK Multilateral Aid Review assessed the Fund
as critical to the achievement of the health related MDGs. The
Government has invested heavily in the Fund and wants it to succeed.
The Global Fund Board took the difficult decision
to cancel Round 11 in November 2011. But the Board also took a
series of good decisions, such as the adoption of a new Strategy
and a Consolidated Transformation Plan to improve significantly
the systems, behaviours, performance and ultimately the impact
that the Fund has in developing countries. The Government supports
this Plan and wants to see it implemented rapidly.
As the Secretary of State has said before, in 2013
the UK will update its assessment of the value for money provided
for UK taxpayers from aid channelled through multilateral organisations
such as the Global Fund, to assess the changes that have been
implemented since the MAR was undertaken in 2010. The Government
will be looking for clear evidence of progress in key reform areas
so that it can make sound judgements on future funding increases.
There has been some good news since the IDC evidence
session, with the Global Fund Board announcing that it will accelerate
new funding opportunities. The Government welcomes this news.
It will not only give hope to countries that had expected to apply
to the Fund for support, but will also allow the Fund's new Strategy
and new Business Model to be tested.
IDC Conclusions and Recommendations
The Global Fund to Fight AIDS, Tuberculosis and
Malaria is an invaluable international finance mechanism. It has
been highly effective over the past decade in tackling three of
the world's most devastating diseases. Good progress has been
made but there is still much work to do to eradicate these diseases
in developing countries as far as possible. We are therefore concerned
about the Global Fund's recent funding problems and the cancellation
of all new grants until 2014. Given the nature of these diseases,
we fear that many gains achieved will be lost if the Global Fund
does not overcome its recent difficulties and return to full operation
as soon as possible. (Paragraph 10)
Partially agree.
The Government shares the Committee's analysis and its concerns.
However, by adopting the suite of decisions taken in November
2011, including the introduction of the Transitional Funding Mechanism
which will provide funding for the continuation of essential prevention,
treatment and/or care services of the three diseases currently
financed by the Global Fund, together with ensuring resources
are available for renewals of existing grants under the title
"Phase II grant renewals", as well as the signature
of all Round 10 grants, the Fund was confident that gains would
be protected until such time as additional funding would be available
for new programmes.
Since the Committee's report was published, the Global
Fund's Board has met and received new financial forecasts. This
means not only that all Transitional Funding Mechanism (TFM) demands
can be met in full, but it also allowed the Board to announce
that it would accelerate the implementation of the Global Fund's
Strategy. The Fund is now designing its new approach to strategic
investments and proposal development, and will launch a new funding
opportunity later this year. The Board expects to make funding
decisions no later than April 2013, one year ahead of previous
expectations. The Government is content with the Board's decision.
We are concerned at the diametrically opposed
views expressed in our evidence about the potential impact of
the cancellation of Round 11. If mistaken, the NGOs views are
alarmist; similarly, if mistaken, the Secretary of State's view
is complacent. We do not have sufficient evidence (including from
those developing countries affected) to come to a conclusion about
the full impact of the cancellation. But robust data of this kind
will be necessary. An independent impact-assessment of the cancellation
of Round 11—endorsed by the Global Fund, the Department
for International Development, other key donors and leading NGOs—needs
to be undertaken to help inform future policy and programming.
We urge DFID to work with international partners and NGOs to agree
the scope of such a study (Paragraph 11).
Disagree.
In its written evidence the Government said 'it is too early to
know the extent of the impact of the cancellation of Round 11
overall', and went on to set out a series of concerns should the
current temporary funding situation turn into significant longer
term shortfalls. This was in no way intended to appear complacent,
rather the funding situation was too fluid to make a clear assessment.
For example the Global Fund Board in November 2011 believed that
there could be no new funding before 2014. But since then, donors
have resumed, increased or accelerated their contributions. Therefore,
as stated above, the Board has decided to accelerate funding and
bring forward its new funding decisions to April 2013, one year
earlier than expected. But it is not yet clear what the alternative
to the Rounds based approach will look like or what, and how much,
it will support.
Another unknown is how big the cancelled Round 11
would have been. Bidding for Round 11 was cancelled because the
Board concluded that there were insufficient funds available to
pay for it.
In addition, of the countries that were planning
to apply for Round 11 funding, we do not know which ones would
have been successful and therefore precisely which interventions
would have been supported. Only 53% of all proposals were successful
under Round 10, with HIV/AIDS proposals representing just a 44%
success rate, TB proposals 54%, and Malaria 79%. At the time the
Government submitted its written evidence, we did not know the
size of applications to the Transitional Funding Mechanism - now
known to be $616 million - which was expressly designed 'to provide
funding for the continuation of essential prevention, treatment
and/or care services of the three diseases currently financed
by the Global Fund' in the absence of Round 11. And we still do
not know what the Technical Review Panel will recommend.
These statistics on the pass/fail rate reinforces
the Coalition Government's belief that a new funding model is
essential, getting away from an annual challenge fund approach
where almost 50% of all proposals fail and towards more predictable
and frequent opportunities for financing the most impactful interventions.
This is the thrust of the Fund's new strategy.
Because of the variables noted above, the Government
does not believe that a full, independent impact assessment would
be either feasible or useful. Instead, the Global Fund Secretariat
has been tasked by the Board to develop demand estimates. This
was part of the package of decisions taken in Accra in 2011, and
reaffirmed in May 2012.
The Global Fund is in need of structural and management
reform. We are concerned about the findings of fraud by some Global
Fund grant implementers, but recognise that the Global Fund's
welcome commitment to transparency and anti-corruption helped
to identify these malpractices. We are impressed by the new General
Manager of the Global Fund and our evidence suggests that the
Global Fund is making good progress in reforming its management
structures and monitoring of financial risk. We believe that a
speedy appointment of a permanent Executive Director is important
to instil confidence amongst donors. (Paragraph 12)
Agree.
The Fund needs a world class Executive Director(ED) if it is to
secure its place as a world class financing institution. The Government
agrees that the General Manager is making difficult but impressive
changes that are designed to lead to a much improved, more settled
and content organisation; and notes that the General Manager has
been appointed for one year only. Thus the appointment of a permanent
ED to replace him, and in good time to ensure as long a handover
as possible, will be vital. DFID has been actively engaged in
establishing a small nominations committee of the Board to help
with the identification and selection of a high-calibre replacement
based on merit. This small committee has three independent members
and has selected a well-known Executive Search firm to assist
with the process. The committee has confirmed that it believes
the Board should make its final decision if possible by no later
than November this year. The Government would expect the Executive
Search firm to deploy its top people to ensure a process to source
world class candidates.
The Coalition Government expects the Fund to continue
the process of structural reform. The Secretariat has undergone
a very rapid transformation, and the Fund's Committees are helping
to design a new business model, which will streamline grant processes
and reduce the burden on implementing countries. These organisational
reforms must also be matched by further governance reform and
cultural change at both the Board and Committee level.
The Board will consider further governance reforms
over the course of the next 18 months, and as the Secretary of
State said in DFID's written evidence to the IDC, in the longer
term he expects the Fund to settle back into a more stable and
less intense period where, for example, Board Chairmanship is
more non-executive than it has been over recent months. The Government
will continue to press for and support these necessary reforms.
DFID is a key donor and reliable partner to the
Global Fund whose commitment could unlock other funds. While we
strongly support the Secretary of State's commitment to increase
the UK's contribution significantly to the Global Fund, subject
to reform, we are concerned at the continuing delay in providing
these funds. A further delay until 2013, as indicated by the Secretary
of State, may put the lives of people in developing countries
at risk. We strongly urge the Department to do all possible to
commit funds earlier by prioritising its assessment of the Global
Fund ahead of, and separately from, its broader update of the
Multilateral Aid Review. (Paragraph 13)
Disagree.
When the Secretary of State spoke at the IDC, he said that DFID
was prepared to give a very significant increase in financial
support to the Fund. He also did not rule out making a decision
on such an increase in advance of 2013. But he also said he would
be guided by the evidence of reform. Although the organisation
itself has transformed, this has yet to be felt on the ground
through improved performance, fewer burdens on countries when
applying for funds, fewer delays and quicker disbursements. The
earlier the Government makes an announcement, the less evidence
there will be, and therefore the more caveats the Government may
have to attach to any future increase.
However, the Decision of the Board to accelerate
the implementation of the strategy and make funding decisions
by April 2013 means that the Fund's own timetable for funding
decisions is now more aligned to the UK's. The organisational
transformation is well underway, and the design of the new funding
models and consequent new funding opportunities will help us all
assess whether the organisational changes are leading to changes
in how the Fund works in countries. PUSS Stephen O'Brien will
shortly undertake a joint visit to Ethiopia with the Fund's General
Manager in order to gather evidence about the effect of the changes
on the ground. This will give a better platform on which to base
funding decisions.
Whilst the Government understands the desire of some
that the UK should announce its future increase earlier, the Government
does not recognise the charge of a 'continuing delay in providing
these [increased] funds'. In practice the Government has consistently
brought forward and increased its commitments to the Fund over
recent years. In December 2010 the Government brought forward
£100 million of its long-term pledge so that all proposals
recommended for funding under Round 10 could be approved by the
Board. In March 2011 the Government made an additional contribution
of £50 million, to help with short term funding challenges.
In November 2011 the Government brought forward another tranche
from the outer years of its pledge to try to help with current
financing challenges and allow all approved Round 10 grants to
be signed. During the IDC evidence session the Secretary of State
confirmed publicly for the first time that the Government would
commit a further £128 million in each of 2012, 2013 and 2014.
This alone, even before any increase, will mean that the Government
will meet in full, and a year early, its 2007 pledge to contribute
up to £1 billion between 2008 and 2015.
It cannot be reliant on DFID to support the Global
Fund while a number of other donors who have considerable resources
are not doing likewise. Other donors need to commit new funds
if the Global Fund is to return to full operation speedily. DFID
should announce its additional funding at a time which raises
the most amount of money from other donors. The G20 meeting in
Mexico presents a good opportunity to do so, provided the Department's
conditions are met and UK taxpayers' money is adequately safeguarded
(Paragraph 14.)
Partially agree.
Other donors need to step up to the plate. And the Government
agrees that it should announce its additional funding at a time
which has the potential to raise the most amount of money from
other donors too. But the Government assessment is that the G20
meeting was not the right moment to do so. The G20 itself has
been clear that it does not view its meetings as pledging events.
Also, there would not have been sufficient evidence by then that
the organisational transformation which is underway is having
a real impact on the people and Governments whom we try to serve,
and therefore the Government was not confident that DFID's conditions
would have been met by then.
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