Examination of Witnesses (Questions 100-119)|
WEDNESDAY 24 APRIL 2002
100. You are still convincedI know what
your answer will be but I will ask it anywaythat setting
targets in terms of GDP growth in countries is actually a valuable
way to drive your work?
(Mr Chakrabarti) No. The GDP growth target and the
share of GDP going to the poorest are not helpful targets. What
we really want to focus on is the number of poor people who are
living on less than a dollar a day so we want to move those two
targets on to what we call a poverty head count target.
101. That neatly brings me on to the multilateral
aid point. You have accepted quite honestly and candidly that
the European Union is making a complete hash of its aid projects
in that less is going to poorer countries than used to be the
case. Maybe I am straying into policy here but is it a policy
decision that 55 per cent of your multilateral aid goes to the
(Mr Chakrabarti) I will let Mr Lowcock explain the
exact budget mechanism but we do not actually have much control
over that. Some proportion of the EC money is negotiated, European
Development Fund, and there we do have some control. The rest
is just budgetised, in other words it is our share and as a member
of the EU we have to pay our proportion.
(Mr Lowcock) Yes. This is a charge to the Department
over which we have no control.
102. If you had a free hand you would like to
take all that money out and administer it yourself, give it to
the World Bank?
(Mr Chakrabarti) Yes, a range of possibilities exist.
I would like to improve it clearly to make it more effective.
If that was not possible over time then I would like to use it
on more effective channels.
103. As a Conservative Member of this Committee
I am acutely aware of the Pergau Dam problems. Is it the case
that there are still aid projects, British funded aid projects,
which are linked in some way to trade promotion?
(Mr Chakrabarti) No, no longer.
104. What about that dam in Turkey, the Ililu
(Mr Chakrabarti) That is not supported by us.
(Mr Lowcock) That is not funded by DFID.
105. How much of your money do you give straight
to NGOs and charities?
(Mr Lowcock) It is about £200 million a year
in recent years.
106. Which is very small, it is less than ten
per cent of your current budget?
(Mr Lowcock) Yes.
107. Why have you decided that is not an effective
way of spending taxpayer's money: funded aid?
(Mr Chakrabarti) I do not think we have decided that.
I think it is a question of absorpative capacity in the NGOs as
well, how much money can they take on and spend effectively because
they are quite lean and mean, that is one channel. Then there
are many other effective channels which we want to support as
well. The £200 million is by no means a small sum, it seems
108. Sure. I could not find this in the report
but it is in the summary of the report produced for Members of
the Committee. It says in that summary "In a poor country,
there are likely to be over 30 developed countries offering aid,
and a similar number of multilateral agencies, as well as a number
of international charities." If you are a very poor country,
you have this wealth of international goodwill, it must be tremendously
difficult for the Government to cope with maybe 100 different
organisations properly. Is it not more effective, instead of DFID
having its own people on the ground, to work through perhaps Oxfam
(Mr Chakrabarti) I think the problem still remains
for the Government there are hundreds of NGOs to deal with instead.
They have both actually to deal with, loads of NGOs and loads
of governments. What we need to do clearly on the Government side
is reduce the pressure on these governments. As you say, the capacity
for dealing with so many different donors is very small in those
governments and we are imposing very high costs on them. What
we are doing increasingly is trying to see if we can have common
frameworks between donors, to use the same audit systems maybe
so we might try and use the same sort of pooled mechanisms of
putting our money in, again trying to reduce the pressure on recipient
109. Why do you take a decision in a country
to have your own operation there? What would be influencing that
decision as opposed to working through an NGO
(Mr Chakrabarti) Or a multilateral agency?
(Mr Chakrabarti) I think in many countries of the
world, of course, we do not have our own operation, we do make
exactly that judgment, that we will do it through an NGO or through
multilateral agencies. Where we have our larger programmes, we
have essentially taken the decision that we can have quite a bit
of influence and shape things for the good. Even there I think
increasingly our programme managers are looking to see whether
we can share resources. "Do you need ten different education
advisers sitting in Dar es Salaam advising the Government and
different donors? Can you get down to two or three?" Those
are the sorts of questions our programme managers are facing day
in day out and actually making a real push amongst the donor community
to try and get some economies of scale really.
111. Can I just return to the targets. I forgot
to mention this when I was questioning you earlier. One of the
problems this report highlights, and indeed Members and yourself
highlight, is that these Public Service Agreements are very short
term, in a relative sense, they apply over three years, whereas
the time line for a typical DFID project may be many, many years,
and indeed be long term, whether you are having an effect on the
ground may be visible over a generation I suppose. Is that not
another problem with these PSAs, the way they are set up in relation
to your Department?
(Mr Chakrabarti) Yes, I think that is right. Development
is a long term business. The PSA horizon is three years which
is why we are trying to negotiate with the Treasury the idea that
we will move to a five year reporting cycle for the PSAs. If all
goes well I would like very much to use the current PSA and just
simply roll it over in the three years rather than inventing a
new one so we carry on with this PSA over many, many years.
112. How much of your time as the Permanent
Secretary has been spent in formulating and negotiating these
(Mr Chakrabarti) Since I took over as Permanent Secretarythis
is a guess, which is as much as I can doprobably two or
three days in discussion overall with staff, senior staff like
Mr Lowcock and others.
113. Two or three days?
(Mr Chakrabarti) Yes, overall.
114. If these are so important, if these are
driving your Department, you spend two or three days on them?
(Mr Chakrabarti) If I can just finish. Before I became
Permanent Secretary I spent quite a bit of time helping design
the PSA. I took the lead on the negotiations with the Treasury
team about how we might reshape the PSA in fact to answer many
of the questions posed by the NAO report. I put quite a lot of
time in before I became Permanent Secretary on this.
115. The senior grades of your secretaries,
your deputy secretaries and so on, how much of their time? The
senior management of the Department, how much of their time has
been spent on this?
(Mr Chakrabarti) The very senior management have spent
quite a lot of time. Obviously Mr Lowcock has been leading the
negotiations and discussions with all our staff and several of
the team behind have been doing that also over the last two or
116. Time well spent, Mr Lowcock?
(Mr Lowcock) We think that the PSA system provides
a number of advantages. It gives us clarity of purpose, it gives
us some benchmarks against which to measure the progress and it
enables us to bring other bits of Government in, which can influence
what we are trying to achieve, through the joint targets so we
do think this is a good system.
117. Can I ask one final question. My time is
up. Would it help your Department or hinder it in the good work
it does if our report suggested to the Treasury that actually
the PSA model that is applied, for example, to the Department
of Health is not ideal for your Department and actually you should
have a great deal more flexibility in the kind of targets you
set and the time line over which they apply? Would it help your
Department if we lent our weight to that argument?
(Mr Chakrabarti) I do not want the argument to run
that the Treasury has not been helpful. Actually the Treasury
has been immensely helpful in our discussions so far about changing
the nature of the PSA, how it should map on to the organisation
rather than as it did previously and also in terms of discussions
about the time line. They have been very open to suggestions.
I do not think they are just facing these issues just from us
actually. I think the PSA system has been evolving and the Treasury
has been in the forefront of trying to improve it.
Mr Osborne: That should guarantee you money
118. Like Mr Trickett I found this reporthe
used the word indigestiblevery difficult to read. One of
the things that did bounce up and smack me in the mouth was on
page 26, paragraph 2.13 under the heading "But difficulties
remain in measuring DFID's contribution to global poverty reduction."
It goes on to say "... with the majority of measures it is
not possible to determine the extent to which any achievement
is a result of DFID's efforts ...". To me that was very fundamental
and a very worrying statement for the report to make. Here we
are spending, what is it, £3.6 or £3.2 billion a year
and we are not sure whether it is making any effect or not. Can
you explain that more fully so you can assure me that it is not
going down the drain?
(Mr Chakrabarti) I can assure you it is not going
down the drain. I think it is having an enormous impact. We are
recognised internationally as being possibly the lead bilateral
donor. There has been an OECD review last year which again gave
us plaudits which I think is quoted in the NAO report. I think
we are pretty well regarded as being at the cutting edge of grant
organisations. The issue is more, it seems to me, about how we
can attribute all of the success to us or some of it to us and
that is difficult. There is no doubt attribution is difficult
when you are in a collective effort. If you take a defence analogy,
to what extent can you attribute the effort in a particular war
to one part of the alliance as opposed to another, they are all
actually a part of a whole. It is very similar in the development
119. A very basic question, the sort of question
that a constituent might ask me is do you know what this money
is being spent on? Do you know whether it is being spent effectively?
(Mr Chakrabarti) Yes, we do. At project level we have
indicators for whether we are succeeding. At more macro economic
level we can point to the successes we have had in influencing
countries or multilateral institutions to do better and what impact
that has had on a country. What we have not got yet, and this
is something we need to move on to I think in the next phase,
is better country evaluations. In the past we have been focusing
on projects, we have got lots of project evaluation information
which shows successful projects but we have not got the measure
at the country level of how we are doing overall. I think, because
at the country level so many donors are involved, and the Government's
own policies matter so much, we do need joint country evaluations,
which again the NAO report quite rightly recommends, to try and
see what the overall impact is and that is what we need to do