Appendix: Government Response
The Department for International Development (DFID)
welcomes this report by the International Development Committee,
which examines DFID's work as described in its Annual Report 2009-10.
The Department is pleased that the Committee has focused on the
increase in resources, the attempts to ensure value for money,
the proposals for reducing the share of the budget allocated to
running costs and the possible risks of doing this while increasing
the overall budget.
As the IDC is aware, DFID has conducted two thorough
reviews of the UK's bilateral and multilateral aid programmes
to determine how we can accelerate progress towards the Millennium
Development Goals and achieve maximum value for money for the
UK taxpayer. The outcomes of these reviews have now been presented
to the House and full details have been published.
Fragile and Conflict-affected states
[Paragraph 8]
We note that closer
working between departments should be assisted by the Conflict
Pool which brings together the Government's development, diplomatic
and defence interests. We trust the Pool will continue to be used
for conflict prevention.
Effective upstream conflict prevention efforts need
an integrated approach which draws together development, diplomatic
and defence expertise. The Conflict Pool is an important mechanism
to help achieve this; departments work together on shared analysis,
joint strategic planning and prioritisation, and joint management
of programmes on the ground. The Strategic Defence and Security
Review committed the Government to expanding the Pool from around
£229 million in 2010/11 to around £300 million by 2014/15.
The planned expansion will enable us to plan our conflict prevention
work several years ahead, and to deliver more cross-government
support to long-term conflict prevention and stabilisation programmes,
for example in security sector reform, justice and institution
building.
[Paragraph 15] DFID is placing an increased focus
on working in fragile and conflict-affected countries, which are
often furthest from achieving the Millennium Development Goals.
In its reply to this report the Government should state which
countries will be receiving the increased spending. The new focus
will produce problems. There will be severe difficulties in ensuring
every pound is well-spent in war-torn environments with corrupt
and incompetent Governments and the greater focus on fragile states
is likely to lead to less assistance to some countries with good
governance where aid is likely to be well spent. We are to undertake
an inquiry into fragile states in 2011 and will examine these
issues in more detail.
We welcome the Committee's intention to undertake
an inquiry into fragile states in 2011. The Government has put
value for money at the heart of our decision-making about where
we invest UK aid - both through our bilateral programmes and the
multilateral agencies. While working in fragile and conflict affected
states carries risks, the risks of not doing so are even greater.
These countries are furthest from achieving the MDGs. Conflict
and fragility not only holds back their development, but may also
threaten the prospects of their neighbours. We have strong systems
in place to safeguard the UK's finances against corruption and
fraud and tailor our choice of modalities and design our interventions
according to the risks in each country.
The Bilateral Aid Review published on 1 March provides
full details of the Government's country by country plans over
the course of the Spending Review period (www.dfid.gov.uk/barmar).
Through the period we will strengthen our efforts to help
the following 20 fragile and conflict affected countries
to make progress towards the MDGs: Afghanistan;
Bangladesh; Burma; DR Congo; Ethiopia; Kenya; Liberia; Malawi;
Nepal; Nigeria; Occupied Palestinian Territories; Pakistan; Rwanda;
Sierra Leone; Somalia; Sudan; Tajikistan; Uganda; Yemen and Zimbabwe.
This list is compiled on the basis of publicly available indicators
in 2010 - the Failed State Index of the Fund for Peace, the World
Bank's CPIA and Uppsala conflict affected countries database.
We will review it in two years time.
[Paragraph 16] Closer working between DFID, the
FCO and the MoD is welcome, especially in fragile and conflict-affected
countries. We do not expect this will lead to the potential militarisation
of aid and trust it will not. We also welcome DFID's inclusion
in the National Security Council and expect it will lead to a
more coherent approach to national security. We support the establishment
of the Joint Committee on the National Security Strategy which
will scrutinise the National Security Strategy, including the
work of the National Security Council.
DFID's inclusion in the National Security Council
ensures that development contributes to the way the Government
thinks about security, for example through upstream conflict prevention
which is good development, good value for money, and also
good for our security in the UK. The Strategic Defence and Security
Review and ongoing work on building stability overseas, co-led
by FCO and DFID, sets a valuable framework for more integrated
efforts by DFID, FCO and MOD, especially in fragile and conflict-affected
countries. We support the Committee in welcoming the work of the
Joint Committee on the National Security Strategy.
Climate Change
[Paragraph 18] We welcome the Government's policy
of making climate change an integral part of DFID's programmes
and providing £2.9 billion funding up to 2014-15 to help
developing countries respond to climate change. In its response
to this report the Government should state how much of this money
will be ODA-compliant and how DECC is to spend its share of the
money. There should be a limit on the amount of ODA spent helping
developing countries respond to climate change, and we are reassured
that the funding allocated for this purpose in the CSR is less
than 10% of ODA.
The Spending Review allocated £2.9 billion for
international climate finance (called the International Climate
Fund, ICF) over the next four years. Of this £1.8 billion
was allocated to DFID, with £1 billion to DECC and £100
million to Defra. The ICF presents us with an unprecedented opportunity
to support poverty reduction through low carbon growth and development,
adaptation to climate change, and tackling deforestation.
All spending under the International Climate Fund
(£2.9bn) will meet the DAC definition of ODA. ICF funding
will scale up over the spending review period and will be almost
50% higher in 2014/15 than in 2010/11. This trajectory will see
climate finance reach 7.5% of ODA by 2014/15.
DECC will spend its share of the ICF in line with
decisions on the overall strategy, priorities and principal allocations
of the ICF taken collectively by the Secretary of State for DFID,
the Secretary of State for DECC and the Chief Secretary of the
Treasury. Joint decisions will be made with the Secretary of State
for DEFRA in relation to forestry and there will be consultation
with the Foreign Secretary. These priorities will be agreed by
Summer 2011.
The Spending Review allocated £2.9 billion for
international climate finance (called the International Climate
Fund, ICF) over the next four years. Of this £1.8 billion
was allocated to DFID, with £1 billion to DECC and £100
million to Defra. The ICF presents us with an unprecedented opportunity
to support poverty reduction through low carbon growth and development,
adaptation to climate change, and tackling deforestation.
All spending under the International Climate Fund
(£2.9bn) will meet the DAC definition of ODA. ICF funding
will scale up over the spending review period and will be almost
50% higher in 2014/15 than in 2010/11. This trajectory will see
climate finance reach 7.5% of ODA by 2014/15.
DECC will spend its share of the ICF in line with
decisions on the overall strategy, priorities and principal allocations
of the ICF taken collectively by the Secretary of State for DFID,
the Secretary of State for DECC and the Chief Secretary of the
Treasury. Joint decisions will be made with the Secretary of State
for DEFRA in relation to forestry and there will be consultation
with the Foreign Secretary. These priorities will be agreed by
Summer 2011.
Development expenditure by other Government Departments
[Paragraph 25] The Permanent Secretary informed
us that the share of the UK's ODA which DFID spends will continue
to increase. She expects it to be 89% by 2014-15. This ensures
that the majority of UK aid is compliant with the International
Development Act 2002 and is for the purposes of poverty reduction.
Spending by other departments does not necessarily comply with
the 2002 Act. DFID is transferring sums to other departments,
including somewhat surprisingly funds for the papal visit. The
Government should explain in its response to this report what
the funds transferred to the FCO for the papal visit were spent
on and how this was ODA-compliant.
In the Spending Review other government departments
bid for how much ODA they will contribute to the 0.7% target.
These amounts are set out in their settlements and this will determine
the future split of DFID and non-DFID ODA. DFID remains the department
with overall responsibility for reporting ODA and ensuring that
all UK aid is consistent with the international agreed rules laid
down by the DAC.
DFID was one of a number of government departments
part funding the Pope's visit to the UK. The funds did not constitute
Official Development Assistance and are therefore additional to
the Coalition Government's historic commitment to meet the 0.7%
UN aid target from 2013.
Research
[Paragraph 28] Research makes an important contribution
both to DFID's work and to international development more widely
and it is important that DFID continues to fund high quality independent
research. DFID should seek to stimulate research in institutions
in developing countries, but it must also recognise the expertise
in UK universities and ensure that the UK remains an important
centre of research into international development. We are concerned
that at present UK research institutions are unfairly disadvantaged
compared to universities in other donor countries. Research commissioned
by DFID must be disseminated more widely. Tenders for research
should state that researchers are expected to provide submissions
to select committee inquiries into relevant subjects and make
their research available to the public at large in order to increase
transparency.
DFID highly values the expertise of UK institutions
both in providing high quality research and in nurturing the next
generation of researchers. The contracting of DFID research is
through open and fair competition with contracts awarded on merit.
The same rules and conditions apply to all who tender. The largest
proportion of our research contracts are won by UK institutions
due to their technical excellence.
We agree that our research must be disseminated
as widely as possible. We have an open access policy for all research
we have funded so it is easily accessible and available free of
charge. Currently 60% of the research we fund is provided by open
access one year after it is published. We aim to increase this
to 80% over the CSR period. The Research for Development (R4D)
portal now has a database containing around 5000 projects, 23,000
research outputs and contact details of over 4000 research organisations
in the UK and elsewhere with whom DFID research teams have worked.
We are currently reaching a large audience with over 50,000 visits
per month.
In response to demand, in 2010, we produced and disseminated
a specialist annual report outlining brief summaries of all the
research projects currently funded by DFID's Research & Evidence
Division, the lead institutions, the mechanisms by which our research
is contracted, our thematic priorities and the countries in which
our research projects are active. http://www.dfid.gov.uk/r4d/news.asp?ArticleID=50614
Switching aid from bilateral to multilateral institutions
[Paragraph 33] Increasing spending through multilateral
organisations would enable DFID to accommodate the large increase
in spending in 2013-14 without a major increase in running costs,
for example by making additional payments to the World Bank. However,
it would make little sense to save on DFID's administration costs
by spending money through institutions with higher costs. Moreover
it should also be noted that increased spending through multilaterals
may reduce the control available to DFID. It can be argued that
it also dilutes its influence as a major international donor -
a proposal which the Committee will examine further. The case
for spending through multilaterals must come from intrinsic advantages
such as economies of scale and lower transaction costs for developing
countries. DFID has not taken a decision yet and we await the
Multilateral Aid Review for an analysis of the costs and benefits.
The full results of the Multilateral Aid Review (MAR)
were published on the 1st March. The case for putting
UK aid through multilateral organisations must be built up on
a case by case basis considering the value for money achieved.
That is exactly the approach the Multilateral Aid Review takes,
including considering the way in which each multilateral organisation
can help deliver specific UK Development Objectives as well as
how well the organisation manages the money for the benefit of
poor people.
The MAR assessed the performance of the multilateral
organisations against a set of criteria ranging from control of
costs through to delivery of outcomes, from focus on poor countries
to accountability and transparency. The aim was to capture the
value for money for UK aid of the whole of each organisation.
DFID does not have the reach, skills or capacities
to do all the things that multilaterals can do. Putting our money
through multilaterals means we can reach more poor people and
do more things - such as address the needs of the most vulnerable
during conflicts or getting vaccines to remote villages.
[Paragraph 34] It is
also uncertain as yet what decisions will be made in respect of
middle income countries following the Bilateral Aid Review. We
reiterate our recommendation made in reports in the last Parliament
that DFID should have a strategy for its engagement with middle
income countries, especially those with large numbers of poor
people, indicating the role of bilateral and multilateral aid.
The full results of the Bilateral Aid Review were
published on 1st March and set out in detail our bilateral
aid plans for each country. Middle Income Countries (MICs) are
crucial to meeting DFID's aim of reducing poverty and achieving
the Millennium Development Goals. Nearly three quarters of the
world's poor live in MICs - principally India, China, Pakistan,
Nigeria and Indonesia. MICs also matter for broader reasons of
global influence, voice in multilateral institutions and international
negotiations, and their impact on development in Low Income Countries
(LICs.)
MICs are a heterogeneous group and a "one size
fits all" approach is not appropriate. DFID will work through
a combination of multilateral/ international influence and bilateral
programmes to press for poverty reduction and building resilience
in all MICs to ensure sustained progress towards the MDGs. DFID
will also work closely with MIC's on international development
priorities and global public goods and with new development actors
to help them have a positive impact on development and poverty
reduction in LICs.
Reviews of bilateral, multilateral and humanitarian
aid
[Paragraph 37] We welcome the Government's reviews
of bilateral, multilateral and humanitarian aid programmes and
trust that they will lead to a switch of spending to organisations
and programmes which offer better value for money.
The results of our Bilateral and Multilateral Aid
Reviews have now been announced. These reviews will make Britain's
aid budget more focused and effective. A complete review of British
aid has looked at how to get maximum value for every pound of
aid invested. We will invest more in countries where our aid can
make the biggest difference. Over the next four years, aid from
Britain will transform the lives of millions of the world's poorest
people. Greater transparency of aid through the UK Aid Transparency
Guarantee, and tougher scrutiny through the Independent Commission
for Aid Impact (ICAI), will give the UK public independently verified
evidence that their money is being well spent.
These reviews provide DFID with a fresh plan to help
achieve real progress and deliver real results. They have refocused
the aid programme in fewer countries so that we can target our
support where it will make the biggest difference and where the
need is greatest. They allow us to put more money behind strong
performing international organisations which are critical to delivering
the UK's development priorities. Organisations identified as having
serious weaknesses will be placed in "special measures"
that will demand an urgent improvement in performance. We will
monitor their progress closely and review within two years. DFID's
core funding may be ceased if improvements are not made.
The recent introduction of a Business Case approach
to developing and approving DFID programme investments puts results
and value for money at the heart of our individual programme decision-making.
Business Cases will be published on our website enabling public
scrutiny of our programme value for money judgements.
The Aid Transparency Guarantee
[Paragraph 43] We support the establishment of
the Aid Transparency Guarantee. This will help increase the effectiveness
of spending on aid and empower aid recipients in developing countries.
We agree that the Aid Transparency Guarantee (ATG)
introduced a step change in the quality of UK aid information
available to citizens in the UK and developing countries. Increasing
transparency will support efforts to increase value for money
and demonstrate results achieved from UK aid. DFID has made good
progress in implementing the Aid Transparency Guarantee with significantly
more information on DFID projects and transactions now being published.
Further new information will be published during financial year
2011/12. DFID is also now publishing its aid information in line
with the new International Aid Transparency Standard - and was
the first international aid organisation to meet the Standard.
We will work to help citizens in developing countries to access
and use such aid information to increase accountability and enable
them to provide feedback to improve development processes. DFID
will continue to work with other aid organisations in the UK and
overseas to adopt similar transparency standards.
The Independent Aid Watchdog
[Paragraph 50] We welcome the establishment of
the Independent Commission on Aid Impact to undertake independent
evaluations of ODA spending. The Commission will report to us
and we will examine its programme of work, propose subjects for
evaluation and take evidence in respect of some of the evaluations
from the Permanent Secretary, the Commissioners and those who
undertook them. We will not take evidence on all the evaluations
since this would detract from our own core functions and work.
DFID welcomes the Committees support. The Independent
Commission on Aid Impact will be operational from June 2011.
[Paragraph 51] We note that the Commission will
only be effective if:
a) DFID designs programmes in such a way that
they can be evaluated
b) Evaluations are undertaken sensitively,
taking account of the fact that the effectiveness of some programmes,
for example those relating to governance, will only become apparent
in the long term
c) Evaluations are designed to be effective
but do not impose unnecessary burdens on staff in the field -
they should not involve excessive bureaucracy and form-filling
for staff
d) DFID ensures that it has mechanisms in
place to learn from the evaluations.
We agree with the Committee's recommendation on the
Independent Commission for Aid Impact (ICAI). DFID is currently
driving a process of embedding stronger evaluation work across
its programmes and building a cadre of evaluation specialists
to carry out the work. This should also help ensure that our programmes
can be more easily evaluated.
ICAI's Chief Commissioner is fully aware of the difficulties
of measuring long-term development outcomes as evidenced in his
pre-appointment hearing with the Committee. The ICAI Commissioners
will be supported by a contractor with solid development evaluation
expertise to ensure outcomes are judged appropriately.
DFID aggress with recommendation 12(c), however,
it is primarily a consideration for ICAI.
DFID is currently developing the follow-up mechanisms
to ensure that agreed ICAI recommendations are actioned and wider
lessons are shared across the organisation.
Staffing Abercrombie House
[Paragraph 64] The previous Committee visited
Abercrombie House during the last Parliament and we intend to
do so during the course of this Parliament. We will keep a watching
brief over staff moves to East Kilbride and at whether the balance
between London and East Kilbride is optimal.
DFID welcomes the Committees continued interest in
Abercrombie House. As part of our ongoing efforts to make best
use of our UK estate and get value for money from our accommodation
expenditure, we continue to review the balance of posts in London
and East Kilbride.
Use of technical cooperation
[Paragraph 80] Over the next 4 years the Department
will make cuts in its administration costs of £34 million,
equivalent to 33% in real terms. These will include significant
reductions in the corporate budget as well as reduced expenditure
on office space, communications and travel. New technologies are
enabling reduced costs in some areas and there will continue to
be reductions in staff in back-office functions. We commend DFID
for making important administrative savings over the last 5 years
and for its plans to do more over the next period provided they
do not undermine DFID's ability to do its work effectively. The
numbers of HR staff have been reduced from 150 to 89 but this
reduced figure looks more than adequate. It makes obvious sense
to reduce the number of back office staff rather than vital frontline
staff. We welcome the decision to increase the number of policy
staff at East Kilbride as the number of 'corporate' staff there
decreases. It will be important to ensure that in reducing corporate
functions, key roles such as the ability to monitor and manage
external suppliers is not weakened.
We are proceeding with plans for further administrative
savings and reducing staff in corporate functions, including additional
reductions in the number of HR staff. At the same time we are
strengthening our approach to ensuring we achieve value for money
and focus on results including our procurement capability. The
teams undertaking this work will have the resources they need.
We welcome the Committee's support for our decision
to use more of our total operating costs for front line staff
[Paragraph 81] DFID's running costs are to be
reduced to 2% of its budget over the next 4 years, but will increase
by about 6% in real terms because of increases in the total DFID
budget. The increase in running costs together with the reduction
in administration costs will enable DFID to employ perhaps 300-400
more frontline staff, according to the Permanent Secretary.
We have initiated an exercise to recruit additional
staff to fill the new front line delivery posts that have been
created as a result of the increase in the budget for these types
of posts. New staff will be deployed to priority posts in priority
locations first.
[Paragraph 82] These additional frontline line
staff will be essential if DFID is to deliver effectively its
increased budget, especially if much of the increase is in bilateral
aid. It is important that these staff have the right skills. Once
the results of the bilateral review are known, we recommend that
DFID devise a strategy for how it will increase the number of
its staff in those countries where it intends to have programmes.
A wider range of staff will also be required if DFID is to successfully
take on a new role in conjunction with the FCO and MOD. This will
mean employing staff who have the ability to influence policy
as well as administer aid budgets. We agree with DFID that it
enhances in-country programmes to have locally-employed staff
and that it is important that such staff not only fill lower grade
jobs but are integrated throughout the DFID programme. We commend
DFID on its efforts to do this and encourage it to continue to
make sure "decision-makers" in each DFID office include
some staff appointed in-country. DFID should focus, in particular,
on how this might be done in fragile and conflict-affected countries.
We have incorporated a workforce planning component
in DFID's Operational Planning exercise. This process will identify
the staff needed in each location to implement the decisions made
through the Bilateral Aid, Multilateral Aid and Humanitarian and
Emergency Response Reviews. It will also include decisions about
the number and type of staff appointed in country in each overseas
office.
[Paragraph 83] The use of external suppliers to
provide technical assistance fills an important skills gap. However,
we are concerned that the use of such suppliers may affect the
ability of developing countries to build up expertise. In addition,
DFID needs to ensure that it is selecting the suppliers which
are providing the best value for money and to examine whether,
as a major purchaser of their services, DFID could do more to
drive down fee rates. We will ask the new ICAI to examine whether
external suppliers are providing value for money.
DFID is continuing to strengthen its approach to
procurement and the management of commercial aspects of project
design in order to improve value for money from spending with
suppliers on technical assistance. We encourage suppliers to use
developing country sources on a sub-contract basis and frequently
include specific commitments to this in technical assistance contracts.
We are working to strengthen levels of commercial capability across
the organisation.
| 
