The Newton Fund review: report of the Sub-Committee on the work of ICAI Contents

3ICAI’s overall findings

16.We returned to ICAI’s original findings and compared them with the latest evidence available.15 We found that it corroborates all of ICAI’s findings and recommendations. Based on the evidence we reviewed, we find that the Amber/Red score awarded by ICAI to the Fund is an accurate assessment of its performance and we endorse ICAI’s six recommendations to BEIS. ICAI’s review should be treated as providing the imperative for BEIS to do much needed improvements to the Fund as conditions for any extension of the Fund within the next Spending Review process. The Department should update us on progress towards implementing ICAI’s recommendations in its response to our Report.

17.We asked the Department for further information on the key issues raised by ICAI (in particular, compliance with ODA-eligibility rules and with UK policy on tied aid) and we are grateful for the update provided by BEIS on progress towards the five “actions ongoing”.16 Nevertheless, ten months after ICAI published its review, we regret that the Department’s written evidence did not put forward more ambitious measures with regards to ICAI’s concerns around untied aid and the Fund’s weak focus on its primary purpose. We also found that progress has been slow in completing those measures to which BEIS had specifically committed:

18.According to the Department’s response, completion towards all five actions is still ongoing or yet to be published despite the fact that some of these actions were committed long before ICAI’s review was published and had been found wanting by ICAI at the time:

With the exception of their action on gender equality and on overall oversight, and a start on ensuring better value for money, we were disappointed by the government’s response. Despite accepting all of our recommendations, they do not seem to have addressed our main concerns; instead, in many cases, they point to existing practices which we had already found wanting. In essence, BEIS continues to reject the fundamental premise of ICAI’s review and the thrust of the recommendations. In particular, we found the responses to Recommendation 1 (on primary purpose and ODA compliance), and Recommendation 3 (on untying aid) inadequate.18

19.ICAI has now also completed the evidence-gathering stage for the usual first year ‘Follow Up’ exercise of its review of the Newton Fund. The Commission told us that it found that, while BEIS has made some welcome progress,19 the same issues around untied aid, ODA-compliance, capacity building and the matched funding model remain. In their evidence to us, ICAI was dubious of the Department’s intention to seriously rethink the design and purpose of the Fund in light of its recommendations:

[…] on the question of tied aid, we did not find evidence that the Newton Fund is reconsidering its fundamental model, beyond a limited evolution of the policy on matched funding to give somewhat greater flexibility. […] There is also limited focus on institutional capacity building (as opposed to funding to individuals, which has less impact on its own). […] . Given that there is no substantive change to the Fund’s operating model we cannot detect any response to these concerns.20

20.We concur with ICAI’s view that the Department’s response to ICAI’s review did not engage sufficiently with the core substance of ICAI’s key recommendations but instead presented a list of actions, previously announced, that did not meet the need identified by the Commission. Almost a year since ICAI’s findings were published, we also note the slow progress made towards completing even these actions to which the Department did commit itself. The Department should update us on progress towards completing these five on-going actions in its response to our Report.

21.The Department was awarded a Red score on learning,21 the worst score available, as stated above. As a result, we look forward to the Department’s response to this report as we hope it will provide us with additional details with respect to steps taken to address the core of the issues of the Fund’s approach to capacity building, ODA compliance and untied aid.

22.Furthermore, ICAI told us in its evidence that BEIS’s handling of the Newton Fund is characteristic of how other ODA-supported, dual-purpose funds (e.g. the Prosperity Fund and the Global Challenges Research Fund):

There appears to be a recurrent issue with funds badged as “dual-purpose”, where focus on poverty reduction, or even the economic development and welfare of developing countries, is not as strong as it could be. Sometimes, in the case of research funds, ODA eligibility is even brought into question.22

23.UKRI’s written evidence suggested a welcome range of additional training and initiatives23 developed in recent months to improve their performance on ODA-compliance. Nevertheless, concerns about the lack of transparency and accountability of dual-purpose funds have been expressed by ICAI24 and the predecessor International Development Committee,25 and progress has been slow on fixing those issues. For this reason, we hope to see specific and measurable steps in the Department’s response to our report by which BEIS plans to increase the transparency and relevance of the two large ODA dual-purpose funds it administers.

15 Which included, in addition to the publications mentioned in the previous chapter and the written evidence for this inquiry, publications such as the Centre for Global Development’s ‘UK Research Aid: Tied, Opaque and Off-Topic?’, July 2019; Publish What You Fund’s ‘How transparent is UK aid? A review of ODA spending departments’, January 2020 and Rethinking Research Collaborative’s ‘Promoting fair and equitable research partnerships to respond to global challenges’, July 2018

16 BEIS (INF003) Q1

17 BEIS (INF003) Q1

18 ICAI (INF002) Q1

19 ICAI (INF002) Q1-a

20 ICAI (INF002) Q1-a

21 Meaning “poor achievement across most areas, with urgent remedial action required in some. An area where UK aid is failing to make a positive contribution.”

22 ICAI (INF002) Q1-c

23 UKRI (INF001) Q1–2

25 International Development Committee, Definition and administration of ODA, chapter 5

Published: 15 June 2020