The Future of UK Development Co-operation: Phase 2: Beyond Aid - International Development Committee Contents

4  Policy coherence for development

27. Policy coherence for development (PCD) refers to the integration of different aspects of international development within policy-making. PCD is particularly relevant to a beyond aid approach, which necessarily entails working on wider aspects of development, across UK Government departments and with other actors internationally. This chapter will assess the UK's current performance regarding PCD.

Beyond Aid: UK policy and impact

28. While there was universal agreement that beyond aid issues were important, there were different views about how well DFID and HMG more generally performed in their handling of these issues. Some were sceptical. For example, Nilima Gulrajani of LSE said "Currently, there is a palpable sense that DFID's advisory and advocacy roles at the heart of government have diminished."[30] Similarly, Owen Barder and Alex Evans argued that recently DFID had lost its role as a global thought leader.[31]

29. DFID, naturally, took a different position. Its own evidence submission contained detailed accounts of effective cross-Government working on such topics as trade, tax and transparency (all highlighted at the 2013 G8 Summit at Lough Erne), as well as the major UK Government initiative on female genital mutilation (see Box 2), involving action both domestically and internationally.[32] We have witnessed examples of these policies at first hand. We saw efforts to tackle FGM and other harmful practices such as early marriage during our 2013 trip to Ethiopia. In Tanzania last November we saw signs that DFID's longstanding efforts to boost trade between east African countries are beginning to bear fruit, with ships in Dar es Salaam port being loaded with surplus maize bound for Mogadishu. We met an official representing the new joint DFID-HMRC tax team in Tanzania, and were impressed by efforts to drive domestic resource mobilisation in the country. The Secretary of State was enthusiastic about continuing work on tax and trade:

    The agenda of trade, tax and transparency was slap bang in the middle of a lot of what DFID has been doing, certainly in recent years. Our ability to be part of that overall HMG team, making sure that the agenda for the G8 was something that would deliver and could work for developing countries as well, worked really effectively. Now we are following up on all of that. We are seeing legislation passing through on things like beneficial ownership. It can really unlock our ability to complement that with the tax capability work we are doing to start to help developing countries really drive this domestic resource-mobilisation agenda, which is going to be another big part of the beyond aid policy approach that we all have.[33]

30. Independent observers also cited successful examples. The OECD DAC, in its five-yearly Peer Review of the UK, published in December 2014, said

    The UK has made public statements about the need for coherence between policies to support development. It takes a useful case-by-case approach to policy coherence for development, bringing together different parts of government to work effectively—at home and abroad—on issues of common interest. This has proven an effective approach to anti-corruption, climate change and trade, areas where the Cabinet has engaged strategically, and where DFID has successfully promoted deeper joint efforts with other departments. Choosing to focus these efforts on a limited number of policy areas where there are win-win opportunities is strategic.[34]

31. This generally positive assessment is endorsed by the results of the annual ranking exercise of the Center for Global Development, the Commitment to Development Index, published in January 2015. This survey is open to debate but is broadly a useful exercise. The UK ranks fourth out of 27 countries in this Index, which covers performance on aid, trade, finance, migration, environment, security and technology (Figure 3). The UK is the only G7 country to appear among the top five.[35]Figure 3: Commitment to Development Index (January 2015)


32. Witnesses informed us of practical examples of joined-up work and collaboration, on such topics as health, science and technology, and gender:

·  On health: We note with approval the cross-Government outcomes framework 'Health is Global' (although we observe that this is due to expire in 2015).[36] The Wellcome Trust told us that "DFID plays a pivotal role in facilitating partnership working and identifying synergies between UK partners to maximise engagement in overseas activities. It is effective in leveraging funding and expertise from other funders and donors."[37] PATH confirmed that the UK has long supported innovations for poverty-related and neglected diseases and conditions through the Medical Research Council and DFID, as well as commercial investment from UK-based companies. In fact, of all EU Member States, the UK is the leading investor in global health research and development, contributing 0.0049 percent of its gross domestic product.[38] For the past several years, the UK has consistently been one of the top three funders of global health research in the world.[39]

·  As far as science and technology are concerned, Research Councils UK said: "The total funding committed since 2005 to collaborative programmes including UK Research Councils and DFID is nearly £390m. Taken together, these commitments represent a major co-funding arrangement with a UK government department for the Research Councils." In addition to collaboration with DFID, the Research Councils are a key delivery partner in the Newton Fund, a £375m investment of UK ODA through international research collaboration.[40]

·  With regard to women and girls, Plan UK said: "Recent work on the Girl Summit between the Cabinet Office, Home Office and DFID has shown a cross-departmental drive to protect girls in the UK and globally from violence by ending child marriage and FGM, an approach Plan UK strongly welcomes. Cooperation with the Department for Health includes for example the international emergency trauma register through which the Department of Health is sending NHS experts to provide medical support to the emergency response in Gaza."[41]

33. These positive comments should not be taken as implying that the UK scores a 'perfect ten' on all topics where it decides to engage. Indeed, many witnesses focused on areas where performance fell short of expectations. Witnesses argued that there were weaknesses on issues as diverse as global finance, tax, some aspects of trade (TRIPS, TTIP), human rights, drugs, oceans, arms, and corruption. There were also many comments about the links between development, humanitarian and security interventions. NGOs and academics were particularly critical of the private sector.

·  On global taxation, Action Aid said that, as it stands, global processes on tax are led mostly by the Treasury and BIS, and developing countries' concerns are not largely necessarily addressed. ActionAid said that current wave of international tax rules negotiations, the so-called BEPS (Base Erosion and Profit Shifting) process does not include developing countries as equal negotiation partners and does not address many developing countries' concerns. For example, the BEPS process fails to deal with how the tax base from multinational companies is shared out between countries—residence versus sources taxation—even though this is of vital importance to many developing countries. In fact, the BEPS Action Plan explicitly states that its actions "are not directly aimed at changing the existing international standards on the allocation of taxing rights on cross-border income."[42]

·  On trade, Stop Aids argued that the ongoing Trans-Atlantic Trade and Investment Partnership (TTIP) is proposed to contain a much broader range of TRIPs-plus terms—data exclusivity, patent term extension and others—that will affect the UK's ability within the EU to access generic medicines, which save the UK around £19 billion annually.[43], [44] The Fair Trade Foundation gave us another example of UK trade policy impacting negatively upon developing countries. It highlighted that the agreed reform to the Common Agricultural Policy's sugar policy will end limits to EU sugar beet production in 2017. This will make it much harder for the many sugar cane producers reliant on the EU market to offer competitive prices. Further, the UK's groceries and market regulation, overseen by the Competition and Markets Authority, provides good protection for consumers but has little or no mandate to address wider Government policy goals. This lack of coherence, according to the Fair Trade Foundation, is having a detrimental impact on achieving sustainability and fairness in global supply chains.[45]

·  On human rights, Amnesty International said that, whilst DFID contributes to the realisation of rights through many elements of its programmes, such as its actions to improve the lives of girls and women and its humanitarian responses to crises, it does not embed human rights consistently across its plans and strategies. It says this makes it difficult for DFID to mainstream human rights across its strategic frameworks, meaning policies neglect human rights, and risk being incoherent with other UK Government work.[46]

·  On arms, the UK Aid Network said that since 2008 the UK has approved arms export licences (including both military and dual use) worth £51,133,673,291.[47] In 2013 the Committees on Arms Export Controls reported that the UK had issued 3,000 export licences for military and intelligence equipment worth £12.3bn to countries which are on its own official list for human rights abuses.[48], [49]

·  On transparency and corruption, CAFOD told us that DFID did not appear to have been at the forefront of discussion on the development and implementation of the UN Guiding Principles on Business and Human Rights, even though there are clearly huge links to the impacts that corporate activities can have on poor and marginalised communities.[50] The ONE Campaign said that that up to 3.6 million deaths could be prevented each year in the world's poorest countries if action was taken to end "the secrecy that allows corruption and criminality to thrive, and if the recovered revenues were invested in health systems."[51] It said that specific measures that could have a big impact would include:

·  HMT committing to action to tackle secrecy in trusts.

·  FCO using its influence to press for public registers of company ownership as well as trust transparency in the UK's Overseas Territories and Crown Dependencies so that action is co-ordinated and has the biggest impact.

·  BIS ensuring that the regulations to transpose the 4th EU Anti-Money Laundering Directive are fully consistent with the Directive and enable citizens, NGOs and other stakeholders to make complaints about companies who do not comply with the requirements without political interference; and

·  HMT, HMRC, FCO and other departments working together to enable tax collectors from developing countries to access information about off-shore bank accounts.[52]

·  Global Witness made a very strong statement to us on this topic:

    Britain is a haven for dirty money and the people it belongs to. Many of the world's most corrupt people are free to park the money they have stolen in London's high-end property and respected banks. They use our lawyers to set up shell companies to hide what they are doing, and send their children to our private schools. They lead extravagant double-lives in one of the world's great cities while the citizens they have stolen from continue to live in dire poverty back home […] There is also more to do around the concept of 'denial of entry' to deny safe haven to corrupt individuals.[53]

·  Finally, private sector development was singled out as a sector subject to particularly weak PCD. The Institute of Development Studies (IDS) noted the large volume of cross-departmental work in this area, for example, DFID work: with BIS on the UN Global Compact and the Extractive Industries Transparency Initiative; and work on trade with UKTI and the Export Credits Guarantee Department. However, the IDS was sceptical about the degree to which proper co-ordination over private sector work was taking place.[54]

34. While there is some attempt to ensure coherence in these different policy areas, it is not clear how trade-offs between development objectives and other economic or political interests are managed. While DFID is playing a leading role in encouraging "pro-poor" economic development, how coordination happens in those areas of government activity that either seek to create more UK business activity or regulate harmful activities is less apparent. Professor Melissa Leach, IDS Director, told us that "sometimes the emphasis has been on more private sector activity without necessarily asking questions about what kind of private sector activity […] We need to examine where there are trade-offs."[55]

35. As these comments illustrate, beyond aid issues are complex. It is clear that there might be trade-offs between domestic and international priorities, as well as trade-offs between spending on poverty reduction and on global public goods. For this reason, we think it important to be clear about the overall PCD strategy. The UK will be challenged in the coming year to make significant commitments on PCD issues, including: global financial management, including shocks caused by changes in oil prices; security, in and originating from fragile states; climate change; and disease threats (illustrated by Ebola). The new SDG framework will require action on these both externally and in the UK.

36. Some commentators have been critical not just about aspects of PCD in the UK but its general approach. We were struck by the conclusion of the OECD/DAC Peer Review of the UK that PCD is a weak aspect of HMG's approach:

    The lack of a comprehensive approach to ensuring its development efforts are not undermined by other government policies means potential incoherence in other policy areas can be overlooked. It also means opportunities might be missed for stakeholders to provide evidence on and solutions to problems of incoherence. For instance, little has been done to address potential links between migration policy and development. In addition to managing trade-offs, a more systematic approach would help the UK to tap positive synergies across policy agendas, as it has started to do with trade and development. The UK also does not appear to be investing in building a knowledge base about the impacts of UK policies on developing countries in order to enable more informed decisions. In dialogue with developing country partners, it could do more to increase understanding of the potential effects of different UK policies on key barriers to development, and to use the evidence acquired to raise awareness of the need for greater coherence.[56]

37. There are many successful examples of policy coherence in the UK. The UK's record is at the high end of international performance. However, we also note witnesses' concerns over the UK's patchy record on some aspects of PCD. We acknowledge that these are difficult issues, with potential trade-offs between national and international priorities, and between spending on poverty reduction and global public goods. We also note the criticism of the OECD DAC Peer Review that the UK lacks an over-arching strategy on PCD. PCD is likely to grow in importance and it is therefore crucial that the UK improves its efforts in this area.

Reporting policy coherence for development

38. We are struck by the fact that it has not been easy to assemble a coherent account of how Beyond Aid issues are handled in the UK. There is a reporting requirement included within the 2006 International Development (Reporting and Transparency) Act, which requires the Secretary of State to report on policy coherence within the context of MDG Goal 8 (Box 3). For the first time in 2014, DFID included a specific section in its Annual Report setting out its work on PCD (in previous years, sections have taken a more general look at the UK's broader policy work). This was incorporated in a chapter entitled 'Effective Development Cooperation' and covered six topics:

1.  Facilitating trade and knowledge transfer (incl WTO)

2.  Encouraging transparent and responsible business (incl supply chains)

3.  Helping (non-aid) finance flow for development (incl international taxation)

4.  Supporting peace-keeping and building resilience (incl Conflict Pool/Conflict, Stability and Security Fund)

5.  Producing and consuming sustainably (including climate change)

6.  Bringing in talented people and sharing knowledge (incl int'l migration)[57]

39. This list does not map perfectly onto the targets of MDG 8, nor to the wider list of topics covered in this inquiry. Indeed, DFID's own written submission and the Secretary of State's oral evidence covered other issues. For example, human rights, corruption, the arms trade, debt management and international finance are poorly covered in the 2014 Departmental Report.

40. Furthermore, it does not seem to us acceptable that PCD issues should be reported in a free-standing section, without being cross-referenced as major themes in DFID's overall strategy or in sectoral or country-focused sections of the Departmental Report.


41. Both the International Development Act 2002 and the International Development (Reporting and Transparency Act) 2006 need updating. The 2002 Act has two problems. First, it is principally concerned with 'development assistance', meaning aid. Second, and more controversially, it has an exclusive focus on poverty reduction, which is appropriate for traditional aid, but may not be as suitable when it comes to funding global public goods.

42. Only Article 4 of the 2002 Act, headed 'Supplementary Powers' provides a somewhat ambiguous opening for non-aid activity (Box 4). The 2006 International Development (Reporting and Transparency Act) does open the door to report on policy coherence issues, but is dated because it is tightly tied to the Millennium Development Goals which expire in 2015 (Box 3).

43. The legislative framework provided by the 2002 and 2006 International Development Acts has been extremely important in preserving the purpose and identity of the UK aid programme. We think it important that we have legal protection for the objectives of development assistance. In order to secure this, the aforementioned acts would need to be updated. We conclude that both Acts should be updated to reflect the wider purposes on the UK's international development efforts. The poverty focus should not be sacrificed, but the importance of global pubic goods should be reflected in the legislation. The new framework of Sustainable Development Goals will also need to be used as the foundation of legislation. The whole-of-Government responsibilities should also be reflected in updated legislation.

44. We asked the Secretary of State whether current reporting on PCD is sufficient. She told us that PCD would in future "need to become a bigger part of that annual report […] because it is now a much bigger part of what we do." Policy coherence is increasing in importance. We recommend that DFID improve its reporting on PCD, in line with the requirement under the 2006 International Development (Reporting and Transparency) Act. Specifically, we recommend that the current short section within DFID's Annual Report is expanded.

  1. We also note that the 2006 Act is based on the MDG framework which will expire in 2015. The Act will need to be amended or replaced once the new post-2015 Sustainable Development framework has been agreed. The new framework will inevitably include a much wider set of Beyond Aid goals and targets. We recommend that the International Development (Reporting and Transparency) Act 2006 be revised or replaced once the post-2015 Sustainable Development Goals have been agreed.

30   Nilima Gulrajani submission Back

31   Owen Barder and Alex Evans submission Back

32   DFID submission Back

33   Q 176 Back

34   OECD DAC Peer Review of the UK (December 2014)  Back

35  Back

36   HM Government, Health is Global (2011-2015) Back

37   Wellcome Trust submission Back

38   Path written evidence. See  Back

39   Q 35 Back

40   RCUK submission  Back

41   Plan UK submission  Back

42   Research Councils UK submission Back

43 Back

44   Stop Aids submission Back

45   Fairtrade Foundation submission  Back

46   Amnesty International submission Back

47   UKAN submission Back

48 Back

49   Committees on Arms Exports Controls, First Joint Report of the Business, Innovation and Skills, Defence, Foreign Affairs, and International Development Committees of Session 2013-14, Scrutiny of Arms Exports and Arms Control, HC 205, 1 July 2013 Back

50   CAFOD submission Back

51   ONE submission Back

52   Economic Affairs Select Committee, The Economic Impact and Effectiveness of Development Aid, March 2012, Chapter 6, Number 75 Back

53   Global Witness submission Back

54   IDS submission Back

55   Q 35 Back

56   OECD DAC Peer Review of the UK (December 2014) Back

57   DFID, Annual Report and Accounts 2013-14 pp. 121-124 Back

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Prepared 2 February 2015