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We are proud that the UK has become the first G7 country to meet the UN target of spending 0.7% of GNI on Official Development Assistance. However, meeting the target has caused problems, particularly as there was a huge (33%) increase in DFID spending from 2013 to 2014.
In 2013 DFID spent 40% of its budget in November and December, whereas in 2009 the figure was only 22%. We are concerned that the spending pattern is the result of the need to meet the 0.7% target and might not provide value for money. We recommend that DFID improve its forecasting. We are concerned that the way ODA accounts for promises of core funding to multilateral organisations (promissory notes) encourages DFID to overuse multilaterals. We recommend that the NAO review the use of promissory notes. We further recommend that DFID assess whether the issuing of promissory notes in 2013-14 encouraged the overuse of multilateral organisations, and report how long promissory notes have been outstanding.
The share of DFID spending which goes to multilateral organisations has increased as has the share going to humanitarian assistance, and spending through centrally managed programmes. DFID is now the world's largest funder of multilateral organisations. We recommend DFID assess whether this represents better value for money than spending on bilateral programmes. DFID now provides 13% of all OECD spending on humanitarian assistance. This is too much and enables other OECD donors to fail to meet their obligations.
On the other hand, spending by DFID's priority country teams has declined relatively, as has spending on programmes in sub-Saharan Africa and on key MDG targets such as reproductive health. We recommend that DFID increase the share of expenditure going to bilateral programmes, to sub-Saharan Africa and significantly increase spending on reproductive health.
DFID has increased the number of staff it employs, but the amount spent per member of staff has increased significantly. To use staff time efficiently DFID has a focus on large programmes, which are outsourced to multilateral organisations and large contractors to manage. Smaller, expert suppliers tend to be overlooked as we saw in our recent report on Parliamentary Strengthening. We recommend that DFID reassess these trends and in its reply indicate what changes it intends to make. We recommend that the Government allow DFID further to increase the number of staff it employs so it can spend its increased budget cost-effectively.
DFID's increased emphasis on Payment By Results was a concern to many witnesses in this inquiry. We recommend that DFID introduce Payment By Results with considerable care to ensure the many potential difficulties are addressed.
We welcome DFID's improvements to programme management, notably the introduction of SMART rules to reduce the amount of bureaucracy. We recommend that DFID ensure that the new rules are accompanied by a real change in culture.
While the emphasis on programme management is important, DFID must also recognise the importance of other skills such as the ability to influence its partners. We recommend that DFID increased its standard posting from three years to four. We further recommend that DFID provide in its 2014-15 Annual Report comparative data on staff turnover and the average service period in country offices for each of its country offices.
We recommend that DFID place more emphasis on language skills. Knowledge of a local language should be a competence for a posting, learning key languages should be encouraged from the start of careers and staff should have relevant language lessons before they begin their posting.
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