Conclusions and recommendations
Definition
1.It seems logical that countries and territories whose GNI falls back below the high-income threshold should be re-admitted to ODA eligibility. The lack of a standard and established procedure for re-admission in such circumstances is a gap in otherwise sensible arrangements. The Government should continue to use its influence within the OECD-DAC to ensure that a reverse graduation mechanism is established as soon as possible. (Paragraph 26)
2.We note the near-universal opposition to other, more far reaching proposals such as allowing all humanitarian assistance, irrespective of the economic status of the recipient country or territory, to be counted as ODA. We agree that allowing humanitarian assistance to high-income countries to be counted as ODA would clearly undermine the concept of international assistance. It would also be complicated and plausibly divisive to have to define the size and severity of an ‘ODA-eligible disaster.’ The Government should oppose any proposals which would allow all humanitarian assistance - irrespective of the economic status of the recipient country - to be counted as ODA. (Paragraph 27)
3.The ODA definition does not preclude the UK from providing humanitarian assistance wherever needed, including to fellow high-income countries and territories: it simply prevents the Government from reporting such assistance as ODA. The UK should continue to provide humanitarian assistance where it judges it appropriate to do so, irrespective of the ODA eligibility status of the recipient countries and territories. In particular, the UK should continue to provide whatever assistance is necessary to its Overseas Territories, as required under the International Development Act 2002. (Paragraph 28)
4.It is clear that GNI is something of a blunt instrument for determining ODA eligibility. In practice, however, the use of a more nuanced indicator would not change much. With the possible exception of a small number of resource-rich countries with very inequitable distributions of wealth, it is difficult to see which currently ineligible countries would become eligible if a more nuanced indicator were used. Moreover, there is inherent benefit in having a simple and understandable indicator such as GNI. We therefore recommend that the Government support the current GNI-based system: low-income and middle-income countries should remain eligible for ODA, and high-income countries should remain ineligible. (Paragraph 31)
5.We agree with the Government that peacekeeping activities can and do contribute to poverty reduction, and we welcome the recent increase in the proportion of UN peacekeeping operations which can be counted as ODA. However, it is clear that such activities are not entirely focused on poverty reduction - they are also designed to deliver other benefits which are not directly linked to poverty. In view of this, the 15% coefficient seems appropriate. We recommend that the Government oppose any further increase in the proportion of UN peacekeeping operations which can be counted as ODA. (Paragraph 36)
6.We believe unilateral action by the UK to develop and use its own ODA definition would be an own goal. The current internationally-recognised definition places no restriction on the activities which the UK can undertake; it merely prevents the UK from reporting certain spending (such as humanitarian assistance in high-income territories) as ODA. The UK’s reputation as a leading development actor stems from its expertise and professionalism, its commitment to multilateralism and the international system and its commitment to, and delivery against, the 0.7% target. All three of these ‘assets’ would be damaged by trying to manipulate the shared understanding of what aid is. The Government should continue to use the internationally-recognised ODA definition even if it fails to secure the changes it is seeking to the current rules. (Paragraph 40)
7.Whilst it is important to ensure that the ODA definition remains relevant and up-to-date, continual changes might cause unnecessary confusion. A regular review process would provide greater certainty. The Government should encourage the OECD-DAC to establish a credible and consensus-based process for reviewing the ODA definition at regular intervals, such as every five years, and should oppose any proposals for ad hoc changes in the interim. (Paragraph 43)
Administration
8.We are concerned that the current bidding process enables departments to bid for ODA without due regard being made of their capability to administer these programmes effectively. Consequently, we recommend that the bidding process is amended to include an evaluation of a department’s staffing, systems and knowledge capacity to administer ODA. We also recommend that departments detail their plans for monitoring and evaluation of projects, including how the Independent Commission for Aid Impact (ICAI) will have access to this information. (Paragraph 47)
9.Increasing the amount of ODA spent by departments other than DFID will necessitate an increase in capacity (both in staffing levels and in departmental knowledge), combined with the refinement of internal systems, in order to ensure that ODA is administered effectively and that the impact of this expenditure can be demonstrated. (Paragraph 50)
10.DFID has a crucial role to play in ensuring that all other government departments understand how to administer ODA programmes effectively and efficiently, including programme management and reporting, and highlighting when required administration standards are not being met. DFID is willing and able to perform this leading role, but our key concern is whether other government departments are willing or able to absorb it (Paragraph 55)
11.DFID should play the leading role in developing the capacity of ODA-administering departments across Whitehall, driving consistently high standards for ODA administration and tightening up practices. It should continue to second staff to other government departments, developing skills and promoting a poverty reduction-focused culture in ODA programmes across Whitehall. Recognising the burden this places upon DFID, the Government must ensure that DFID receives adequate resources to cover backfill within DFID. (Paragraph 56)
12.We believe that this collaborative approach is an example of cross-department ODA at its best, using skills and experience from across Whitehall nimbly to deliver benefits for global health. (Paragraph 61)
13.Strong and effective cross-government mechanisms should form the bedrock of an effective system of cross-government ODA. The current arrangements leave opportunities for gaps in coherence and ambiguity in where oversight of ODA lies across Whitehall. This creates a risk of duplication, overlap or conflicting priorities in programmes. Without a single person responsible, this also means that there is no single check on the overall coherence or quality of UK ODA as a whole and no central point for capturing examples of added value. There is a conundrum in any joined-up or cross-government working, which is the balance between the opportunity of benefitting from different views and new skills and expertise and the risks of strategic incoherence, duplication and other unintended consequences. (Paragraph 66)
14.The existing coordination and oversight groups - notably the cross-Ministerial and Senior Officials Groups - must be more proactive in targeting their activities explicitly towards poverty reduction and the SDGs to give greater focus across Whitehall. The Government should set out a process for capturing the added value gained as a result of greater cross-Whitehall working. (Paragraph 67)
15.The Government should publish a clear statement outlining individual departmental responsibilities in delivering, overseeing, monitoring and coordinating ODA, including how they correspond to the aims of the UK Aid Strategy. This should also state explicitly that the International Development Committee may perform oversight of any ODA spending across Whitehall, including via partnership with other select committees as appropriate. (Paragraph 68)
16.The Secretary of State for International Development should have ultimate responsibility for oversight of the UK’s ODA and the Department should have final sign off of all ODA. (Paragraph 69)
17.Just as DFID commissions agencies to conduct work on the ground or pays into multi-lateral funds, whilst retaining oversight of UK ODA and ensuring quality control of ODA spending, the Government should consider whether other government departments should only receive ODA money if it has come via DFID so that they have oversight and ensure that the money ‘cannot be better spent’. (Paragraph 70)
18.The UK is respected worldwide for the quality of its ODA research base and the consequent benefits it affords in enabling context-sensitive and targeted aid interventions. This strong base, building upon established relationships, must not be jeopardised by a shift of ODA away from DFID. (Paragraph 76)
19.Given the level of spending involved, we are concerned that departments are not publishing fuller details of their ODA spending as this lack of clarity clouds the public’s ability to see good and bad spending. The Government must outline how it intends to measure progress towards the commitment to publish data to IATI standards by 2020, providing regular milestones to track progress towards this target. (Paragraph 81)
20.The redaction of large tranches of CSSF information makes it difficult to assess the effectiveness of programmes. Without access to this information, the taxpayer cannot see examples of well-spent money on well targeted programmes, nor identify poorly targeted programmes. This lack of clarity undermines trust in the fund. (Paragraph 84)
21.The cross-government funds must improve significantly their transparency levels as a matter of urgency to reverse the damaging lack of confidence in the quality of the funds’ interventions. Without transparency it is impossible to assess the effectiveness of the cross-government funds and consider whether they are creating the benefits espoused by the government. CSSF programmes must publish programme information as a matter of course unless a clear national security reason is cited for redaction. (Paragraph 87)
22.In light of widespread concerns about the Funds, including from the JCNSS, we recommend that ICAI should be given responsibility to scrutinise the totality of the cross-government funds, as well as other blended ODA/non-ODA programmes. (Paragraph 88)
23.The UK’s ODA output must be underpinned by strong administrative systems and processes to ensure that all ODA activities are as effective, transparent and joined-up as possible. We urge DFID to develop more detailed and robust guidance for all departments and funds managing ODA on how to meet effectiveness standards, ODA legislation and rules and other cross-Government development commitments. We are concerned that the movement of ODA from DFID to other government departments appears to have been started before adequate systems and standards were in place, and further capacity building is required across Whitehall to achieve the necessary standards required. The Government must ensure that UK ODA is delivered to a consistently high standard, regardless of whether it is delivered by DFID or another government department. Accordingly, DFID should take the lead in promoting excellence in ODA administration across Whitehall. (Paragraph 89)
24.If the increase of ODA via other government departments is aimed at benefitting from individual departments’ skills and knowledge then the Government must now establish the means to monitor and report to Parliament on the added value of this additional expertise when balanced against the dilution of control by DFID. (Paragraph 90)
Objectives - Poverty reduction and national interests
25.The heavy emphasis of the Prosperity Fund upon promoting UK trade risks losing the rightful emphasis of the Fund upon the primacy of poverty reduction, and is a step towards the return of tied aid. (Paragraph 95)
26.It is unclear to us how these types of interventions will benefit the very poorest people; both those living in the countryside and the urban poor. We acknowledge the importance of providing ODA to MICs, where 73% of the world’s poorest people live. However, we are concerned to have uncovered Prosperity Fund projects within MICs which show inadequate, or negligible, targeting at improving the lives of the very poorest and most vulnerable communities in these countries. We are also concerned by the disconnect between DFID’s intention to use ODA in China for broader development benefit compared to the activities of other departments and the reality of what spending is being badged as ODA. (Paragraph 101)
27.Prosperity Fund programming should be targeted at helping the very poorest. Accordingly, we recommend that Prosperity Fund programmes should have a particular focus upon development in rural areas and the urban poor to transform the lives of the very poorest people in MICs. In the light of our concerns, we recommend that existing programmes should be reviewed. (Paragraph 102)
28.We note the value of spending ODA in fragile and conflict affected states to promote peace and stability. We also acknowledge that CSSF programming offers the potential to deliver dually beneficial outcomes of increasing national security whilst also reducing poverty. However, selecting countries based upon security rationale alone risks side-tracking the primary aim of poverty reduction. (Paragraph 105)
29.The choice of countries for ODA CSSF projects must be led first and foremost by the aim of reducing poverty. To this end, ODA CSSF programmes must contain a detailed theory of change outlining how they will directly contribute to a reduction in poverty. These theories of change should be revisited and assessed during mid-term reviews and programmes adjusted if necessary. (Paragraph 106)
30.The Government states that the money spent on the CSSF cannot be spent anywhere better for ODA and following the ICAI report we are not convinced that this is the case. We therefore recommend a review of the continuation of the CSSF in its current form. (Paragraph 107)
31.We are concerned that the use of ODA for administrative purposes is misdirected and that in some cases existing diplomatic activities are being badged as ODA without any additional targeting to lead to a reduction in poverty. (Paragraph 110)
32.The Government’s explicit strategy to increase the proportion of ODA administered by other government departments presents opportunities and risks. The benefit identified by the Government is harnessing relevant expertise, resources and networks available in another department to enhance development projects in the policy area of that department. There may also be promotion of a development focus across Whitehall. However, the risk identified throughout our evidence is the reverse, that other departments’ priorities will dilute or damage ODA’s primary purpose which is poverty reduction for the poorest, most vulnerable and marginalised and ensure that DFID has oversight of all ODA spending. (Paragraph 111)
33.At worst, programmes administered with dual objectives (notably the cross-government funds) risk delivering on neither their primary poverty reduction purpose, nor their secondary national interest objective. ODA must be directed primarily at reducing poverty, helping the very poorest and most vulnerable rather than being used as a slush fund to pay for developing the UK’s diplomatic, trade or national security interests. ODA eligibility should not be a question of meeting a threshold or badging activities as part of a mandatory spend to protect departmental budgets during a time of austerity. Rather, departments should be actively identifying how they can apply their unique skillsets and expertise to deliver high quality development programming which enhances the quality and effectiveness of UK aid even further. (Paragraph 112)
34.To ensure the primacy of poverty reduction as an objective for all UK ODA, ODA spending departments should conform in practice with the terms of the International Development Act 2002. All ODA programming should contain theories of change which explicitly link to the SDGs. The Government should make systematic improvements to coherence, transparency and - most crucially–the poverty focus of cross-government fund projects before increasing their share of UK ODA any further, and ensure that DFID has oversight of all ODA spending. (Paragraph 113)
Published: 5 June 2018