Response to Conclusions and Recommendations
Recommendation 1: "We are concerned that
two separate European Commission departments dealing with development
aid and humanitarian aid pose problems for linking relief, rehabilitation
and development. Furthermore, clarity is needed on roles and responsibilities
between the European External Action Service (EEAS) and the Directorate
General of EuropeAid, Development and Cooperation (DG DEVCO) in
the programming process. The UK Government should seek reassurances
that DG DEVCO, the Directorate-General for Humanitarian Aid and
Civil Protection (ECHO) and the EEAS are working together in a
coherent and coordinated manner and that anti-poverty objectives
are not being marginalised within the EEAS."
Agree.
The European External Action Service (EEAS), launched in January
2011, under Baroness Ashton, has taken over responsibility for
drafting country development programmes, with the newly merged
DG DEVCO, under Commissioner Piebalgs, maintaining overall responsibility
for development funding. This new structure has the potential
to deliver a step-change in effectiveness and coherence across
the EU's external actions and a more joined-up EU approach to
security, development and foreign policy.
The UK is pressing the EEAS and DG DEVCO to ensure
external actions stay focused on development and that the EU delivers
a joined-up response on trade, climate change and conflict. We
will continue to work with senior EEAS officials to improve the
EEAS' capacity to deliver our development priorities.
Recommendation 2: "Although the European
Commission has higher administration costs for development than
DFID it is difficult to compare like for like. The Commission
does far more direct work which requires a greater level of administration.
We urge, however, the Government to continue to stress the need
for value for money."
Agree. One of the highest
priorities for the UK is to actively press the EU to reduce its
administrative costs and ensure that all UK aid is achieving value
for money for the British taxpayer.
Recommendation 3: "The UK Government should
push the European Commission to improve its policy capacity, given
its status as the largest supplier of development aid in the world."
Agree. The UK's Multilateral
Aid Review (MAR) identified capacity for development as a reform
priority for the EU. The UK is engaged with the European Commission
on this issue and we will continue to work with the Commission
to improve its ability to recruit and maintain development expertise.
In particular, we will press the Commission, and the European
External Action Service (EEAS), to ensure that staff with the
right level of technical and policy expertise are effectively
deployed, both in Brussels and in EU delegations.
DG DEVCO recently conducted a workload assessment,
aimed at allocating resources and staff with the relevant skills
and experience to appropriate positions. Subsequent DFID research
conducted in country has highlighted some positive changes including
an improvement in the EU's technical and advisory capacity and
an indication that they are recruiting staff with improved skills
and experience in monitoring and evaluation.
The UK will continue to support the Commission in
its plans to improve the policy capacity of the EU in the field
of aid and development. DFID currently seconds between 25 and
30 UK experts into the Commission, the EEAS and related institutions
in areas of strategic performance in order to improve the performance
and value for money of EU aid. The UK will ensure that DFID's
secondment programme supports the necessary improvements in the
EU's policy capacity and works to deliver the UK's development
priorities.
Recommendation 4: "We welcome the Government's
commitment to improve the bureaucracy of procurement at the European
Commission, but there still seems to be a long way to go. The
Government must put more pressure on the Commission to make further
improvements."
Agree. The Coalition Government
will continue to press the EU to open up its procurement policy
as the UK has done in order to ensure greater value for money.
In reducing Commission bureaucracy, it will nevertheless be important
to ensure that essential safeguards against fraud and corruption
are not compromised.
Recommendation 5: "It is unacceptable that
only 46% of aid disbursed through European institutions goes to
low income countries. It devalues the concept of aid when so much
of what is defined as Official Development Assistance (ODA) goes
to relatively rich countries such as Turkey. We do not agree with
the Government that it should not seek to change the definition
of what qualifies as ODA- money given to higher Middle Income
Countries should not be classified as ODA, nor do we believe it
is right to keep the present definition as a way of fudging the
figures to meet the 0.7% target. The UK must continue to press
for funding to be diverted from those higher middle income countries,
who have their own resources to provide for their people, to give
greater help to the poorest people in the world, including in
lower income countries."
Partially Agree. The UK
agrees with the IDC that the EU should refocus its aid on the
poorest countries and we will continue to push the EU to do so.
However, the UK disagrees that the definition of ODA should be
changed. The ODA definition is long-standing, ensures consistency
of measurement across donor countries and remains the basis for
determining ODA-eligible resource flows. All UK ODA, including
that channelled through the EU, complies with the OECD DAC definition
of ODA. The UK is committed to the 0.7% target on the basis of
the existing definition and has put in place spending plans for
delivery of this commitment on that basis. We should work within
the current definition to avoid the potential criticism of meeting
a target based on methodological change.
EU expenditure outside of the Union covers more than
development aid. It plays an important role in supporting the
reforms of the Arab Spring from its Neighbourhood financial instrument
and its pre-accession instrument also focuses on key reforms,
which are necessary to enable the accession of the Western Balkans
countries, Turkey and Iceland to the EU. The EU's main development
aid instruments, the Development Cooperation Instrument, which
covers Asia and Latin America, and the European Development Fund,
covering African, Caribbean and Pacific countries have a more
traditional development focus.
As a result of successful UK influence, the EU is
reviewing its entire approach to aid: cutting funding to countries
that do not need it, refocusing its aid on results and ensuring
much greater transparency, value for money and accountability.
We will continue to press the EU to refocus its aid on the poorest
countries.
Recommendation 6: "The UK has a certain amount
of choice whether it spends its aid bilaterally or through multilaterals.
Although we have acknowledged that there are some problems with
channelling aid through the European Commission for example the
large amount of aid going to middle income countries and its slow
bureaucracy, on balance, we are not convinced it is any worse
than the other multilaterals DFID funds, for example the World
Bank which we have previously reported our concerns. However,
DFID should continue to press the Commission to improve its aid
effectiveness and value for money."
Agree. The UK's Multilateral
Aid Review (MAR) clearly highlighted the need for the EU to take
concrete steps to improve the overall effectiveness and value
for money of its assistance. This has been strongly reinforced
by the recent Development Assistance Committee (DAC) Peer Review
on EU assistance which highlighted the need for further efforts
to meet Busan and other development commitments. The EU is responding
to this, for example through the Agenda for Change, but there
is much more that can be done to improve speed of delivery, results
focus and overall aid quality.
An important element of achieving greater value for
money is ensuring that aid is targeted at the right countries
and right sectors within those countries to best meet the needs
of poor people. The UK supports the Commission's recent proposals
for a further differentiation of their development cooperation
programmes from 2014.
In 2013 the UK will update its assessment of the
value for money provided for UK taxpayers from aid channelled
through multilateral organisations such as the EU, to assess the
changes that have been implemented since the MAR was undertaken
in 2010. We will be looking for clear evidence of progress in
key reform areas such as accountability for results, efficiency
of operations, value for money achieved, the strength of human
resource management and implementation of new EU policies on gender
and climate change.
Recommendation 7: "We need to be careful
that money spent is not directly or indirectly used for the wrong
purposes by the heads of corrupt regimes. We agree with the UK
Government that conditionality should not punish the poorest people
for the sins of their governments."
Agree. The Coalition Government
agrees that aid conditionality in government to government aid
needs to be used judiciously to ensure that the needs of poor
people are met but that aid is not misused by governments. The
UK's approach in cases where we have serious concerns about the
partner government's commitment to poverty reduction and good
governance is to identify alternative delivery channels for aid,
such as non-governmental organisations, to ensure that the poorest
people are not unnecessarily penalised for the sins of others.
We would be equally concerned if a more rigid and inflexible approach
to the use of conditionality, driven by political decisions in
Brussels, resulted in frequent and disruptive interruptions in
high priority, poverty-focused aid programmes in partner countries.
The UK's strengthened approach to budget support
was introduced in July 2011 and includes a more thorough assessment
of each country's commitment to upholding human rights and international
obligations, as well as the country's commitment to combat corruption,
through more robust use of data, both at local and international
level. However, we do not support the introduction of "minimum
standards" which would risk excluding the very countries
that need financial support and where enhanced dialogue and technical
assistance would be likely to have greater impact and result in
greater benefit for poor people.
We welcome the proposals in the 2011 Communication
on 'The Future Approach of EU Budget Support to Third Countries'
concerning their approach to careful assessment of each country's
performance on human rights, democracy and rule of law. We also
support their proposals to raise political governance issues through
their dialogue on budget support with partner governments, with
a clear focus on commitment to fundamental values of human rights,
democracy and the rule of law. We will ensure that this is done
within the framework of agreed country-level dialogue and review
processes, involving all of the main development partners.
Recommendation 8: "We support both the UK
Government and the European Commission's focus on wealth creation
through the private sector. DFID needs to get clarification from
the European Commission on what this means in practice, how it
is to be achieved and in particular, how the Commission intends
to support local business and ensure access to finance for small
to medium sized businesses or entrepreneurs in developing countries."
Agree. As the UK has
done, we are pressing the EU to work more closely with the private
sector and to improve the business environment in developing countries.
We have pressed the Commission to focus on building local institutional
and business capacity; encouraging the development of Small and
Medium Enterprises and Cooperatives; and creating a business environment
conducive to growth through regulatory and legislative framework
reforms.
The 'Agenda for Change' Communication offers an opportunity
to increase the EU's support for developing competitive local
private sectors and increasing its focus on drivers for growth
and job creation. Furthermore, the next long-term EU budget negotiations
offer a significant opportunity to take advantage of the EU's
capacity to make large scale investments at a regional level and
press for better-focused support for regional economic integration,
which is a high priority for the UK's wealth creation work in
Africa.
We will work with the Commission on this Agenda at
official level in regular working groups. DG DEVCO has recently
restarted the EU's expert group on private sector development,
which will meet twice a year and will report to Member States
on its implementation of the Agenda for Change commitments and
its wider private sector development programmes. This will provide
clarification on the Commission's activities in practice and will
give the UK a chance to influence its future direction.
In addition, the Commission's recent work on 'blended
finance', where grants are combined with loans from financial
institutions, is an encouraging development. Such initiatives
have the potential to stimulate the private sector by leveraging
more investment into developing countries and by supporting the
infrastructure needed for economic growth and development. The
UK will continue to follow the progress of these initiatives with
active interest.
Recommendation 9: "Greater Policy Coherence
in Europe on development is a worthy aim. There has been a slight
improvement in the trade agenda and the Minister is optimistic
on the potential for coherence between Climate Change and Development
Policies. However, as African academics have highlighted, the
reform of the Common Agricultural Policy (CAP) could do more good
than anything else. DFID needs to take a greater role in UK Government
discussions highlighting the damage done by both tariff and non-tariff
barriers to the developing world. In particular DFID should press
Commissioner Piebalgs to engage widely in Europe on development,
challenging those with vested interests in the CAP and who oppose
its reform. There needs to be a much tougher approach to joined
up government on development."
Partially agree. The UK
Government agrees that radical reform of the Common Agricultural
Policy (CAP) is required as this could deliver strong benefits
to both the EU and developing countries. Some reform of the CAP
has already occurred; direct payments to farmers have largely
been de-linked from production, and export subsidies have reduced
from €15 billion in 1989 to €166 million in 2010. The
least developed countries, and countries from the African, Caribbean
and Pacific who have signed Economic Partnership Agreements, have
duty free and quota free access to the EU market.
DFID is already strongly linked in with cross-government
discussions with DEFRA on the CAP. Development objectives are
fully captured in the UK approach and DFID argues these development
objectives robustly and consistently. We agree however that the
EU could provide greater policy coherence between their agricultural
policy and development policy. The UK government will continue
to look for opportunities to press the EU and other Member States
to make further progress in this area
As the Committee noted, DFID already engages with
the Commission to ensure there is a strong focus on developing
countries in EU trade negotiations including Free Trade Agreements.
Recent successes include negotiations on the revised Generalised
System of Preferences regulation, where the UK successfully argued
for an increase in the products covered by the scheme and to limit
the impact of safeguards measures which would have restricted
imports to the EU of products important to many developing countries.
DFID has also been actively engaged throughout the development
of the Trade and Development Communication. In addition to our
response to the Public Consultation, the UK Government coordinated
a joint Ministerial letter with like-minded member states to the
Commission to maximise our influence and ensure key objectives
were realised. The strategy set out in the Communication has taken
many of these points as a result.
Recommendation 10: "We have concerns that
although joint programming has the potential to prevent the overlap
of Member State bilateral programmes and reduce transaction cost
for recipient countries, the European Commission does not necessarily
have the capacity or the expertise to lead the coordination. The
lead donor who coordinates policy for bilateral donors should
be the one with the most experience in the area and a proven track
record."
Agree. Wherever possible
joint programming should be led by the partner country government
and the UK will continue to encourage and support partner governments
to take a lead in donor coordination. We agree that joint programming
should be used where it will add value to existing partnerships,
and should involve the most experienced donor in the area taking
a lead role. Coordination must be pragmatic and sensitive to local
circumstances in the partner country, and we must avoid any inflexible
top-down initiatives which would increase transaction costs in
Brussels, capitals and at the country level.
Joint Programming should only be used to help deliver
maximum aid impact at country level, by simplifying and building
on existing mechanisms, rather than duplicating. This approach
is in line with the Conclusions of the Busan High Level Forum
on Aid Effectiveness, which agreed principles for EU joint programming,
including that it is: "led by the partner country wherever
possible, is based on a partner country's national development
strategy and is aligned to the partner country's strategy and
programming cycles"; "kept simple and pragmatic and
conducted at partner country level in order to respond to specific
needs and the situation on the ground"; "should build
on the comparative advantages of all EU donors"; and "flexible
and avoid parallel processes".
Recommendation 11 "We support the Commission's
proposals for differentiated partnerships and in particular, that
there should be a reduction in the number of countries in which
the Commission has a programme. However, the Commission should
go further. So far the proposals have been focused on the Development
Cooperation Instrument. We believe that this should also cover
countries who receive funding under the European Neighbourhood
Partnership Instrument and those who are members of the African,
Caribbean and Pacific group covered by the European Development
Fund".
Partially agree. We strongly
support the Commission's intention to refocus its development
aid on the poorest countries and cut bilateral aid to Emerging
Economies and other Upper Middle Income Countries (UMICs), as
they "graduate" from traditional aid relationships.
We expect the Commission to propose similar arrangements for the
EDF. The new Partnership Instrument (PI) will provide mostly
non-ODA funding, at a significantly reduced level, for strategic
cooperation between the better off partner countries and the EU
in areas of mutual interest such as trade and economic cooperation.
We will continue to press the EC to ensure that all EU funding
channels target the poorest people, whether they operate in Low
or Middle Income Countries.
We do not agree that European Neighbourhood Partnership
Instrument (ENPI) should be subject to similar differentiation.
EU activities under the ENPI address both development and important
political priorities. For instance, the EU is playing an important
role in supporting the reforms of the Arab Spring.
Recommendation 12 "Whilst we approve of the
concept of budget support we also recognise that it has its limitations
when countries are emerging from conflict and are fragile. It
is only suitable in countries with sound administrative capacity
and a reasonable record of pluralism and human rights."
Partially agree. We have
considered and indicated our agreement in principle to the EU's
proposals to potentially provide budget support to fragile states,
e.g. Haiti or Sierra Leone, to assist with critical state-building
needs in the form of the new "State Building Contracts".
We will want to review early experiences of this instrument carefully
to ensure that it is well targeted, managed effectively, is not
prone to corruption and achieves positive developmental results
on the ground.
The UK's own approach to fragile states or those
emerging from conflict is that we will only consider the provision
of budget support (or other types of financial aid) if partnership
commitments are met and we assess that budget support can achieve
better results and value for money than other instruments. This
requires a careful assessment of all of the relevant risks and
will often involve the implementation of supporting measures to
mitigate risk such as providing direct UK support to public agencies
in these countries to manage funds effectively and transparently.
These decisions can only be taken on a case-by-case
basis with Ministerial oversight and approval at all of the key
stages of the decision-making and implementation process. We do
not support the introduction of "minimum standards"
of eligibility for either general or sector budget support, but
instead focus on careful and continuous assessment of the credibility
of reform plans and commitment of the partner government to strengthen
standards of public administration and good governance.
Recommendation 13: "We do not support the
European Development Fund (EDF) becoming part of the main European
Commission budget in 2014, six years before the expiry of the
Cotonou Agreement. EDF budgetisation should only be considered
if: there is a shift in European Commission budget funding away
from MICs to the poorest people and the poorest countries; it
can be used as a way to get other member states to contribute
more; and there is thorough consultation with the ACP. The future
of the EDF should be discussed in parallel to the future of EU-
ACP relations."
Disagree. The EDF currently
represents half of all off-budget expenditure and the future of
the EDF will be negotiated as part of the Multiannual Financial
Framework. The Coalition Government is concerned by the lack of
transparency in the proposals to move some contingency budget
lines, worth €28 billion, outside of the budget in the next
Multiannual Financial Framework (MFF). The overriding Coalition
Government objective for the MFF negotiations is budgetary restraint
and for this reason, we would wish to see all off-budget lines
placed inside the budget, but without increasing the overall value
of the budget. The UK wants to see all items included in the
budget to ensure proper clarity and sound financial management.
The UK will not accept changes to the EDF which might
prejudice its current effectiveness, focus, allocation criteria
and unique partnership model. The fundamental principles of the
Cotonou Agreement must be upheld.
Recommendation 14: "In light of the results
of DFID's Multilateral Aid Review we are not convinced that the
Development Cooperation Instrument (DCI) should get a larger percentage
increase in its funding than the European Development Fund. We
recommend the UK Government negotiates for a smaller increase
to the DCI unless efficiency and effectiveness is significantly
improved."
Partially Agree. The UK
opposes increases beyond real growth in any budget headings and
believes that the Commission's proposed funding level for the
Development Cooperation Instrument (DCI) in the next Multi-Annual
Financial Framework (MFF), covering the period 2014-2020, is too
high. However, we also think that maintaining or increasing the
proportion of Official Development Assistance (ODA) within a smaller
overall budget is a priority for the MFF. The Government agrees
with the assertion that DCI needs to be more effective and the
Commission's proposals for DCI address many of our concerns about
EU effectiveness: these include the better differentiation between
poor and better off countries, the stated intention to focus on
EU value added and to concentrate on results and increased efficiency.
We will continue to work with the Commission to ensure these
improvements are captured in the new DCI regulation currently
being negotiated by the Council and in the Commission's guidelines
for implementing EU development programmes.
Recommendation 15: "We agree with the Minister
that the UK should continue to lead by example in making progress
towards the 0.7% target. It is only by meeting the target ourselves
can we continue to put pressure on other EU Member States to do
the same, particularly, Germany, France and Italy."
Agree. The UK is on track
to reach 0.7% ODA:GNI from 2013, as set out in the Coalition Programme
for Government. Every EU Member State needs to set out their clear
and precise plans to meet this internationally agreed aid target,
as the UK has done. We will continue to urge others to keep their
promises to the world's poorest and most vulnerable, even in times
of austerity. We will do this through leading by example, through
bilateral exchanges and through opportunities at the EU level
and other international fora.
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