1Introduction
1.The domestic and global landscapes have shifted dramatically over the last two years. In the UK, the result of the referendum on the European Union has led to a change in the focus of Government policy towards building a strong and prosperous country post-withdrawal. The Government reshuffle which followed that referendum also included the appointment of a new Secretary of State for International Development, and a new junior ministerial team at the Department for International Development (DFID). More widely, the continuation of conflicts in countries like Syria and Yemen, as well as conflict and food insecurity in many parts of Africa, have led to serious humanitarian crises and the largest refugee flows since World War II. The election of President Donald Trump in the USA has also created uncertainty about how the largest donor country in the world will choose to engage with the development agenda. These shifts will undoubtedly have a profound impact upon international development, including on where and how resources are focused to achieve the greatest effect.
2.Against this backdrop the Government has been reviewing and altering the make-up of UK aid spending. In 2015, an Act was passed which created a statutory requirement for the UK to spend at least 0.7% of its gross national income on official development assistance (ODA), a target which the UK had first met in 2013.1 Later in 2015, a new UK aid strategy refocused UK aid spending onto how it benefits the national interest, with a larger proportion to be spent by government departments other than DFID.2 Alongside this, DFID was running a number of major development reviews, which were eventually published in late 2016 after numerous delays. This included the Bilateral Development Review (BDR),3 the Multilateral Development Review (MDR),4 the Civil Society Partnership Review (CSPR),5 and the Research Review.6 Together, these reviews were intended to inform future UK aid spending decisions.
3.We originally launched this inquiry, as DFID’s allocation of resources, in late 2015 to look at how DFID decides where to allocate its resources including the results of the development reviews, with the following terms of references:
- What is the right definition of ‘fragile states’? What are the implications in defining fragility for DFID’s decisions on where it works and how? For instance, how effective is the balance of spending through multilateral (60%) and bilateral partners (40%)?
- What is the capacity of DFID and its partners to scale up in fragile states?
- What choices and challenges does DFID face in determining where it will work in the future and what should inform those decisions?
- What is DFID’s capacity to deliver on both existing commitments and refocused priorities:
- What are the implications of the security and prosperity agenda for delivery of the other Sustainable Development Goals and work to tackle extreme poverty both in the shorter and longer term?
- What does DFID need to do to improve on past performance in the following areas?
a)Security; and
b)Economic development.
- What are the challenges ahead for ensuring effective design, delivery and accountability of ODA spend by other Government departments through cross-Government funds such as the CSSF and the new Prosperity Fund? What role can DFID play in ensuring value for money in all ODA spending? What is the responsibility of other Government departments to comply with DFID’s objective to reduce poverty?
- How effectively has DFID managed its operating costs and what are the implications of the new aid strategy for operating costs both centrally and in country offices?
- What are the challenges of meeting Treasury non-fiscal spending7 requirements and will these be affected by the new aid strategy?
- How has ‘payment by results’ worked for DFID in the past (eg. 2014–15) and what are the implications of extending this approach as implied in the aid strategy?
- How effective is DFID’s approach to managing risk and how could or should this change to reflect new priorities under the aid strategy?
- How has DFID performed on the targets and indicators it had in place to March 2015? How should targets and indicators be altered to reflect delivery against Government manifesto commitments and the priorities of the new aid strategy?
4.The length of this inquiry has meant that it has evolved with new developments. The release of the UK aid strategy, and the increase in cross-government aid spending, led us to broaden the inquiry to look at UK aid spending decisions more generally and change its name to UK aid: allocation of resources. Media coverage of DFID’s use of private sector contractors led to us calling for further written evidence on this and taking oral evidence on it; that evidence raised further questions which we are now exploring as part of a separate inquiry on DFID’s use of contractors,8 and will not cover in this Report. We have also begun a separate inquiry to look at the work of other government departments spending ODA, entitled UK aid: other government departments.9
5.We decided to publish an interim Report10 to deal with a number of issues at the earliest possible opportunity because of delays to the publication of the development reviews, which we were initially expecting in early 2016. In that interim Report, we particularly looked at the UK aid strategy. Primarily, we recommended that:
- poverty reduction should be a legal obligation for the spending of ODA, regardless of which department is spending it; and
- DFID should provide us with more information as to the various factors and criteria used in its spending decisions, including on its definition of fragility and the balance between its multilateral and bilateral spending.
2 HM Treasury and Department for International Development, UK aid: tackling global challenges in the national interest, Cm 9163, November 2015
3 Department for International Development, Rising to the challenge of ending poverty: the Bilateral Development Review 2016, December 2016
4 Department for International Development, Raising the standard: the Multilateral Development Review 2016, December 2016
5 Department for International Development, Civil Society Partnership Review, November 2016
6 Department for International Development, DFID Research Review, October 2016
7 Spending such as loans, equity investments and contributions to multilateral development banks, which do not impact net public sector debt.
8 International Development Committee, ‘DFID’s use of contractors inquiry’, accessed 24 February 2017
9 International Development Committee, ‘UK aid: other government departments inquiry’, accessed 24 February 2017
10 International Development Committee, Third Report of Session 2015–16, UK aid: allocation of resources: interim report, HC 927, incorporating HC 533
27 March 2017