Simon Maxwell

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scrutinysmallScrutinising DfID:  A new report from the International Development Select Committee points to new themes in scrutiny of the UK aid programme.

A new report from the House of Commons International Development Select Committee points to themes that will recur in scrutiny of the UK aid programme: transparency, aid effectiveness, resourcing, and bilateral versus multilateral, as well as substantive issues like fragile states and climate change. A declaration of interest: I am a specialist adviser to the IDC, though was not involved in this report.

Transparency is underwritten by a new Aid Transparency Guarantee, which means that information about all expenditure over £500 will be published on the DFID website. It is not there yet, as far as I can see, but there is information about the initiative, and also about the International Aid Transparency Initiative, launched in 2008. Publish What You Fund will be pleased by the Committee’s endorsement. Karin Christiansen, who leads the organisation, has been a redoubtable campaigner for greater transparency, and for common reporting standards. It’s worth noting, though, that according to Publish What You Fund’s annual review, DFID is already in the top three donors, behind only the World Bank and the Netherlands. The Select Committee should ask about some of the UK’s multilateral partners, though to be fair most are in the top half of the league table. France, the US and Japan, on the other hand, are all in the bottom half – and probably beyond the Committee’s purview.

Aid effectiveness is the theme of the new Independent Commission on Aid Impact, whose membership was announced just the other day, and which will be accountable to parliament through the IDC. As I discussed in a previous contribution on doing aid centre-right, the political imperative behind a focus on results is obvious, and right, but the technicalities are complicated. Evidence to the IDC also pointed out that aid has complex and often indirect effects, for example in the field of governance. The macro-economics are also more difficult than simply drawing a straight line between a gift of cash in the UK and the building, say, of a primary school in Tanzania: sometimes, for example, aid is used, legitimately, to bolster foreign exchange reserves or pay down internal debt. Fungibility is also an issue: was the Government of Tanzania planning to build a primary school anyway, and does the aid therefore allow some other expenditure to take place?

There is continual pressure in the aid business to deliver measurable short-term results, with much current enthusiasm for randomised controlled trials. Claire Melamed at ODI has made a spirited contribution to this debate, favouring a results-based approach even for social and political interventions. ICAI will succeed if it can be equally determined to understand the impact of aid, but subtle enough to recognise that different kinds of aid work in different ways, and that all have multi-faceted impacts on the politics and institutions which drive development. The wording of the IDC Report suggests that it will be sensitive to these issues.

The issue on resourcing is about whether DFID will have the people it needs to manage a rising aid programme from 2013 onwards. When I went in to bat for the aid programme in front of the Treasury Select Committee, back in November, I noted that the admin budget was due to fall by a third. It turns out that this is true, but somewhat misleading, because ‘running costs’ will actually increase, by 6% over the period of the Comprehensive Spending Review. This will allow DFID to appoint 3-400 additional ‘frontline staff’. Cynically, my guess is that there will be some re-labelling of staff, from admin to front line, but I have no evidence for this. Instead, the evidence to the IDC was all about renting out floors of DFID’s headquarters in Palace Street, and saving on human resources and communications staff. DFID has even cut the number of Directors General and Directors.

Out-sourcing also turns out to be part of the solution, with technical assistance contracts being used to deliver services to developing countries. As someone who participates in that part of the aid programme, for example through the Climate and Development Knowledge Network, of which I am Executive Chair, I am naturally enthusiastic about the potential. I note, however, that the Committee – and DFID – will pay careful attention to impact, value for money and capacity-building in developing countries. Quite right.

On bilateral versus multilateral, both DFID and the IDC are waiting for the results of the three big reviews set up by Andrew Mitchell last year, covering respectively the bilateral, multilateral and humanitarian programmes. Another declaration of interest: I sit on the Senior Advisory Board of the humanitarian review. The Committee is holding its fire until the reviews are published, but picks up one important issue, which is that saving on admin costs is not a very good reason for increasing the share of aid given through multilateral channels. At first sight, DFID might argue that it can save on overheads by routing money through the World Bank, the UN or the EU. In fact, however, those institutions may have overheads which are higher than DFID’s own, and therefore represent worse value for money. I wonder whether the reviews will address that question. Probably not. In which case, this would be an excellent topic for the ICAI, and for further review by the IDC.

It is interesting, by the way, and not much discussed, that the UK has committed £2.6 bn to the next replenishment of the IDA, the soft loan window of the World Bank, for the period 2011-14. This is up from £2.13 bn for the previous period. I can’t work out whether this means the DFID share of the IDA will rise or fall, but the DFID increase amounts to 25%, whereas the World Bank says the overall increase is 18%, so this looks like a higher share. The UK was the largest contributor to IDA 15. Is this still true for IDA 16? And, in the interests of transparency, why is the full list of contributors not on the World Bank website?

I’m curious also as to whether the commitment means that DFID will spend a larger share of its total funding through the IDA. Andrew Mitchell’s written statement to parliament on 16 December did not make this clear. A PQ anyone?

Finally, on the substantive issues, the Committee does little more than tee up its current or forthcoming enquiries, including the World Bank, India, the humanitarian response to the floods in Pakistan, CDC, and infrastructure. All these will be worth watching.