Select Committee on Public Accounts Minutes of Evidence

Examination of Witnesses (Questions 40-59)



  40. I am not sure that I entirely accept your assurance, but I do feel somewhat reassured that it is an issue which you are addressing. Let us talk about the PSAs themselves. I do not suppose the Department invented PSAs. I suppose that the Treasury imposed PSAs. No doubt you welcome them, or will say that you welcome them, but I want to ask what the costs to the Department are of these PSAs. How much do you spend on constructing them and how much do you spend on monitoring the progress of these PSAs?
  (Mr Chakrabarti) I do not have that cost figure to hand but I was in the Treasury when PSAs were around.

  41. So you will welcome them then?
  (Mr Chakrabarti) I have seen it from both ends and I strongly do support them. I think they have made a difference and they have made us think in the Department about what are we spending this money on that Parliament votes to us. What are the outcomes we are trying to get to? Obviously, the collective efforts involve other people, so it helps explain that. It also helps focus the objectives, as I was explaining in my answer to the Chairman. It helps focus the efforts of individuals further down the line in a way that we simply did not do before so yes, we are undoubtedly putting more resources into designing PSAs, into designing objectives that pass through from the top level of the PSAs down to individual objectives, and obviously we are spending more time and effort on that than we would have done but the benefits outweigh those costs.

  42. I think it would be helpful if we knew just what it was costing. Frankly, I am deeply troubled about some of the PSAs which you have established. You have not met the targets either. If I can draw your attention to page 16, table 7, it is an analysis of DFID's performance against the PSAs up to 2002. On page 16 you will see that there are several thick lines running across the page. If I can go down to the third group it says there that in the 30 largest recipients of British aid DFID aims to make a major contribution to the achievement of—and then it analyses various objectives there. Next to that in the central column it says that the group of the top 30 recipients of British aid changes from year to year. It also talks about imputed share of multilateral aid. What I am guessing is that these 30 recipients change each year according to the calculation of which country receives the most aid, not only from the UK but from other countries. I say it is a guess, because the word "imputed" I think is a fancy word for saying what we call in Yorkshire a guess, and it changes year to year. That being the case, how can it possibly be argued that you have any control whatsoever over the outcomes of these PSAs if it is changing from year to year? We then find that the PSAs are talking about average achievements, for example, 1.5 increase in GDP per capita, but since the countries change from year to year I cannot possible understand how this is in any way responsive to anything which HMG could achieve.
  (Mr Chakrabarti) There are some PSA targets where we do have more direct control, for example, our share of the budget base for the poorest countries. That is quite clearly an issue that ministers here can decide. In other areas, like the other targets that you mentioned there, we are working with many other people; there is no doubt about that contribution. We cannot simply put in all the performance ourselves; we are part of a collective effort. With regard to the number of countries that change from year to year, I do not think that is quite right. We have the change between PSAs, undoubtedly, because we have always had this problem with the balance between trying to be as comprehensive as possible but also trying to focus only on those countries where we already have the biggest impact out of recipients.

  43. I am going to run out of time and I do not think I have made my point yet. I want to sharpen up both my questioning and your responses please. What you have really said is that there are some PSAs into which you have very little input at all, and I want to highlight them. The UK Government would not say it can control its own GDP very precisely but you have got a PSA here trying to bring about a 50 per cent increase in GDP for 30 countries which change across time and over which you have very little influence. That is simply not a realistic target for you to achieve, is it? Just yes or no would be helpful, I think.
  (Mr Chakrabarti) Absolutely.

  44. So you really could achieve that?
  (Mr Chakrabarti) In an earlier answer I did say that we have dropped that target for exactly the reason you have made clear.

  45. Let us go down the page because here we have another one, which is the reduction of maternal mortality. We have failed in relation to that as well. I put to you that the same reply is required from you on that.
  (Mr Chakrabarti) No, I think there we can have much more of an impact. We spend a lot of money on health, we can work with other donors and with the key countries to have that impact. I do not accept that.

  46. I am going to go on to the next page, share in GDP of the poorest 20 per cent of the population. We live in a society which is riddled with class and in which the differences between the poorest and the wealthiest are very substantial, and no doubt that is the case in developing countries as well, maybe even more so. Here we are proposing to change the class structure of these countries, in 30 countries which change across time. Is it really plausible to suggest that we can get the money to the poorest 20 per cent of the population in those 30 countries?
  (Mr Chakrabarti) We have dropped that target too because of data problems. There are surveys conducted every five years so we do not yet have the data to know what is going there.

  47. Whether you have the data is another question which I am not going to have time to get to. I want to go to one final one. On the following page, page 18, we are talking about an objective increase in EC countries' specific aid going to the poorest countries. I think you have already accepted that you have little control over the European Union in terms of what priorities it establishes and yet half our aid goes through that route, does it not?
  (Mr Chakrabarti) Quite a lot of our aid does go through that route. We alone, DFID, do not have control over it. That is the beauty of the PSAs as we develop them, that as we are moving more to joint targets together with the Treasury and the Foreign Office, who do a lot more negotiation for us in the European Community, I think we can make some impact here.

  48. Do you not really accept the thrust of my argument, that some of these PSAs are not plausible and that the amount of control which DFID has over them is very limited, that the whole process of setting up PSAs, which you cannot monitor because the information is not there and you cannot control because there is a plurality of other factors, is really a waste of money for the Department which would be better giving it to the poorest people on the planet rather than spending it on bureaucrats and monitoring something which you can neither measure nor attain?
  (Mr Chakrabarti) I do not accept that. I think we can measure a lot of these things and we can, by plausible association, say whether we have made a difference, quite often. I agree that longer timescales are certainly needed for some of them and we are in negotiation with the Treasury at the moment as to whether some of these PSA targets in the next PSA should be over five years rather than three so that we have some better data next time round.

  Mr Trickett: My time is up, but I rest my case.


  49. I think Mr Trickett has a point there which you have to try and explain to the Committee, because you are in this dilemma, are you not? You have got these performance targets, they are based on reductions in poverty, but they are very difficult to measure your success on because you have got up to 50 other donors taking part in all this. It does put you in great difficulty in interpreting the success of your programmes, does it not? That is the point Mr Trickett was trying to make and it is a fair point, is it not?
  (Mr Chakrabarti) The point about attribution I fully accept, that it is a collective effort and therefore when we have success it is a collective success. We cannot always find exactly what DFID did. But sometimes in some places we can have a quite clear link between our actions, even in a collective effort, and change on the ground, even when it is general budget support. I will give you an example: Uganda, a very recent example which was in the papers, where the donor community decided that they would not provide more money to Uganda unless it kept its defence spending under control at two per cent. The Government of Uganda wanted to increase it above that. It was Clare Short who essentially argued the case and made the case and made President Museveni change policy. That is clearly, within a collective framework, something that DFID has done, so you can sometimes show that. In a larger number of cases clearly it is a collective effort.

Geraint Davies

  50. It is a pleasure to have you in front of the Committee and I am sure you are doing a good job. Can I just ask first of all on the broader political picture that you mentioned about the EC moving away from 70 per cent on poverty to 50 percent on poverty, is the British position to continue to give more to poverty than the EU average or do we just act in unison?
  (Mr Chakrabarti) No. We very much try to get the EU to shift towards our position.

  51. So you are taking a lead by action?
  (Mr Chakrabarti) Yes, we are.

  52. And not just agreeing the line?
  (Mr Chakrabarti) No. Within the EU we have quite strong alliances with Germany and the Dutch on this position and some others. Unfortunately, development organisations, whether it is us or the Dutch or the Germans, are not in the lead in negotiation on this budget.

  53. Is there any sense in which we attempt to influence public opinion in other countries in the EU towards our position basically of targeting poverty rather than targeting, for instance, commercial interests of indigenous companies, French companies wanting to build dams or whatever?
  (Mr Chakrabarti) We tend to do that through our links with our counterparts in development departments in these other countries who of course share many of our views on this. We also do it internationally. Within the OECD there is a group which looks at aid donors and they very much push the same line that these other countries should also do this.

  54. Is there a further cultural difference—you have mentioned the difference with the EU - with the United States where they may be more corporately led, more interested in foreign policy rather than poverty elimination? Is that true?
  (Mr Chakrabarti) Undoubtedly if you look at the administrations for the last 20 or 30 years, they have been very keen to have quite a poverty focus among some of them, but it is true that the State Department and also Congress in the United States have tended to try and earmark for political or commercial reasons some of their aid. The new aid which was very recently announced by President Bush, the additional money that he is going to put into the system, they are going to try and focus much more clearly on poverty reduction.

  55. Do you feel that there has been a change of emphasis since September 11?
  (Mr Chakrabarti) Yes, I do.

  56. On the issue of good governance and corruption, are there obvious tell-tale signs so that if you are targeting money at a given country you can tell that some of that money is being skimmed off? Are there structural signals that you get other than explicit evidence?
  (Mr Chakrabarti) I think there are analyses which should tell us whether in some countries corruption is so pervasive that we have to be extremely careful about the systems through which we put the money or we have to put in some technical assistance, as I said earlier, to try and strengthen that assistance to make sure that our money is not wasted.

  57. Do you send any money to Russia?
  (Mr Chakrabarti) Yes, we have a £25 million programme of aid to Russia.

  58. There is endemic corruption there, is there not?
  (Mr Chakrabarti) I have recently been there. Yes, there is very large corruption there. The Russian Government is working very hard to try and stamp it out but undoubtedly corruption exists. The way we have moved our programme in Russia is to focus on two oblast, two provinces essentially, who are much more committed both to poverty reduction goals but also to stamping out things like corruption.

  59. Is there a tendency for you to withdraw aid from places where you know there is corruption, thereby unfortunately having the negative impact of hurting poor people in some sense?
  (Mr Chakrabarti) It depends. There are two types of cases. Where there is corruption and a government is doing nothing about it we will not want to put our money through government channels. Where there is corruption and the government is doing something about it we will try and support that government in doing something about it.

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