The new UK aid strategy: comments and questions

A new UK aid strategy, ‘Tackling global challenges in the national interest’, was published on 23 November, as a Command Paper presented to Parliament by the Chancellor of the Exchequer, George Osborne, but with a Preface signed jointly by the Chancellor and the Secretary of State for International Development, Justine Greening.

The paper makes the case for a new aid strategy, focusing more on global problems. It identifies four new strategic objectives. It details new spending commitments associated with each objective. And it summarises a reinforced commitment to value-for-money.

Complementing the strategy, the outcome of the Comprehensive Spending Review was announced on 25 November. The overall level of spending is protected by the 0.7 legislation, but there is a potentially significant shift of funding away from DFIDDepartment for International Development and towards other Government Departments. There is also a commitment that DFIDDepartment for International Development will save £400m in efficiency savings ‘by 2019-20’.

There are other reviews underway, including a civil society review, a Bilateral Aid Review and a Multilateral Aid Review. It is too soon, therefore, to draw final conclusions about the overall future shape of the UK development programme. At this stage, however, some immediate conclusions stand out, and many questions arise. In brief:

• First, the overall shift in emphasis from country poverty reduction to global challenges is entirely consistent with current thinking on the future of development cooperation – and with the findings of the UK Parliament’s International Development Select Committee, in its report earlier in 2015 on The Future of UK Development Cooperation. Those who have advocated for such a shift should welcome the thrust of the new strategy.
• Second, this is only part of a larger review underway about the future of UK international development. Other components of the review include: the Civil Society review, the Bilateral Aid Review, the Multilateral Aid Review. Further, this is an aid-focused initiative, which does not fully cover the wider international development remit. The wide-ranging changes implied by this and subsequent reports reinforce the desirability of a White Paper in 2016
• Third, there are some undeniable tensions between e.g. the desire to serve British interests, and the fundamental definitions of what is or is not permissible under the DACDevelopment Assistance Committee (of the OECD) rules. It is important that the document references the need to abide by the rules, albeit with somewhat ambiguous wording about ‘spending under the International Development Act’. Is it also worrying that there is reference to the Government working to change the DACDevelopment Assistance Committee (of the OECD) rules?
• Fourth, there are unambiguous commitments to spend a greater share of the aid programme through Departments other than DFIDDepartment for International Development – possibly up to 25%. The National Security Council is identified as the lead agency for several new initiatives. Further, even if DFIDDepartment for International Development retains control over most oda spending, as it does at present, or has access to cross-Government Funds, it will have some difficulty working with the ever-greater level of earmarking associated with the new strategy.
• Fifth, a geographic ‘re-focus’ towards fragile and conflict-affected states implies a re-focus away from some others. Possible ‘losers’ might include middle income countries. Is there an implicit graduation strategy?
• Sixth, it will be important to clarify the implications of the new strategy for the tying status of UK aid, in particular with respect to the research funds – and hopefully to insist that all spending is untied across the portfolio. Why, by the way, is there such a heavy emphasis on health in the research funding announcements? Is health thought to be the only area in which the UK has comparative advantage?
• Finally, accountability will have to be managed. Will ICAI cover all aspect of aid spending, including that by Departments other than DFID? And will the International Development Select Committee have overall oversight?

Before returning to these issues in more detail, though, a quick summary.

What does the new strategy say?

            The overall framing

The overall framing is that a re-think is required because global issues are more prominent than previously, and these affect both the development prospects of poor people, and the prosperity and safety of the UK. In the words of the Preface

‘our aid budget will be restructured to ensure that it is spent on tackling the great global challenges – from the root causes of mass migration and disease, to the threat of terrorism and global climate change – all of which also directly threaten British interests.’

The document says that all manifesto commitments will be met in full. It also says that the new priorities are consistent with the new Sustainable Development Goals.

            The strategy: Four new strategic priorities; Geographic re-focus; a cross-Government approach; reforming the ODAOverseas Development Assistance rules

Four new strategic priorities are identified, viz

• Strengthening global peace, security and governance: the government will invest more to tackle the causes of instability, insecurity and conflict, and to tackle crime and corruption. This is fundamental to poverty reduction overseas, and will also strengthen our own national security at home.
• Strengthening resilience and response to crises: this includes more support for ongoing crises including that in Syria and other countries in the Middle East and North Africa region, more science and technology spend on global public health risks such as antimicrobial resistance, and support for efforts to mitigate and adapt to climate change.
•  Promoting global prosperity: the government will use Official Development Assistance (ODA) to promote economic development and prosperity in the developing world. This will contribute to the reduction of poverty and also strengthen UK trade and investment opportunities around the world.
• Tackling extreme poverty and helping the world’s most vulnerable: the government will strive to eliminate extreme poverty by 2030, and support the world’s poorest.

It is important that the new strategic priorities are consistent with existing legislation and international rules. In a carefully worded paragraph, the document says that

‘The government will continue to ensure that all spending under the International Development Act meets its provisions, in particular that this spending furthers the sustainable development and welfare of developing countries and is likely to contribute to a reduction in poverty. The government will also continue to ensure that all its development spending is in line with OECDOrganisation for Economic Cooperation and Development rules.’

The document promises a ‘geographic re-focus’, with more funding to fragile and conflict-affected states, including Syria and other countries in the Middle East and North Africa. More detail is promised in the Bilateral Aid Review.

A cross-Government approach is promised, with ‘more aid administered by other Government Departments’. Three cross-Government funds are noted: the Conflict, Stability and Security Fund (CSSF); a new ODAOverseas Development Assistance crisis reserve; and a new Prosperity Fund. The International Climate Fund is not mentioned in this section.

On the definition of oda, the document says that

‘The government will continue to work closely with other countries to modernise the definition of ODAOverseas Development Assistance at the OECD, ensuring it reflects the breadth of the new international development agenda set by the new UN Global Goals, and fully incentivises other countries to meet these goals.’

            Strengthening global peace, security and governance

There will be a focus on tackling the root causes of conflict, including weak and unstable institutions. The UK will convene a global anti-corruption summit in 2016. The National Security Council will coordinate strategies for countries and regions at risk of instability. Development will be coordinated with diplomatic work.

Funding of the CSSF will rise by about 30%, from £1bn in 2015/16 to £1.3bn by 2019/20. This will include a substantial expansion of work in Eastern Europe and the Balkans, and in North Africa.

50% of DFID’s budget will be allocated to fragile states and regions. There will also be funding for the BBC World Service.

            Strengthening resilience and response to crises

Reference is made in a box to climate finance, already scheduled to rise to at least £5.8bn over five years. In addition, new commitments are made:

• A new £500m oda crisis reserve;
• A further £70 m for the Fleming Fund to cover drug resistance and laboratory capacity;
• Further support of £90m to the UK Vaccines network;
• A new Global Challenges Research Fund of £1.5 bn over 5 years, to ‘harness the expertise of the UK’s world leading research base to strengthen resilience and response to crisis’, especially in the field of health;
• A new Ross Fund to spend £1bn on R and D related to infectious diseases;
• Bigger, better and faster humanitarian response capability.

Promoting global prosperity

Again, there is a series of announcements:

• A new Prosperity Fund, led by the National Security Council, and worth £1.3bn over five years;
• An investment of at least £735m in CDC;
• Support to the IMFInternational Monetary Fund Poverty Reduction and Growth Trust;
• A new Energy Africa campaign.

Tackling extreme poverty and helping the world’s most vulnerable

The document commits to Leave No-one Behind, and to prioritise girls and women. It says that

‘Delivering the ‘basics’ of development and finishing the job of the Millennium Development Goals will continue to be central to the government’s approach to international development. The government remains committed to meeting in full all its manifesto commitments, including those on health, education, nutrition, water and sanitation and family planning’.

Value for money

There is a final chapter on Value for Money. The document reiterates existing commitments to independent evaluation and to transparency. It says that HM Treasury and DFIDDepartment for International Development will co-chair a working group, reporting to ministers, to ensure value for money’. It also announces an end to traditional general budget support and an extension of Payment-By-Results.

The Comprehensive Spending Review

The DFID website has the figures as in Table 1, distinguishing resource and capital expenditure. These numbers are rather hard to interpret, but imply that the overall volume of oda will rise as GNI rises, reflecting the 0.7 legislation; and that spending by other Government Departments will more than double, in absolute terms and as a share of total oda. The announcement also says that

‘DFIDwill make efficiency savings of over £400 million by 2019-20 through transformation of its administrative functions including improved central contract management, digital platform and technology. These savings will be recycled to deliver DFID’s aid commitments.’

More information is available in the Treasury Blue Book, published on the same day.

Table 1

Source: https://www.gov.uk/government/news/department-for-international-developments-settlement-at-the-spending-review-2015

Initial comments and questions

First, the overall shift in emphasis (at the margin or maybe even not at the margin) from country poverty reduction to global challenges is entirely consistent with current thinking on the future of development cooperation – and with the findings of the UK Parliament’s International Development Select Committee, in its report earlier in 2015 on The Future of UK Development Cooperation. Those who have advocated for such a shift should welcome the thrust of the new strategy.

Second, the latest announcements form only part of a larger review underway about the future of UK international development. Other components of the review include: the Civil Society review, covering relations with and funding of NGOs (a topic not discussed in the paper); the Bilateral Aid Review, covering the allocation of aid between countries and the substantive content of country programmes; and the Multilateral Aid Review, covering funding through multilateral agencies like the World Bank, the UN and the EUEuropean Union (none of which is mentioned in the document). All these are expected in early 2016.

Further, the new strategy is an aid-focused initiative, albeit with a short box on Beyond Aid issues: it does not fully cover the wider international development remit. There have been suggestions from outside DFIDDepartment for International Development that the outcome of all the reviews should be brought together in a comprehensive White Paper in 2016. The wide-ranging changes implied by this and subsequent reports reinforce the desirability of such a document. Is it important, by the way, that the Aid Strategy is a Treasury-led Command Paper? Does it, for example, have the Cabinet imprimatur of a White Paper?

Third, it is tempting to parse the document and try to see which group of civil servants or outside interests inserted which particular phrase or paragraph. That is not very fruitful, but there are some undeniable tensions between e.g. the desire to serve British interests, and the fundamental definitions of what is or is not permissible under the DACDevelopment Assistance Committee (of the OECD) rules of what can and cannot be counted as official development assistance. It is important that the document references the need to abide by the rules and stresses Value-for-Money principles, albeit with somewhat ambiguous wording about ‘spending under the International Development Act’. Is it also worrying that there is reference to the Government working to change the DACDevelopment Assistance Committee (of the OECD) rules (in unspecified ways)?

Fourth, the implications for DFIDDepartment for International Development are not as clear as they might be. There are unambiguous commitments to spend a greater share of the aid programme through other Departments, as illustrated in Table 1. This might amount to 25% by the end of the review period, compared to about 15% today. In some cases, spending might be through cross-Government Funds in which DFIDDepartment for International Development has a say, or to which it has access; but that might not be universally true. The National Security Council is identified as the lead agency for several new initiatives, odd since it is not an executive branch of Government: formally, it is a Cabinet Committee. The oda reserve is not well described. Further, even if DFIDDepartment for International Development retains control over a large part of oda spending, as it does at present, it will have some difficulty working with the ever-greater level of earmarking associated with the new strategy.

Fifth, it is necessary to read between the lines. For example, a geographic ‘re-focus’ towards fragile and conflict-affected states might imply a re-focus away from some others. It is not clear which these might be, and further clarification is promised in the Bilateral Aid Review. However, the most likely ‘losers’ will be middle income countries. Some will think this is a bad answer, especially when middle income countries contain many poor people; others will think that graduation is the right thing to do, provided it is calibrated and gradual. Perhaps assistance will continue to be provided to middle income countries via special funds like the new Prosperity Fund, or via multilateral agencies?

Sixth, it will be important to clarify the implications of the new strategy for the tying status of UK aid. At present, there is very little tying, though aid to NGOs and some other items of expenditure may qualify under this head. The description of some of the new funds announced in the strategy document suggest that this policy has been reviewed. This applies in particular to the research funds. Unofficial information is that the commitment to untied aid has not been abandoned; it is to be hoped the science funders know this.

Why, by the way, is there such a heavy emphasis on health in the research funding announcements? Does agriculture not count? Or engineering? Or even development studies? Is health a particular UK comparative advantage? Or the only field in which the UK has such an opportunity?

Finally, accountability will have to be managed carefully. It is important that the strategy lays great emphasis on Value-for-Money and on independent evaluation, especially through ICAI, the Independent Commission on Aid Impact. It will be important that new VFM rules, and new work by ICAI, cover all aspect of aid spending, and not just those associated with DFID. Will the Select Committee on International Development oversee all spending across Government?