Select Committee on International Development Appendices to the Minutes of Evidence


Memorandum submitted by British Consultants Bureau


  This memorandum on the implications of the unilateral untying of British bilateral aid is submitted by the Chief Executive BCB at the request of the 300 Consulting and other Professional Service members who cover 115 disparate Sectors and all of whom are engaged in working internationally. With some 60 per cent of the membership having undertaken projects for DFID within the last few years, BCB arguably represents the largest single concerned commercial grouping. It should be underlined however that BCB speaks for those in Professional Services rather than in the provision of goods. The sum of money involved in tied aid is in the order of £300 million of which £190 million is for consultancy and therefore directly related to our work. In addition some of the research-related consultancies benefit from receiving research contracts allocated from another £100 million. We estimate that this is equivalent to some 7 per cent of BCB's members' annual fee earning worldwide. The BCB membership represents some 40,000 people involved directly or in support of international consultancy. Our very real concern is that a substantial loss of DFID projects to our international consulting competitors will result in a potential loss of jobs for people working in or from this country, particularly amongst the SMEs.


  Although we in BCB may not be totally in agreement with the policy change, particularly its timing, we would like to acknowledge the effort made by the Secretary of State for International Development and her senior officials in ensuring that BCB was extensively consulted during the drafting and publication of the White Paper. Furthermore, since then a working group made up of BCB members and DFID officials has been meeting to use the experience of the private sector in the process of improving and modifying DFID procedures for untying. This is in line with the International Development Committee's advice contained in the Eighth Report (475).


  The UK has one of the most well developed independent Professional Services Sectors. It is highly regarded worldwide, extremely successful in winning work and generally very competitive, despite an adverse pound. The bedrock on which this is based is the successful completion of projects funded from this country and other IFIs. Recipient countries see how well UK firms carry out consultancy projects, and these are the catalyst for inviting such firms to do further work. Moreover this helps to generate two-way trade between UK and the country in question. BCB is entirely in agreement with the argument that firms in recipient countries should be fostered and, provided they are capable and professionally competent to do consultancy work, should be allowed to compete on equal, or perhaps even more favourable terms. This is why BCB advocates that members should open local offices, for the most part staffed by local people, and of course many have done so the world over.

  By opening UK bilateral work to our continental and other competitors who are not reciprocating in the untying process, we open the door to them winning not only initial DFID projects, but potentially any follow-on work or trade exchange that may result. If therefore the policy of unilateral untying does not, after a finite period, lead to others also untying, UK should review whether the policy is in the national interest.

  With a strong and successful international Professional Services Sector, the UK has little to fear from a general untying of aid. It is however unfortunate that the Government has not waited until a larger grouping of like-minded countries agreed to implement the policy together. Furthermore with deliberations currently underway in Brussels into the legality of tied aid within EU countries, it might have been better to have awaited their ruling.

  Last summer the International Development Committee commented in detail on DFID's procedures. An implementation date of 1 April 2001 undoubtedly sets the Department a very difficult and perhaps unrealistic target to achieve procedural reform.

  Despite these concerns, BCB accepts that the policy of untying UK bilateral aid is effectively a fait accompli. The Government must therefore now ensure:

    —  A political agenda is spelt out for working with other like-minded countries to establish total untying of bilateral aid worldwide;

    —  All concerned government departments should work together so that the UK's commercial potential to win work under multi-lateral development programmes is maximised;

    —  The Department for International Development should have procedural changes in place to cater for the untying of aid by the implementation date of 1 April 2001, not just within UK but in all regional offices worldwide.


  Certain European countries such as the Dutch and Swedes are in favour of comparable untying policies. UK should now make vigorous efforts to ensure that all those who agree with this policy worldwide are working together to apply pressure on the rest. Moreover specific efforts should be made to ensure that untied projects in like-minded countries are positively identified for the benefit of British consultants seeking to assist in their completion.

  At the same time pressure should be brought to bear on the European Commission for an early conclusion to the deliberation on the legality of tied aid. Furthermore with much of the technical assistance from such as the World Bank or Inter-American Development Bank provided by Trust Funds it is important to ensure that all Trust Funds are untied, available to all potential bidders for projects, and thus as cost effective as possible.


  Post untying the UK Government could do much to assist British firms by ensuring that in the Multi-lateral Financing Institutions, every opportunity is taken to help British consultants win work. Too often in the past there has been a tendency in International Committees, (for example in discussing Brussels-based Development Programmes), to dwell on the development issues without giving enough emphasis to the commercial potential for British companies. This is in sharp contrast to our European competitors such as the French and Germans who at every opportunity, irrespective of their Government departmental allegiance, strive to ensure that their commercial concerns are being suitably addressed and the private sector notified about potential work. Helping exporters should be incumbent upon everyone in this country not simply those in trade-related posts or those seeking to work overseas. BCB would like to see all concerned government departments working as a team to ensure that the playing-field is level and the opportunities for British companies are as good as those for anyone else.


  As explained in the introduction BCB is working closely with DFID to ensure all required procedural changes are in place for the opening-up of UK's Bilateral Aid to competition. This will undoubtedly result in a major modification to DFID's current working practices, both here in UK and in the regional offices. A great deal of emphasis will have to be placed on advertising projects correctly and for all to see, where appropriate in the EU Official Journal, DFID Website etc. Moreover detailed procedures are being revised for selection, explanation of rejection, and project implementation etc as well as the introduction of a suitably revised complaints procedure. All this is being discussed in detail in the DFID/BCB Working Party .

  It will however require enormous effort on DFID's behalf to meet a 1 April deadline and we have some doubt that this can be achieved.


  The Unilateral Untying of Bilateral Aid is undoubtedly a brave step. If this is the catalyst for a rapid move to general untying of bilateral aid and the objective achieved of recipients receiving the full benefit of the initial investment, it will prove highly worthwhile. It is imperative however that the consequences of this unilateral action are carefully monitored and the potential for UK firms to win work is not sacrificed for a point of principle which is eventually found to have had no influence on the rest of the world.

Colin Adams

Chief Executive, British Consultants Bureau

January 2001

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