House of Commons - The Future of UK Development Co-operation: Phase 2: Beyond Aid

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

5 How the UK's approach should change

46. We have used the earlier chapters to argue that the way beyond aid issues are tackled is likely to define the success of the UK's future development approach. Having established the importance of a beyond aid approach, we now move to consider how such an approach can best be facilitated. This raises questions about organisational structure, cross-Government working, and accountability in the UK. It also requires careful thought about the competences possessed by DFID staff, and the accountability of agencies responsible for development work. We begin by analysing the experience of other countries, before turning to UK experience and future options.

What have other countries done, why, and how successfully?

47. The UK is not the only country to have been considering how development co-operation is managed. In 2013, for example, there were major reorganisations in both Australia and Canada, both of whom reintegrated their development agencies within their Ministries of Foreign Affairs. We were told in written submissions that the UK was now unusual in having an independent cabinet-level ministry responsible for both policy and implementation. Researchers from the Overseas Development Institute told us that "development cooperation agencies are now closely linked with foreign affairs ministries in most DAC countries" (see Box 5). That approach is illustrated in Models 2 and 3 within Box 4. The (mainstreaming) of development cooperation across policy areas within a Ministry of Foreign Affairs (Model 1) and the existence of a ministry dedicated to development cooperation (as in the UK - Model 4) are less usual.

Box 5: Models of donor governance

Model 1: E.g. Norway, Denmark

Model 2: E.g. Australia, Canada, Finland, Greece, Ireland, Netherlands, New Zealand, Switzerland

Model 3: E.g. Austria, Belgium, France, Germany, Italy, Japan, Luxembourg, Portugal, Spain, Sweden, United States

Model 4: E.g. United Kingdom

48. Witnesses said it was difficult to assess which of these models is most successful. Erik Lundsgaarde of the German Development Institute told us that "it is becoming increasingly important to consider whether independent development agencies can adequately assume the role of promoting coherent action across government. As the German and US cases suggest, development agencies face clear limitations in coordinating funding managed by other actors or serving as development advocates within the government." However, he said, "there is limited evidence on the value of different ways of organising cooperation systems, and a dearth of comparative research on the performance of these systems—mainly as they are considered context-specific."[58]

49. Nilima Gulrajani of LSE went further. She said that

The OECD DAC concurred. It said that "looking across our reviews, it is clear that it is not the institutional organisation so much as the inherent capabilities that make the difference in effective development co-operation." The DAC added that

50. If the test of how well different models deliver policy coherence, experience also differs widely. The European Centre for Development Policy Management (ECDPM) told us that there were five key dilemmas in managing policy coherence:

Key dilemmas

1) Sustaining political interest, will and support for PCD.

2) Making PCD commitments at national level meaningful.

3) Making PCD commitments for EU policies and at EU level meaningful.

4) Ensuring that there is a common understanding and a shared ownership of what is meant by 'development' and a broad knowledge of development policy objectives.

5) Ensuring that there is a common understanding and a shared ownership both of the concept of PCD and the PCD policy commitments in place beyond those mandated to promote it.

Source: ECDPM submission

ECDPM concluded that

In terms of how PCD is organised in different countries, ECDPM assessed experience in five countries, not including the UK, summarising existing institutional mechanisms as follows:

Existing institutional mechanisms for promoting PCD

Country Year instituted Name Situated Mandate for PCD

Finland 2008 Inter-ministerial network on PCD Inter-ministerial, political level. Awareness raising and exchange of information on PCD issues.

Germany 2011 Department for Cooperation and Coherence in the Federal Government Ministry for Economic Cooperation and Development, technical level. Mainstream PCD across the Federal Government.

Ireland 2007 Inter-Department Committee on Development (IDCD) Inter-ministerial, political level. Strengthen coherence in the government's approach to development.

The Netherlands 2002 (until 2012) Department for Evaluation and Coherence (DEC) Ministry of Foreign Affairs, Directorate for Development Cooperation, technical level. Screen Dutch positions on EU policies; proactively engage with specific policy dossiers.

Sweden 2003 Unit for Development Cooperation Governance (UD-USTYR) Ministry of Foreign Affairs, Department for Development Cooperation, technical level. Coordinating government efforts towards PCD.

Source: ECDPM submission

51. A more comprehensive review of EU experience was carried out by the European Commission in 2013.[62] It found inter alia that:

· The EU itself and eight Member States have legislation on PCD. The UK does not.

· Political commitment is expressed in 17 Member States, through 'Guiding Principles' (e.g. Finland, Spain, Portugal, Poland), White Papers (Ireland, Austria, Denmark) or Plans of Action (Sweden, Finland, Denmark, Czech Republic). The UK has no comparable statement.

· The European Parliament has a Standing Rapporteur on PCD.

· The EU has a formal procedure for Impact Assessments, and, in the case of trade, Sustainability Impact Assessments.

· Evaluations are used purposively to examine PCD issues.

· The OCED has a PCD methodology, and regularly reviews Member State performance.

· Different Member States have different reporting requirements. e.g. Belgium (annual stakeholder meeting), Czech Republic (Council on Dev't Cooperation), Denmark (annual report), France (biennial reporting), Ireland (special study on indicators), Luxemburg (inter-ministerial committee), Spain (biennial PCD reporting), Sweden (biennial report to parliament), Netherlands (reports to parliament), Croatia (annual report). The entry for the UK reads "No specific national PCD Reporting requirement reported in the national contribution".[63]

52. The International HIV/AIDS Alliance said the US International Development Agency (USAID)'s 2010 Quadrennial Diplomacy and Development Review offers a number of lessons from which the UK could draw (see Box 6). It said the UK Government could follow the example of the US Government and give DFID "a more prominent role in international foreign policy deliberations and decisions and be able to shape global development conversations." [64]

UK experience and options

ORGANISATIONAL STRUCTURES

53. We asked specifically in the terms of reference for this inquiry 'whether a stand-alone DFID has a long-term future'. This was regarded by witnesses as an important question. For example, Dr Erik Lundsgaarde told us that "a core dilemma within the UK system relates to whether DFID, as a department with a reputation for managing funding effectively, can assume responsibility for influencing the policy orientations and cooperation programmes promoted by other departments beyond its narrow funding role."[65]

54. The future of DFID was a question addressed by most of those submitting written evidence, with a near-universal response that the answer to our question was 'yes'. Different reasons were offered: the creation of DFID had sent a strong message internationally; DFID acts as the moral conscience of the UK's international engagement; having a seat in the Cabinet gives influence at the heart of Government, and DFID's operational capacity is easier to protect. A selection of comments received is in Box 7.

55. Furthermore, there were risks in making institutional changes. Nilima Gulrajani told us that:

56. Subsuming DFID into another department could be a highly risky approach in that it could risk marginalising development. DFID does not need to be folded into another department to ensure a coherent, comprehensive approach to international development policies. As Lord Jay of Ewelme, a former official of the ODA (now DFID) and former Permanent Secretary of the Foreign and Commonwealth Office, stated in 2012 to the House of Lords Economic Affairs Select Committee inquiry on the economic impact and effectiveness of development aid: "the right structure [for UK international development policy] is to have a separate DFID from the Foreign Office, but working closely together."[67]

57. DFID's own view unsurprisingly favours the continuation of the Department. The Annual Report for 2014 says that

58. We asked the Secretary of State about the fact that the UK was now the only OECD DAC donor with a standalone cabinet-level ministry responsible for both policy and implementation.[69] She said it was "the right approach" for the UK. She said that development was a "strategic agenda for the UK Government", which was why she had a seat at the National Security Council.[70] We will return to the NSC in the following section.[71]

59. We support the continued existence of DFID as a standalone department represented at Cabinet level. Several donors have recently changed the way they structure their development approaches. We heard useful evidence about their new models. The UK is now an outlier in having an independent cabinet-level ministry responsible for both policy and implementation. It is too early to judge the benefits of other donors' new approaches. It may be that greater integration leads to close coordination between diplomacy, defence and development; or it may, conversely, be the case that integration leads to the co-option of development in the service of other national interests. Approaches are likely to be highly context-specific, and, as the OECD DAC says, mergers risk losing technical development expertise, which is more important than ever with a Beyond Aid approach. We believe that no one cross-departmental model will guarantee a successful approach, and that other factors are likely to be more important, including political will, and the ability to develop and use the right cross-Government structures.

Cross-Government working

60. A standalone development department continues to be the right approach for the UK. However, we thought it important to consider DFID's role in working with other Government Departments.

61. ODI emphasised the importance of the UK Government assuming "a more coherent and compelling institutional approach to dealing with future global development challenges."[72] A number of witnesses, including DFID itself, noted the importance of cross-Government strategy documents (like the cross-Whitehall 'Health is Global' strategy), Cabinet Committees, jointly-owned cross-Government funds (like the International Climate Fund), joint ministerial appointments, and so on. There were many practical suggestions. For example, ODI proposed the "re-introduction of Public Service Agreements (or equivalent) (and) a reporting requirement to Parliament on PCD."[73] The British Overseas Aid Group made a different suggestion: the introduction of a "shared, coherent strategic policy framework to ensure government interventions across the board promote complementary policies."[74] UKAN interpreted this putative framework as a "Cross-Whitehall PCD strategy/action plan", linked to a cross-departmental task force to track and monitor implementation. Like other witnesses, it said that any new such accountability frameworks must be subject to "stringent development and poverty eradication tests."[75] Other witnesses recommended systematic ex-ante impact assessments, for example of proposed legislation, or formal 'spillover analysis' of domestic policy. We were told about Australia's decision to set uniform cross-government standards for development co-operation to ensure coherence and effective co-ordination of joint initiatives. The Australian Government has developed eleven formal strategic partnership agreements between the former AusAID and 13 Australian government agencies outlining clearly the nature of their partnerships.[76]

62. It was beyond the reach of this inquiry to consider all the structures used by the UK Government to work collaboratively on development. We recommend that, in its response to this report, DFID consider the options for better management of cross-Government working set out in this chapter. We decided to look at one example: how departments work together on security and development.

THE NATIONAL SECURITY COUNCIL

63. The National Security Council is the UK's cross-Whitehall forum for discussion of the Government's objectives for national security, and for making policy about how best to deliver them. The Council meets weekly and is chaired by the Prime Minister.[77]

64. We heard mixed views on the NSC. There was a recognition that the Council helps ensure that "the political and military relationship is functioning"—for example, as it did over the Libya conflict.[78] However, several witnesses saw the NSC as symptomatic of how development was given a lower priority than defence issues. Sir John Holmes, ex-UN Under-Secretary General, said that development was often "bolted on" to pre-existing military operations. He cited the case of Afghanistan, which he believe had resulted in a "very skewed strategy, badly affected by a lot of happy military talk over many years about how well it was all going."[79]

65. Holmes told us that Afghanistan demonstrates that the MoD and DFID have not always worked coherently to meet development and humanitarian objectives. For example in Afghanistan in the years running up to 2012 20% of UK aid was directly focused on Helmand province despite Helmand being home to only 3% of the Afghan population and being one of the richer Afghan provinces.[80] This suggests that political and security objectives have been prioritised over an impartial needs-based approach, contravening Good Humanitarian Donorship Principles.[81]

66. Witnesses saw inherent weaknesses in the NSC that contributed to these incoherent military and development strategies. Ben Jackson of BOND said that the NSS and NSC had not amounted "to a driven cross-government strategy."[82] Other witnesses said the Council was better suited to crisis management and military issues than "longer-term" issues, including development.[83] Sir John Holmes said the NSC was "less focused" on "the broader coherence of policies towards a particular country in terms of trade and regulation and all those other things." Holmes said that the DFID Secretary of State should have a "powerful voice" in the NSC, because of the Department's presence on the ground, and the large sums being committed, but that "from the outside" it wasn't obvious that it did.[84]

67. James de Waal of Chatham House told us that the NSC offers the "structure" to HMG but that this does not guarantee a "coherent way of making sure how people use it." He said that the effectiveness of input into NSC "still depends on a lot of things like personal relationships, presentational skills, and how skilful you are at using the bureaucratic machinery." He argued for a code of conduct setting out the precise roles of people working on national security and how they use the NSC.[85] Saferworld wanted an increased role for the NSC in setting whole-of-government objectives for UK engagement in priority countries, including under the new Conflict, Stability and Security Fund which replaces the tri-departmental Conflict Pool in 2015. Saferworld also recommended an enhanced role for DFID, with its in-country expertise and networks.[86]

68. We asked the Secretary of State for her view on how well the NSC worked. She said it worked "extremely effectively […] not only a very regular meeting of key Ministers in Government" but as a means to look "in the round at what DFID is doing". She said it gives her "the chance to make sure that this development aspect of tackling security, which is really important, can be a full discussion part of what are often some much more detailed conflict and security-driven discussions." She stressed that alongside the NSC, the FCO, MOD and DFID work together through the new Conflict, Stability and Security Fund (the CSSF, the 2015 successor to the Conflict Pool). She said

The CSSF is now £1 billion of investment that allows us to combine both ODA spend and non-international-development spend on projects that can really sit alongside NSC priority countries, and it works very effectively. […] It has a joint secretariat, so it is collectively decisioned between three Departments, and that means we can ensure that it has the right balance of focus. The challenges are making sure that we effectively combine the international development part of the budget with the non-international-development part of the budget and that that is stacked up in the right proportions. We have seen a significant increase in our budget over recent years […] But we recognise that for other Departments the resourcing side of it is difficult, and therefore we have to bear that in mind in understanding what the right mix of money in the conflict fund is versus the broader departmental investments that they have in these similar areas.[87]We asked the Secretary of State whether the NSC put adequate focus on conflict prevention. She said it did, citing evidence showing that every £1 spent on conflict prevention can save £4 on dealing with the conflict itself, and referencing the Syrian conflict, where £700 million has been spent by the UK. She said "[Syria] is extremely expensive when you compare it with what that money could have driven in relation to development outcomes in stable countries."[88]

69. The current Government published the latest National Security Strategy in October 2010, to stay in place until 2015.[89] Parliamentary scrutiny of the National Security Strategy and NSC is carried out by the Joint Committee on the National Security Strategy (JCNSS), which brings together 22 members of both the House of Commons and the House of Lords (including the chairs of the relevant Commons departmental select committees). As part of its remit the JCNSS scrutinises the structures for Government decision-making on national security, particularly the role of the National Security Council and the National Security Adviser. It has published a series of reports on the various elements of the NSC and NSS.

70. The case for DFID's continued existence as a standalone department will be made stronger if cross-government structures ensure collaboration with other Departments is as efficient and coherent as possible. Witnesses put forward a range of possible approaches, from creating cross-Government taskforces, to ensuring that Operational Plans harmonise with FCO and other Government department strategies.

71. We are reserving our specific recommendations for security, where improved cross-Government working is crucial given long-held concerns that the development agenda perhaps is downplayed to military priorities.

72. We continue to support the existence of the NSC as a way of improving cross-Government working. However, we received mixed views on its efficacy as a cohering framework for UK policy. At the moment the NSC fails to give adequate priority to DFID's concerns, and in particular conflict prevention. Any structure is only as good as the efforts invested in it. It is vital that development issues are accorded sufficient priority, and are not "bolted on" to existing military strategies. This will necessitate a broad understanding of security, which encompasses all the issues at stake in conflict-affected countries, including governance, the economy and social investment. Conflict prevention must also be a key priority: not only is it the right thing to do, but it repays the initial investment many times over. We recommend the NSC to take a broader view of threats to UK security, and ensure that development is given the priority it deserves. We urge the Government to ensure that conflict prevention remains a crucial part of NSC activity.

ONE HMG

73. On a slightly wider topic, we looked at the UK Government's One HMG initiative. In 2013, the UK initiated a One HMG Team Overseas programme to deliver a "shared vision of HMG's international objectives and value for money." DFID said "This will enable staff overseas to collaborate closely on policy issues, make the best use of collective expertise and skills; be co-located in the same buildings wherever operationally or practically possible and for each post to have a single corporate services team wherever possible."[90] We decided to look at a practical example of UK departments' collaboration with one another. Briefly consulting publically available material on Ethiopia, it seemed to us that more information would be useful on how the FCO's approach to human rights links up to DFID's approach to development-see Box 8.

74. We asked the Secretary of State for a progress report on One HMG. She said there had been "a lot of progress", and that co-location was now the norm in all but two DFID focus countries. She said efforts went beyond co-location to include a streamlining of back-office processes, and that it was important culturally for "teams to really feel that they are ultimately in one Government team."[91]

JOINT UNITS

75. Witnesses recommended that the Government make more use of joint country strategies.[92] We were pleased to hear about joint DFID-DECC units in India and Indonesia working on the International Climate Fund. Andrea Ledward, DFID Head of Climate and Environment Department, told us

In Indonesia […] we have a joint unit where we work very closely together. It is a great example, actually, of how we are working on integrating the multilateral and the bilateral, and then working with them on the global arena and influencing them politically. India, again, is a great example where it is not huge volumes of finance, but it is very propoor focused, and it is a lot of technical assistance to catalyse an enormous amount of change, particularly within the energy sector.[93]

Nick Dyer, DFID's Director General, Policy and Global Programmes told us that there was "variable geometry" of DFID engagement with other departments, and that while joint units might work in some instances because "we can invest in that scale of governance", in others they made less sense "because you are dealing with smaller sums of money or they are particular issues."[94]

76. The Secretary of State told us that One HMG has been very useful. We welcome the advantages of One HMG on a practical basis, and strongly endorse the concept of co-located offices being more streamlined and efficient. We agree that it is important culturally for FCO and DFID teams to feel they are part of one team. We also endorse the joint units run between DFID and DECC in India and Indonesia. They provide an important way of having long-term influence whether or not an aid programme is in place. We recommend that DFID look at opportunities for introducing joint units in other locations, especially in middle income countries, or where aid is of declining relevance.

Competences

77. A key benefit of a standalone development department is the fact that qualified development specialists deliver the aid programme, and the Department has given great emphasis to programme management to achieve this. Clearly, these competences will continue to be important. However, witnesses told us that, as the 'non-aid' element of the Department's work increases, its staff will need new skills, notably its ability to influence partners across Whitehall and in developing countries. ODI stressed the importance of this task: "While DFID has demonstrated clear success in administering and disbursing a sizeable aid budget […] without a re-assessment of its organisational structure and ways of working, DFID will be faced with the threat of declining relevance. (Thus) It will also require different capabilities and ways of working to move from disbursement of aid as the primary function towards brokering of global action and the transfer of knowledge."

78. Other witnesses agreed. We were told

What DFID needs most from its staff is the capacity to broker partnerships, understand how to support and promote enabling environments for private sector-led growth, tackle market failures, and bring knowledge of emerging approaches around the world to policy areas ranging from social protection to green growth and climate resilience. Experience of project finance and how to secure it will be especially important.[95]

We were told that DFID will have to continue to employ both aid managers, and people with a different set of skills:

79. A further issue is that more staff than ever are working in fragile and conflict-affected states. The Institute for Development Studies said that staff working in fragile contexts needed longer rotations in post, and a broader range of skills and expertise around security and diplomacy.[97] Barder and Evans agreed, saying that the beyond aid agenda would be better-served with longer-term DFID postings that would help DFID staff develop expert knowledge of specific countries and their politics, history, and culture—and that language skills would be important. They suggested that specialisms in specific regions would be sensible, so that staff had skills in specialist areas related, for example, to political transitions; and the ability to operate across disciplinary boundaries (humanitarian, mediation, military, institutional, development).[98]

80. These recommendations chimed with our calls over the course of this Parliament regarding DFID language training, and tour length. Also, if DFID staff are going to play a larger role in influencing and working in co-operation with developing country partners, they will need a great awareness of the cultural context, and for this language is very important. In our report on DFID's 2012-13 Annual Report, we recommended that DFID emphasise that language acquisition is an implicit expectation of all staff posted overseas; and that the Department include language skills in the expected competencies of senior civil servants and in promotion criteria. DFID partially accepted this recommendation pointing to the inclusion of languages in its new international competency framework. However, DFID qualified its commitment to training by saying

81. During our visits, we have been struck by the importance of knowing local languages. When we visited Ethiopia in 2013, a DFID staff member spoke Amharic; in Burma in the same year an FCO official spoke Burmese; and Tanzania in December 2014, one of our own Members—Jeremy Lefroy MP—spoke fluent Kiswahili.[100] These language skills proved to be a genuine asset: it impressed and engaged people we met in the field. When we asked for an update on the training of DFID's staff, the Secretary of State conceded that the importance of local languages was "a very fair point."[101] She said

102

82. We have also emphasised the need for DFID staff postings to fragile- and conflict-affected countries to be for longer periods than is currently the case. Often DFID staff only remain in post for 18 months to two years. In our report on DFID's 2012-13 Annual Report, we recommended that postings to countries other than the six most difficult countries should normally be for a minimum of four years.[103] DFID disagreed with this, saying that the length of tour should be determined by business need, and might restrict those willing to apply (for example, staff with families).[104]

83. Witnesses made a number of practical recommendations about ensuring the right skills mix. Some told us that ensuring this mix was likely to require more secondments into and from DFID.[105] Others said that competence in cross-Government working should be written into all DFID job descriptions, and that good performance in this area should be rewarded.[106] Oxfam agreed that DFID will need to constantly assess that its staff are working cross-departmentally—and, simultaneously, ensure that other departments are required to engage with DFID to develop policies that meet the UK's overall aims, including reducing poverty.

84. More generally, Erik Lunsgaarde recommended a competence review, covering DFID's internal skill set, but also asking what it could achieve more effectively via multilateral channels. He argued that

107

We understand that DFID is in the process of putting in place new competency frameworks for staff as a result of the wider Civil Service reform process.[108]

85. To confront the new challenges we have described, DFID will need to develop skills that enable it to influence organisations and people in internationally, across Whitehall and in developing countries. These skills will include an enhanced language capacity. Some DFID staff have excellent language skills and are clearly able to exert influence with local interlocutors. It is also important that DFID make the most of locally recruited staff. In light of the increasing significance of beyond aid issues, we recommend a competence review covering DFID's internal skill set, and also its role in influencing the approaches of other government departments and international actors, including multilaterals. DFID has a lot to learn from the FCO and other departments in terms of competences and vice versa. Ideally we would like to see a combination of the traditional influencing skills of the FCO and the project management skills of DFID.

Reporting and accountability

86. We have commented earlier that a new approach to international development will require changes to the legislative framework governing the UK Government's development activities, with less emphasis on aid as the main instrument, and clarification of DFID's role as the lead institution across Government. In addition, there will need to be changes in the reporting and accountability arrangements.

87. With regard to DFID, we have made the point that action related to Policy Coherence for Development has not been well-reported in the past. There is a section in the latest Departmental Report which covers PCD, but the key themes are not visible in DIFD's overall objectives or in its results frameworks, which focus too much on spending. Furthermore, DFID only offers a partial lens on the UK Government's policy and activities. A number of witnesses made the point to us that better reporting was required. We have demonstrated that many other countries offer comprehensive PCD reporting.

88. With regard to independent monitoring and evaluation, we note that both the National Audit Office and the Independent Commission on Aid Impact have roles to play. We are pleased to note that the National Audit Office has assembled its work on foreign policy and development under a single heading of 'International Affairs'. We note, however, that most of its work is Departmentally-focused, with the exception of a report on the Conflict Pool in 2012. There also seem to have been few reports linking international work to domestic policy. We encourage the NAO ensure that PCD issues are fully reflected in its work.

89. Finally, with regard to Parliament, and specifically our own work as the International Development Select Committee, it goes without saying that we take our responsibilities for PCD extremely seriously. However, we have been constrained in the inquiry by the refusal of the National Security Adviser to appear before us. We recognise that parliamentary scrutiny of the National Security Strategy and NSC is led by the Joint Committee on the National Security Strategy (JCNSS). However, we also believe that the NSC should be accountable to other Committees, including ours, so we can test whether it is taking adequate account as such issues as conflict prevention. Select Committees must have access to all relevant branches of Government to complete their work.

90. We support close working between other relevant select committees on PCD issues. We trust that our successor committee will continue to take a focus on a wide range of development issues including PCD, and working in partnership with developing countries, rather than a narrow focus on the delivery of aid programmes.

Conclusions and recommendations

The continuing role for aid

1. We do not see it as necessary to explore further in this report the case for aid. Aid absolutely still matters, notably for humanitarian purposes and to support poverty reduction and human development in low-income countries. It also has a limited role helping to build partnerships with emerging powers and other middle income countries. Increased awareness of the range and scope of development challenges must not come at the expense of effective aid policy. In Phase 1 of this inquiry we recorded our full support for the 0.7% aid target. We strongly endorse the continuing need to maintain development spending at 0.7% of GNI. (Paragraph 15)

Transition strategies in middle-income countries

2. As grants of aid become less appropriate in some countries, so new forms of development co-operation are necessary. During our recent visits to countries like India, we have noted how the UK could act as a partner in a very wide range of areas, including health, law, education, culture, planning and transport. We recommend that the UK Government increase its efforts to facilitate links between the UK and MICs in these areas, and use a new set of approaches and financial mechanisms, a number of which we explored in Phase 1 of this inquiry. (Paragraph 21)

3. We support the UK's principled stance against tied aid, but this should not stand in the way of building links between middle income countries and UK institutions. We recommend that the UK be confident about its decision to continue its 'beyond aid' engagement in middleincome countries. The UK may no longer have a traditional aid relationship with these countries, but it is spending ODA in Brazil, India and China-and is rather diffident about admitting this. We believe the Government should stand up for this course of action, rather than giving its critics opportunities by obfuscating about its perfectly legitimate activities in these countries. (Paragraph 22)

4. We recommend that DFID think creatively about other ways in which it could develop non-aid forms of co-operation between the UK and MICs such as India, for example by linking up with smaller organisations, and by exporting UK knowledge in a wide range of areas. We remind DFID of ICAI's report on the Department's livelihoods work in Odisha state, which demonstrated how very good demonstration projects can have significant impact, especially when taken up by the Government of India. We support ICAI's recommendations that DFID focus on knowledge partnerships in the poorest states. (Paragraph 23)

5. While we should continue to grant aid in some middle-income countries, we believe that as we have argued in previous reports the substantial and growing DFID spend in conflict-affected middle-income countries like Pakistan must not divert funds from poorer African countries. We encourage DFID and other Government Departments responsible for aid spending to maintain continuous improvement in management and accountability, so that well-informed, evidence-based decisions can be taken about when and where to use aid. (Paragraph 24)

6. The growing profile of shared global problems, and global public goods, means we must be sure global institutions are fit for purpose. The international financial institutions must seek to include the needs of the BRICS and other emerging powers, or they will risk irrelevance. The UK Government must continue to push for reforms to the IMF and World Bank, in particular, to ensure they meet the needs of emerging powers as much as developed countries. (Paragraph 26)

Policy coherence for development

7. 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. (Paragraph 35)

8. 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. (Paragraph 37)

9. 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. (Paragraph 43)

10. 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. (Paragraph 44)

11. 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. (Paragraph 45)

How the UK's approach should change

12. We support the continued existence of DFID as a standalone department represented at Cabinet level. Several donors have recently changed the way they structure their development approaches. We heard useful evidence about their new models. The UK is now an outlier in having an independent cabinet-level ministry responsible for both policy and implementation. It is too early to judge the benefits of other donors' new approaches. It may be that greater integration leads to close coordination between diplomacy, defence and development; or it may, conversely, be the case that integration leads to the co-option of development in the service of other national interests. Approaches are likely to be highly context-specific, and, as the OECD DAC says, mergers risk losing technical development expertise, which is more important than ever with a Beyond Aid approach. We believe that no one cross-departmental model will guarantee a successful approach, and that other factors are likely to be more important, including political will, and the ability to develop and use the right cross-Government structures. (Paragraph 59)

13. We recommend that, in its response to this report, DFID consider the options for better management of cross-Government working set out in this chapter. (Paragraph 62)

14. The case for DFID's continued existence as a standalone department will be made stronger if cross-government structures ensure collaboration with other Departments is as efficient and coherent as possible. Witnesses put forward a range of possible approaches, from creating cross-Government taskforces, to ensuring that Operational Plans harmonise with FCO and other Government department strategies. (Paragraph 71)

15. We are reserving our specific recommendations for security, where improved cross-Government working is crucial given long-held concerns that the development agenda perhaps is downplayed to military priorities. (Paragraph 72)

16. We continue to support the existence of the NSC as a way of improving cross-Government working. However, we received mixed views on its efficacy as a cohering framework for UK policy. At the moment the NSC fails to give adequate priority to DFID's concerns, and in particular conflict prevention. Any structure is only as good as the efforts invested in it. It is vital that development issues are accorded sufficient priority, and are not "bolted on" to existing military strategies. This will necessitate a broad understanding of security, which encompasses all the issues at stake in conflict-affected countries, including governance, the economy and social investment. Conflict prevention must also be a key priority: not only is it the right thing to do, but it repays the initial investment many times over. We recommend the NSC to take a broader view of threats to UK security, and ensure that development is given the priority it deserves. We urge the Government to ensure that conflict prevention remains a crucial part of NSC activity. (Paragraph 73)

17. The Secretary of State told us that One HMG has been very useful. We welcome the advantages of One HMG on a practical basis, and strongly endorse the concept of co-located offices being more streamlined and efficient. We agree that it is important culturally for FCO and DFID teams to feel they are part of one team. We also endorse the joint units run between DFID and DECC in India and Indonesia. They provide an important way of having long-term influence whether or not an aid programme is in place. We recommend that DFID look at opportunities for introducing joint units in other locations, especially in middle income countries, or where aid is of declining relevance. (Paragraph 77)

18. To confront the new challenges we have described, DFID will need to develop skills that enable it to influence organisations and people in internationally, across Whitehall and in developing countries. These skills will include an enhanced language capacity. Some DFID staff have excellent language skills and are clearly able to exert influence with local interlocutors. It is also important that DFID make the most of locally recruited staff. In light of the increasing significance of beyond aid issues, we recommend a competence review covering DFID's internal skill set, and also its role in influencing the approaches of other government departments and international actors, including multilaterals. DFID has a lot to learn from the FCO and other departments in terms of competences and vice versa. Ideally we would like to see a combination of the traditional influencing skills of the FCO and the project management skills of DFID. (Paragraph 86)

19. With regard to independent monitoring and evaluation, we note that both the National Audit Office and the Independent Commission on Aid Impact have roles to play. We encourage the NAO ensure that PCD issues are fully reflected in its work. (Paragraph 89)

20. Finally, with regard to Parliament, and specifically our own work as the International Development Select Committee, it goes without saying that we take our responsibilities for PCD extremely seriously. However, we have been constrained in the inquiry by the refusal of the National Security Adviser to appear before us. We recognise that parliamentary scrutiny of the National Security Strategy and NSC is led by the Joint Committee on the National Security Strategy (JCNSS). However, we also believe that the NSC should be accountable to other Committees, including ours, so we can test whether it is taking adequate account as such issues as conflict prevention. Select Committees must have access to all relevant branches of Government to complete their work. We support close working between other relevant select committees on PCD issues. We trust that our successor committee will continue to take a focus on a wide range of development including PCD, and working in partnership with developing countries, rather than a narrow focus on the delivery of aid programmes. (Paragraph 91)

58 Eric Lundsgaarde submission Back

59 Nilima Gulrajani submission Back

60 OECD DAC submission Back

61 ECDPM submission Back

62 European Commission, EU 2013 Report on Policy Coherence for Development Back

63 Q 154 Back

64 USAID, Quadrennial Diplomacy and Development Review (2010) Back

65 Eric Lundsgaarde submission Back

66 Nilima Gulrajani submission Back

67 House of Lords Economic Affairs Select Committee, The Economic Impact and Effectiveness of Development Aid, March 2012, Chapter 6, Number 75 http://www.publications.parliament.uk/pa/ld201012/ldselect/ldeconaf/278/27802.htm Back

68 DFID, Annual Report and Accounts 2013-14, p.121 Back

69 Q53 Back