Effectiveness of UK aid: potential impact of FCO/DFID merger Contents

Summary

On 16 June 2020, the Prime Minister announced the merger of the Department for International Development with the Foreign and Commonwealth Office to form the Foreign, Commonwealth and Development Office. The announcement came out of the blue. The Government’s Integrated Review of international policy was paused, the world was in the midst of a global pandemic, and barely a week had gone by since the publication of our first report on this topic, which reflected the near unanimous voice of our witnesses by recommending that a well-resourced and independent DFID was very much in the UK’s national interest. We have significant concerns that the merger may jeopardise the ongoing effectiveness of future UK aid spending.

Amid projections of a sharp contraction in the UK economy from the pandemic, and warnings that the Government is looking for in-year savings from the UK aid budget amounting to billions of pounds, now is not the time for a major government restructure. Successful mergers require more than an announcement; moreover, while merging departments may seem attractive in the short-term, with possible administrative efficiency savings and improved policy coherence, they can be extremely costly and disruptive, and impair organisational effectiveness. In the long run, the creation of the new Foreign, Commonwealth and Development Office could reduce the UK’s clout on the world stage. We restate the recommendation made in our interim report that the Government should present a statement to Parliament setting out an evidence-led rationale for any change, quantifying expected costs and how intended benefits justify the costs, and showing how both will be measured and controlled.

To ensure that UK aid is as effective as possible, poverty reduction should continue to form a central part of the Government’s international policy, with UK aid focused upon the very poorest and most vulnerable people in the poorest countries. The Government should frame this commitment to poverty reduction with firm strategic commitments in the conclusions of its Integrated Review. It should underpin these commitments by continuing adherence to both the letter and spirit of domestic development legislation, including the OECD DAC definition of Official Development Assistance (ODA), the 0.7% target, poverty alleviation, gender equality, transparency and independent evaluation of impact.

We welcome increased attention on coordinating the UK’s messages, policies and programmes on international policy matters. But this is not necessarily achieved by a simple amalgamation of portfolios. The UK would do much better to demonstrate international political leadership on humanitarian relief, poverty reduction and other development issues by retaining a Cabinet-level Minister for International Development, responsible for the totality of the UK’s ODA spend, who should also remain the distinct and separate ‘development voice’, as now, and should sit on the National Security Council.

The loss of an independent DFID, with poverty reduction at its heart and years of specialist development expertise, risks damaging the quality of UK aid and undoing hard won development gains. The Government should set out how it intends to capture and retain DFID expertise in doing development well, and what plans are in place to rapidly train FCO staff in the skills necessary to manage effective development programmes. In the face of budget cuts, UK aid must protect its life-saving projects, especially those undertaken by small, local civil society organisations. Aid must be transparent, and accordingly the Government should commit to all UK ODA funding meeting the international aid transparency standard of at least ‘good’ within the next year.

Maintaining robust scrutiny mechanisms is essential to make sure that UK aid is spent in the best possible way. To that end, we recommend that the House of Commons creates an Official Development Assistance Select Committee tasked with scrutiny of the totality of UK aid spending and echoing the Independent Commission for Aid Impact’s remit. We also recommend that the Government retains ICAI in its current form in order to provide thorough, independent scrutiny of the UK’s aid budget.





Published: 16 July 2020