Eighth Special Report
The International Development Committee published its Seventh Report of Session 2024–26, Assessing Value, Ensuring Impact: The FCDO’s Approach to Value for Money in Official Development Assistance (HC 422), on 29 October 2025. The Government’s Response was received on 20 January 2026 and is appended below.
Appendix: Government Response
Introduction
1. The Government is grateful to the International Development Committee for its report on the FCDO’s approach to Value for Money (VfM) in Official Development Assistance (ODA), published on 29 October 2025.
2. Maximising the impact of the FCDO’s ODA spend has always been important and is even more important in the current context of falling global aid. As the IDC recognises, the FCDO is a world leader in its approach to VfM and has built upon the strong legacy from the former DFID.
3. The Committee’s focus on this important topic is welcome, and the Committee’s recommendations to further strengthen the FCDO’s approach to VfM in ODA have been carefully considered. This response addresses the Committee’s recommendations in the order in which they appear in the report.
FCDO’s Approach to Value for Money
(Recommendation 1, paragraph 18) The FCDO must publish a clear strategy and framework regarding its approach to VfM, as had previously been done by DFID and other Government departments. This should include:
a. Clear definition of VfM;
b. The FCDO’s core VfM principles;
c. How the FCDO assesses VfM against its core principles;
d. Governance, accountability and evaluation measures; and
e. Examples of how VfM issues can and should be considered in different contexts, including when working with partners.
4. Government response: Disagree. The Programme Operating Framework (PrOF), published on gov.uk already sets out the rules for how the FCDO delivers its programmes and projects and includes an updated Principle on VfM. There is also already in place a set of, mainly internal, discretionary guidance, called PrOF Guides relating to programme management. The Guides are designed to provide additional information on the application of the principles and rules in the PrOF, for FCDO staff. The PrOF Guide on VfM explains FCDO’s approach to VfM, including a clear VfM definition and framework. Rather than preparing and publishing a new stand-alone VfM strategy, which would simply duplicate the material already in place, the FCDO will focus on updating our existing VfM guidance, sharing good VfM examples, rolling out VfM training for staff and implementing the Government’s modernised approach to development.
(Recommendation 2, paragraph 19) Alongside a clear VfM strategy and framework, the FCDO should publish detailed and practical guidance for its staff and partners on how to approach and conduct VfM assessments, particularly in respect to equity, ensuring that programme activities address the needs of the most marginalised in society. The FCDO should also ensure that all partners are informed of the latest VfM strategy, to ensure coherence. This guidance should be produced as soon as possible, in the least to coincide with the 2026 Spring Statement.
5. Government response: Partially agree. The FCDO will update its PrOF Guide on VfM for staff in 2026. Once updated, a version of the guidance will also be published on gov.uk for external partners, alongside existing external guides on Due Diligence and Delivery Chain Mapping.
6. In fulfilment of an earlier IDC recommendation (IDC report on Disability-Inclusive Development), the FCDO will produce an “Equity and VfM” internal guide for staff, setting out why and how to consider equity in VfM analysis across all FCDO interventions.
(Recommendation 3, Paragraph 24) It is essential that the FCDO makes it clear in all strategy frameworks and guidance documents that improving the lives of those in poverty is the core principle of the FCDO’s approach to VfM. All economy, efficiency, effectiveness and equity assessments must be explicitly considered against this principle.
7. Government response: Partially agree. The FCDO will update its VfM guidance in 2026 to communicate more clearly to staff and partners the basis on which VfM is assessed and improved. However, in practice, assessments on ODA expenditure are already about the impact of each pound spent on those living in poverty. The FCDO already ensures that ODA expenditure meets OECD DAC rules and requirements in the International Development Act (2002) and uses the 5Es criteria (economy, efficiency, effectiveness, cost-effectiveness and equity) to breakdown and assess the different aspects of how to deliver this objective with value for money.
(Recommendation 4, Paragraph 29) The Committee recommend that sustainability should be a named central tenet of the FCDO’s VfM assessment criteria by the end of the 2025/26 financial year, and should be regularly and formally considered throughout the life of a programme.
8. Government response: Partially agree. Sustainability is already integrated into the FCDO’s approach to assessing VfM at each of the 5Es stages, rather than at a separate stage. The refreshed VfM guidance that will be developed in 2026 will have a stronger focus on assessing sustainability and the longer-term costs and benefits of an intervention. The guidance will help staff consider different types of sustainability (e.g. financial, institutional, behaviour change, environmental etc.) at each of the 5Es stages (economy, efficiency, effectiveness, equity and cost-effectiveness).
The international development landscape and the UK ODA’s reduction to 0.3%
(Recommendation 5, Paragraph 38) The Government must make every effort to return to spending 0.5% of GNI on ODA at a minimum, as soon as possible. The Government should produce a clear schedule for rebuilding aid from the interim level of 0.3%, with defined milestones in each Spending Review to provide certainty to the FCDO and partner countries and organisations.
9. Government response: Disagree. The Government is committed to returning to spending 0.7% of GNI on ODA as soon as fiscal circumstances allow, and when the Office for Budget Responsibility’s (OBR) fiscal forecast confirms that, on a sustainable basis, the UK is no longer borrowing for day-to-day spending and underlying debt is falling (the ODA fiscal tests). The government will continue to monitor future forecasts closely, and each year will review and confirm, in accordance with the International Development (Official Development Assistance Target) Act 2015, whether a return to spending 0.7% of GNI on ODA is possible against the latest fiscal forecast. The OBR’s latest forecast shows that the ODA fiscal tests are not due to be met within this Parliament.
(Recommendation 6, Paragraph 39) We recommend that the Government commits to publishing an impact assessment for every year in which cuts to ODA are implemented, including the 2026/27 financial year, and providing rationale for how these decisions align with the impact that UK aid aims to achieve.
10. Government response: Agree. The FCDO plans to publish this assessment following the finalisation of ODA programme allocations.
(Recommendation 7, Paragraph 47) The Government should consider that Home Office in-donor refugee costs should be capped at a fixed percentage of total ODA spend to protect a rapidly diminishing envelope of funding. This should include formal review points if projections breach 80% of the agreed caps.
11. Government response: Disagree. The FCDO’s ODA budget is no longer automatically exposed to spending by other government departments, including demand-driven refugee and asylum costs in the UK, so a cap on Home Office in-donor refugee costs is not required. The Government has taken measures to reduce the asylum backlog and reform the asylum accommodation system to end the use of expensive accommodation in this Parliament to ensure more of our ODA budget is spent on our development priorities overseas. The aid spent in the UK on refugee and asylum costs fell by a third last year and the Home Office is working to bring it down further. The FCDO is supporting that effort through its own work to tackle organised immigration crime, and reduce pressures on the asylum system.
(Recommendation 8, Paragraph 48) The FCDO must make formal representation to HM Treasury that any unspent ODA allocated to other Government departments is channelled back through the FCDO to continue its vital humanitarian and development work, and to ensure that overall ODA spending does not fall even further to below 0.3%. This representation must not be on a case-by-case basis, but requesting a commitment that all unspent ODA in future will be reallocated back to the FCDO.
12. Government response: Disagree. At Spring Statement 2025, the Government confirmed that financial year ODA Department Expenditure Limit (DEL) totals will not be adjusted for GNI fluctuations to improve budget stability. This means FCDO’s ODA budget will no longer be automatically exposed to the volatility of GNI fluctuations or ODA spending by other departments, including changes in asylum costs, providing greater predictability to FCDO budgets. This approach helps provide best VfM for UK taxpayers and delivers mutual benefits at home and overseas. The Government is committed to meeting the ODA budgets that have been set out.
(Recommendation 9, Paragraph 50) Achieving VfM for every pound of ODA is now more vital than ever, and it is essential that one consistent framework is applied across all aid spending. Given that the FCDO is the largest administrator of ODA, its published framework, in line with our recommendation in Chapter 1, should be used, with the Second Permanent Under-Secretary of the FCDO having formal oversight over the VfM of ODA spending across all departments.
13. Government response: Disagree. Departmental Secretaries of State, Ministers and Accounting Officers remain accountable for the money spent by their department in line with the existing principles of Managing Public Money. The Minister for International Development’s role as chair of the ODA Impact and Delivery Board gives her oversight of cross Government development policy, ensuring stronger strategic delivery to ODA and development activity across Government and improved value for money. In this role the Minister for Development is supported by the Second Permanent Under-Secretary of the FCDO as the cross-Government Development and ODA Senior Responsible Owner.
The FCDO’s engagement with partners
(Recommendation 10, Paragraph 59) We recommend that the Government conducts a new multilateral aid review of its current ODA spending to ensure that VfM is being achieved by the end of the 2025/26 financial year. This should include:
a. An evaluation of the most effective proportion of spending through multilateral vs bilateral programming;
b. Consideration of the benefits the UK receives through its multilateral development programming;
c. How much UK funding to multilateral organisations is going towards administration costs compared to direct programme activities; and
d. Evaluation of the performance of each multilateral organisations receiving UK ODA, including their impact, efficiency and alignment with UK priorities.
14. Government response: Disagree. The FCDO’s funding to multilateral development organisations is scrutinised regularly in line with the PrOF. This specifies the rules which must be applied when delivering the FCDO’s policy and programmes. These include reviewing performance against objectives and alignment to UK priorities and conducting Central Assurance Assessments of each multilateral organisation that are given core funding.
15. As well as these internal tools, HMG also uses external assessments to evaluate the effectiveness of the multilateral organisations that the UK funds. This includes the Multilateral Organisation Performance Assessment Network which carries out regular assessments of multilateral organisations that receive ODA.
16. During Spending Review processes, the FCDO evaluates how well the multilateral portfolio aligns with UK objectives and assesses the impact and VfM of multilateral programmes. As part of the current ODA allocation process, the FCDO is prioritising funding for multilateral organisations that deliver the greatest impact for UK priorities.
(Recommendation 11, Paragraph 67) The Government must prioritise localised interventions for context-specific challenges, including poverty reduction and community health. Given a reduced ODA budget, these interventions should be targeted towards areas with the highest level of impact to maximise VfM and fulfil the globally agreed Grand Bargain.
17. Government response: Agree. Country-led, whole of society and context-specific development partnerships are at the heart of the FCDO’s bilateral offer. The alleviation of poverty is the foundation of everything the FCDO does and is the primary purpose of all FCDO ODA programmes. The UK has supported the Grand Bargain since its inception and remains committed to its objectives, which align closely with our Humanitarian Framework. Locally led development and humanitarian action, and quality funding for local actors, are critical to improving VfM and effectiveness, and the FCDO remains committed to advancing these priorities internally and through global platforms.
(Recommendation 12, Paragraph 68) The Minister for International Development must ensure that there is coherence across the department in respect of promoting locally-led programmes and ensuring they deliver good VfM. This should include prioritising the development of a local leadership strategy as a cross-departmental piece of work that places lower- and middle-income countries at the centre.
18. Government response: Partially agree. The FCDO has added ‘locally led’ as a principle for good quality programming in the refreshed PrOF and will follow this up with detailed guidance on existing good practice, to advise colleagues working on development and managing programmes.
19. The UK’s modernised development approach, including the shift to local leadership, is an organising principle across all work within the FCDO. This approach makes clear that the department should be working in closer partnership with local actors rather than through internationally driven interventions.
(Recommendation 13, Paragraph 75) We recommend that the FCDO convenes regular strategic dialogues with philanthropists and development foundations to ensure that work can be aligned and complementary, and to encourage knowledge sharing.
20. Government response: Partially agree. Partnerships with philanthropic organisations are important. The FCDO is committed to deepening these to drive the government’s new approach to international development.
21. The FCDO’s existing engagement through formal frameworks and informal collaboration covers a range of activities across shared priorities. Last year for example, FCDO convened a strategic roundtable which hosted over 20 CEOs from international philanthropic foundations (including from the UK, South Africa, Turkey, USA, Italy, Singapore, UAE and Germany) for a discussion on how government and philanthropic organisations can work together to achieve development outcomes.
22. Building on engagements like these, the FCDO is proactively assessing ways to systematically partner with philanthropies - including through convening strategic dialogues to align on emerging priority issues and ensure philanthropies are informed of UK priorities to help complement our multilateral development efforts.
(Recommendation 14, Paragraph 88) It is essential that the FCDO requires all of its contracts with private contractors to adhere to the International Aid Transparency Initiative, not just most, to ensure that all implementers of UK ODA are held to the same transparency and accountability standards.
23. Government response: Agree. The published organisation and activity data of the FCDO’s implementing partners is incomplete and more can be done to improve the completeness of the UK’s International Aid Transparency Initiative (IATI) publishing. While some information is omitted due to the data being too sensitive, e.g. some sensitive conflict and humanitarian environments, this only partly explains the incomplete nature of the FCDO’s implementing partners published data. The FCDO is aware of implementers with non-sensitive information which have not published, and is looking into how to encourage their compliance.
24. At the same time, the FCDO recognises that implementers are under increasing financial strain and the requirement to publish represents a financial burden, so the FCDO is reviewing its approach to partner publishing, aiming to increase the proportion of implementing partners that publish data, while lessening the administrative burden on implementers. This includes working with IATI to streamline the publication process.
(Recommendation 15, Paragraph 89) The FCDO must make every effort to improve the transparency of the data it collects on its engagement with contractors and operating partners. The information that is required of organisations to report through IATI must be published in a way that is clear, user-friendly, and complete.
25. Government response: Agree. The FCDO is committed to ensuring that data is published in a clear, user-friendly, and complete manner. The FCDO recognises the importance of IATI data not just in its availability but also its accessibility and will continue to evolve DevTracker in response to user feedback.
26. FCDO will work with the IATI community to improve the accessibility of the data on IATI’s own data portal, D-Portal. This will make it easier for data users to access the wider range of data held by IATI including on suppliers.
(Recommendation 16, Paragraph 91) The FCDO should perform an audit of all individual private contractor engagement longer than 12 months or approaching renewal. This must assess whether extended tenures align with performance outcomes and original mandates, with findings with clear recommendations for terminations or formal renegotiations to be escalated to senior leadership.
27. Government response: Disagree. Existing governance, performance reviews, and contract management processes already provide robust oversight and accountability. All FCDO contracts undergo annual reviews assessing delivery against programme objectives, indicators, and intended outcomes, supported by monthly or quarterly reporting. For contracts exceeding £5 million, at least three Key Performance Indicators are mandated, tracked, and published annually. These mechanisms ensure transparency and enable timely identification of performance issues, with corrective actions implemented through time-bound improvement plans or, where necessary, contract termination under the Public Procurement Act 2023.
28. Performance-linked payment structures further reinforce compliance, while any renegotiation of terms is managed through formal contract variations in line with UK procurement regulations. Accredited Contract Managers oversee these processes to ensure alignment with VfM. Governance frameworks include escalation to senior leadership when significant events occur, such as major ODA reductions or severe performance failures, supported by clear data and continuity plans. These measures ensure contracts remain fit for purpose and deliver intended outcomes without requiring additional audits.
Monitoring, Evaluation and Learning
(Recommendation 17, Paragraph 103) Wherever possible, the UK should support smaller organisations in MEL processes without placing unrealistic expectations on the level of data and reporting they are able to provide. Whilst we recognise and agree that MEL is vital for ensuring VfM, this should not be at the expense of using local organisations. The FCDO should establish business hubs in partner countries to assist and support small organisations on the ground to meet MEL requirements. These hubs should include facilities such as feedback channels direct to the FCDO for local actors, which would aid in alleviating the excessive burden on organisations due to onerous, but necessary, MEL processes.
29. Government response: Partially agree. The FCDO is committed to ensuring that MEL requirements do not create barriers for smaller organisations. Teams are expected to apply MEL proportionately and in accordance with PrOF Rules, which allow for adjustments and flexibility in reporting where appropriate. Forthcoming updates to MEL guidance and programme performance reviews will reinforce this approach. The FCDO will increasingly work in partnership with local actors, including civil society, aiming to eliminate unnecessary obstacles to engagement with them. Whilst partner feedback is important, given the diversity of our network missions, a one-size-fits-all approach like business hubs may not be appropriate.
(Recommendation 18, Paragraph 104) To enhance the effectiveness and accountability of UK ODA spending, we recommend that MEL reporting requirements of ODA programming should be standardised across all Government departments. In line with our recommendation in Chapter 2, the Second Permanent Under-Secretary at the FCDO should have formal oversight of this, given their responsibility for ODA spend across Government.
30. Government response: Partially agree. Existing cross government guidance on MEL supports consistent standards across departments, supported by the Evaluation Task Force, the Government Social Research publication protocol, and HM Treasury’s Magenta Book. The FCDO applies a range of monitoring and evaluation approaches, with decentralised decision-making to enable teams to focus on priority evidence gaps. The FCDO is also developing a framework to assess global outcomes, which will generate insights to share with other ODA spending departments and build greater coherence. The refreshed ODA Delivery and Impact Board, chaired by the Minister for Development will provide scrutiny of performance, and improve data sharing and alignment of ODA delivery across government.
(Recommendation 19, Paragraph 109) It is essential that the FCDO ringfences MEL spend within programme budgets and protects these throughout the reduction of ODA to 0.3% of GNI. Further cuts to MEL threaten to undermine the very assessments that sustain the accountability and impact of all FCDO work.
31. Government response: Disagree. The Government recognises the Committee’s concerns and remains committed to delivering proportionate, strategic MEL that strengthens accountability, adaptability, and VfM. However, ringfencing MEL budgets is not appropriate in the current fiscal landscape. The FCDO must have the flexibility to prioritise and allocate resources in the most efficient way to deliver the greatest impact; in some cases this will involve trade-offs between delivery and MEL spending. Ringfencing limits the ability to navigate these trade-offs to maximise impact. Monitoring will continue to be mandatory, and MEL approaches will be made fit for purpose by adapting systems, targeting evidence gaps, and preparing a new evaluation strategy for 2026 to support a more agile, impactful evaluation function.
(Recommendation 20, Paragraph 111) The FCDO must make every effort to ensure that its staff feel valued and appreciated within the organisation, particularly amidst budget insecurity. The Committee recommend that the FCDO commissions a rapid capacity assessment, and recruit or offer secondments to additional specialists to relieve overworked Programme Managers, rebalance workloads and bring better value to the taxpayer.
32. Government response: Agree. FCDO2030 represents a transformative portfolio of change projects designed to build a more technologically enabled, partnership-driven, and highly skilled organisation. In response to concerns about programme manager workloads, through FCDO2030, the Department is aligning workforce plans with strategic priorities, investing in professional development, and expanding access to expertise through agile deployment models and thematic one-stop shops. These initiatives include strengthening project delivery capability, new models for supporting smaller posts and providing surge support for others, offering industry-standard qualifications and accreditation for professional programme managers, and embedding advisors in key areas to provide robust leadership of programmes. Through strategic workforce planning and innovative support structures, FCDO2030 is positioning the organisation to deliver greater impact, VfM, and resilience in a changing development landscape.