Select Committee on Public Accounts Minutes of Evidence

Examination of Witnesses (Questions 1-19)




  1. Today we are examining the Department for International Development, Performance Management—Helping to Reduce World Poverty, and welcome Mr Chakrabarti, the Permanent Secretary of the Department. I think it is the first time you have appeared before our Committee, so you are doubly welcome. Perhaps you would like to introduce your colleague.
  (Mr Chakrabarti) On my right is Mr Mark Lowcock who is Director of Finance and Development Policy in the Department.

  2. Thank you. This is a very important subject. It is a difficult and complicated report on an important subject and quite technical, so I know you will try to help us with that as best you can. I am sure you will do it very well. Can I start by asking you how you judge the value you get from the significant funding you provide to multilateral agencies?

  (Mr Chakrabarti) You are right, Mr Chairman. We have put nearly half our budget into multilateral institutions, ranging from the UN agencies through the EC and the World Bank, so it is extremely important that we do get value out of it. The way we look at this is, first, how do they allocate their funds? Do they allocate them to where aid is likely to be most effective? All the evidence suggests that that means allocating to the poorest countries. On that basis we would say that the World Bank is a pretty good institution. Most of its money goes go to the poorest countries. The EC is not so good. Then we look at also, I guess, their evaluation systems. Again, the World Bank has a very strong evaluation system which has been built up over the years, independent of the programme teams, and the evaluations there show that it is getting better and better over the years. The third thing we do and have done increasingly since 1997 is put together institutional strategy papers, as we call them. Essentially these describe how we as an institution, DFID, will work to try and influence these international organisations. We try and set out what our targets will be in terms of that influence, how we will go about it, will we put individuals into the organisations, will we build up coalitions of support in our dialogue with those institutions. Again there we have fared much better with the World Bank and with bits of the UN system than we have with the EC. At the World Bank we have managed to put people in to help the World Bank re-design its poverty reduction strategies. With the UN system we have had a strategy for how we could reform the UNDP which is one of the most important parts of the UN system, which is spread over too many places in the world, too many sectors, and, with the helpful efforts of some other donors, UNDP has radically reformed itself over the years. It is a number of things that we do to try and get good performance there.

  3. Obviously performance targets are important. Can you explain to me why only two of your 23 performance targets relate directly to multilateral aid if it is so important? Indeed, it is half of our aid effort.
  (Mr Chakrabarti) Because at the end of the day we are trying to get a balance between what we have direct control over and where we do more in influencing strategies. In the bilateral programme we have more direct control over how we spend our money than we do in the multilateral system. That is not to say that the multilateral is not important to us. It surely is.

  4. It is difficult to know what is going on, though, if only two of your performance targets relate to this aid, is it not?
  (Mr Chakrabarti) We have enough information, if you look at the PSA, which supports that we are making an impact in those two areas.

  5. You mentioned the EU. Let us look at the EU. If you could turn to pages 18 and 19 where this subject is directly raised, you had a target for persuading the European Community to increase the proportion of their aid going to poor countries, which I am sure you would agree is a very important issue, but you are not being very successful, are you?
  (Mr Chakrabarti) I think that is absolutely right. We cannot shy away from that. We are not making as much progress as we would like. The reasons are essentially political. I can give you technical reasons but they are just underlying the political reasons. During the 1990s essentially the EC, obviously supported by its Member States, moved away from a focus which had I think about 70 per cent of its aid targeted on poor countries at the end of the 1980s, now to around 50 per cent because many Member States do not share our vision that development assistance should be about poverty reduction. They see it partly as poverty reduction but partly also about foreign policy interests and they have tended to move it towards the middle income countries. We need to build up a coalition of support there within the UK to impress on the EC, together with other Member States who believe, like us, that it can shift to low income countries and do much better.

  6. I will leave that. If other members want to come in they can do. I want now to look at a rather more technical area, which is your performance targets. This relates to the spending reviews and how they relate to them. Why are the targets resulting from the two spending reviews so different in format from each other and from longer term international poverty reduction targets?
  (Mr Chakrabarti) I think there is more consistency than might meet the eye. Both the PSAs, the first and second, are very directly linked to the Millennium Development Goals which I think the NAO report brings out very well, so there is quite a bit of consistency in the subject matter, the substance underlying those targets. What we are trying to do is change the structure of the PSA, really following the NAO's recommendations, so that our staff feel much better ownership than they have done up to now of the PSA.

  7. Would you say that there is a problem? For instance, they target different things in different ways. There is no focus on improvements in GDP in the second and there is in the first, that sort of thing. Is that not causing confusion to your staff? It will certainly cause, I imagine, confusion to members of this Committee as they try to understand this report. It is a very complex area, is it not?
  (Mr Chakrabarti) It is a very complex area. Obviously, when we change things like that we have to explain them to our staff very clearly. There was good explanation of the change of that target in particular. What we found was that the data was essentially swamped by the performance of five or six very large developing country economies within which our aid, although sizeable in our terms, was actually very small against the size of their economies, so it would have been hard in attribution terms, I think, for us to say that we were really that influential on the growth rates of those countries. We therefore made an honest choice there and decided to move away from that target.

  8. If you look at figure 7 on pages 16-17, I think this is quite an important point. DFID is expecting to miss three key targets for 1999-2002 relating to growth in GDP, reduction in maternal mortality, increases in the poor's share of national income. What action are you going to take in response to this forecast shortfall? It is quite an important shortfall to try and address, is it not?
  (Mr Chakrabarti) Yes. I think the Committee has been sent the latest figures which suggest that actually, firstly on the GDP per capita growth target, we—

  9. I was warned you might come out with that answer, I am afraid, but that still leaves the second two.
  (Mr Chakrabarti) Okay; let us go to the next two then. I can do that. On the second one, the share of the poorest target, what we found with this was that frankly the data is totally unreliable to make much headway with this, so it is true that performance was below target but the aggregate data does not really tell us very much. What we have done with both the GDP target and the share of the GDP target is try to combine them and really focus on what the institution really needs to do, which is the poverty head count: how many people earning more than a dollar a day and how many people earning less than a dollar a day. In the new PSA which we are now in discussion with the Treasury about, we will focus on that as the ultimate measure. On the third one, maternal mortality, there are a number of reasons why we have not reached that target. Three I will outline. One is high HIV prevalence in the countries that we are focused on; secondly, very poor emergency obstetric care in a number of those countries, and more generally poor health systems. In all three areas we are trying to work with others to strengthen and increase the capacity of health systems to focus on those issues. We have now major programmes to focus on maternal mortality in our bigger aid programmes such as Malawi and Nepal, Ghana and Kenya. We are also working with the World Health Organisation much more closely than we used to and with the World Bank to try and focus on those three issues, as I said. I am not shying away from that. I think we have definitely slipped and we aim to do better. Again, there we have to work with a number of other players to try and do better.

  10. If you now turn to pages 32 and 33 and look at paragraphs 3.6 to 3.8, this is about your planning and assistance programmes for developing countries and the fact that it does not translate corporate performance targets into appropriate targets for the country programmes. Is this a problem for you and, if so, how do you seek to overcome it?
  (Mr Chakrabarti) It is a problem and we clearly need to do better there as well. What we have found and what the NAO brings out very well is that we can relate activities at country level to the PSA targets but it is clearly not driving the way staff think about performance management. What is driving them much more is the Millennium Development Goals which of course link to the PSA. We need to change quite radically our business planning processes, and I hope that is not too much jargon.

  11. I think we will avoid any kind of jargon this afternoon. If you can do a short teach-in for the members and explain how this works we would be very grateful.
  (Mr Chakrabarti) Okay. The way we envisage it working, and we are obviously in discussion with the Treasury about this as well, is that at the very top level the world has Millennium Development Goals ranging from health and education and what-have-you. These then need to be translated into individuals' objectives at the very bottom: how do we get from one to the other? The Public Service Agreement will describe what the institution as a whole will be doing in terms of the Millennium Development Goals. What we will try and do is have the agreement much more focused on the organisation's structure, which we have never done before, so that there will now be directors in the organisation who are responsible for the PSA objectives, say, for Africa or for Asia, so that they are much more incentivised to deliver. Below them we will have country plans which are again feeding through to those regional plans and, finally, the individuals will have their own individual objectives feeding through those country plans. There will be a much clearer pass-through than there has been in the past between the top level goals and individuals.

  12. Okay. We can come back to that later if we need to. Can I move on now? If you look now at evaluation studies, this is quite important and it is mentioned on page 48. They are important in helping to sort out the reasons behind changes in the level of poverty, and I am sure we would agree there, and they are vital to your work. Why is your programme of evaluation studies not more directly aimed at helping to interpret your contribution towards poverty reduction targets?
  (Mr Chakrabarti) We need to change the evaluation programmes within DFID quite significantly and we accept the NAO's recommendations in that regard.

  13. Just explain to us why you do not think they are working.
  (Mr Chakrabarti) What I think has been happening, and there are some quotes from our staff which I think are very apposite, is that our evaluation has tended to come too late in the process to help staff change their actions as they find problems with their projects, programmes, whatever. Increasingly therefore what staff have done is resort to personal networks, retreats to try and learn lessons from each other and feed that into their work. That is fine but we do need a more formal system which also brings in some independence, which the Evaluation Department will do, to try and help change behaviour in real time. That is where we need to move our evaluation. That is very much at the project staff end of the system. At the top end of the system I think we have made real use of the evaluation which is out there which we share with the World Bank and others, as I said earlier, in terms of aid effectiveness, focusing on the poorest countries, focusing on those countries that are reforming their policies as opposed to those who are not.

  14. Every member will have his own interests in this. I am interested in the arguments about bilateral as opposed to multilateral aid, but I am also particularly interested in good governance. I think this is a key aspect of international development. There is no point in pouring money into countries which are corrupt or badly governed. If you look at pages 40-41, paragraphs 3.28 to 3.35, you will see that governance assessments are not a routine part of DFID's planning for countries. I think this is a surprising statement. I would have thought that good governance is absolutely essentially to how well aid works. Can you explain why that is the case and why tracking of governance is not a routine element in DFID country planning?
  (Mr Chakrabarti) Governance is crucial. We absolutely agree with that. There are two types of countries here that we are trying to describe. One is the country which does not have a full scale strategy for how it might reduce poverty. In those countries we do have to do governance assessments, economic assessments, all sorts of assessments, which need to focus on these sectors. There are other sorts of countries where increasingly they are adopting what are called poverty reduction strategies put together by those countries where governance will be a key part of that strategy. Indeed, the best of these poverty reduction strategies will be worked out in association with civil society and so on, so the whole governance issue gets discussed in some detail because of that. In those countries it does not seem sensible to do governance assessments separately from those poverty reduction strategy processes. We take them as part of those processes. It depends which country we are talking about. We will look at governance in the first set of countries separately, but in the second set we will look at that as part of a joined-up process.

  15. Would you accept that perhaps you have not put enough emphasis on this aspect of your work in the past and that good governance is moving up your agenda? Would that be a fair statement?
  (Mr Chakrabarti) I think good governance has been moving up our agenda since the late eighties. One can argue about whether we have put enough emphasis on it or not. I happen to think we do, particularly in those countries that I have described that are doing these poverty reduction strategies because increasingly the debate around the economic reform agenda tends to touch on a lot of governance issues, corruption issues and things like that. It has permeated into the system much more than might seem apparent.

  16. Can I end with the data that you use? If you look at paragraphs 4.31 to 4.36 on pages 53-54 you will be familiar with the poverty reduction policy and timeliness of much of the data available. This is a fairly key point. If you have not got the right data how can you make the right decisions? Do you want to tell us something about how these shortcomings in the data available to you are affecting your work?
  (Mr Chakrabarti) In my view this is the biggest problem. Attribution is an issue, linkage up and down and these business planning chains are an issue, but data is the biggest issue for us, much more so than perhaps the domestic departments, dealing with their public service agreements. Coverage, timeliness, reliability of that data, as we have already seen, are a real problem. This could make us just give up, which I think would be ridiculous because we really must try and measure not only our performance but how these countries are doing, and so what we are doing increasingly is supporting international efforts through the World Bank and the UN system to try and improve the statistical work in these countries, but also, in the countries where we are one of the bigger players, we are also putting a lot of effort into the work on data, in Kenya, Uganda, Tanzania, Nepal and Bangladesh. It is generally a feature of poor countries that their data systems are poor but it is not always so. Take India, for example. Over the last 50 years India has developed a pretty good database actually, spurred by the efforts of donors to help it, so it can be done but it is something which I would say that donors over the last 20 years have probably not put much effort into and now we really do need as individuals to measure our own performance as well.

  Chairman: Thank you for trying to explain that so clearly.

Mr Rendel

  17. May I first say to the witnesses and to the Committee that I have a non-pecuniary interest in the subject as a member of the Council of VSO. Like all the other ex-VSO MPs who are automatically put on the Council I have not attended it once. That brings me on straight away to the question I want to ask. We are talking today about the way in which we monitor that our aid is being properly used, but it is also surely a question of what the aid is to some extent. I wonder if you could just tell us a little bit about the extent to which your aid effort includes the sending of people rather than just money or goods from this country to help those in poorer countries of the world.
  (Mr Chakrabarti) Mr Lowcock might like to elaborate. I think there has been a shift away from that way of providing technical assistance, to seeing technical assistance, if we are going to provide it, as much more part of a wider package of assistance. For example, in countries where we are providing project support, support direct through the budget rather than doing projects, we will increasingly think through to what extent can a government take this forward without having people in the right areas, like audit, like financial management, and so on, so we may as part of that package want to provide people to strengthen those areas. It is much more trying to think of those people inputs as part of an overall package rather than things in separate entities which is how we have been doing it in the past.

  18. I know that the Government still does support the VSO programme but that is more for fully trained and older people. Do you give any support to younger people, perhaps in gap year terms and things of that sort?
  (Mr Lowcock) The main continuing scheme we have there is a scheme run by the Overseas Development Institute which is for young social scientists, mostly economists. Twenty or 30 a year get financed by us to go and work for governments in developing countries.

  19. This is on what sort of length of project?
  (Mr Lowcock) Two years.

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