DfID needs more staff to manage aid budget, say MPs
Select committee calls on Treasury to relax rules so that Department for International Development can build capacity to ensure it allocates and manages aid budgets effectively
Headcount at the Department for International Development appears to have “fallen below what is required” to manage the UK aid budget, according to report from the International Development Committee published on Tuesday.
The select committee said it is “concerned that DfID’s own capacity could be affecting the effectiveness of UK aid", noting that although staff numbers have risen over the last six years, they have not kept pace with an increasing aid budget.
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In 2009-10, DfID had over 2,500 staff and a budget of £6.7m. By 2015-16 this budget had risen by 35% to £9.9bn – in line with the UK’s commitment to spend 0.7% of GDP on overseas aid. Staff numbers, however, had risen by just 15% to just over 2,800.
“DfID’s administrative capacity appears to have fallen below what is required to manage its increasing budget optimally, causing it to become more reliant on larger external organisations,” the report concluded.
MPs therefore urged the department to increase staff numbers and spend more of its budget on administration.
“This would allow it to better manage its own budget and make better use of small, and often more effective, organisations and programmes,” says the report, adding that: “If this requires a relaxation of Treasury rules, we would strongly urge the Treasury to do so, considering DfID’s unique budgetary position.”
MPs also want the Treasury to relax rules about how much of DfID’s budget must be used for capital budgets, and for the department to relax targets around the use of payment by results.
“We conclude that DfID works best when it works flexibly, and these strict rules and targets can be damaging to effective development and can lead to perverse outcomes,” said the report. DfID may judge the targets are correct at the moment, but “should keep them under constant review and be willing to relax them when appropriate, in order to have the flexibility required to spend effectively.”
Despite concerns over capacity, the committee stated that the proportion of wasteful spending at DfID is low. “We have not seen evidence that poor or wasteful spending is any more of a problem for DfID than any other government department or other international donors; instead we would assess it to be effective in its spending,” the report stated.
Rather it is worried about the increasing amount of aid money spent through joint funds and other Whitehall departments. Between 2015 and 2020, nearly a third (28%) of official development assistance (ODA) budget will be spent by other government departments such as the business department, Foreign Office and cross-government funds such as the Prosperity Fund.
MPs raise concerns about whether this money will be spent effectively, and over the transparency around spending through other departments.
“The allocation of ODA between different departments was done through a competitive process run by the Treasury,” says the report.
“The results of the competitive process have not been made clear and details of spend by other government departments are only made clearly available retrospectively. It is therefore difficult to conclude whether there is proper strategic oversight of all UK ODA spending and on whether it is being allocated most effectively.”
Spreading aid spending across government may also jeopardise the focus on using aid to reduce extreme poverty.
“We strongly reiterate our recommendation that poverty reduction should always be the primary purpose of any UK aid spending,” MPs say. They noted, however, that recent ministerial speeches and publications from DfID have indicated a shift towards using aid to further the UK’s trade agenda.
UK aid has been “untied” since 2001 – meaning it must not be conditional on aid spending being used to buy goods or services from the UK. However MPs heard concerns from witnesses that UK aid could become implicitly tied – “either structured in such a way that it is inevitable, or with a strong expectation, that it will be used to procure goods or services from the UK".
The report said: “While it remains to be seen how it works in practice, language surrounding leveraging aid for trade and creating opportunities for UK companies and the City of London needs to be used cautiously, so as not to create an impression that aid is being given conditionally.
“We ask that DfID provides us with a full assessment of the current risk of UK aid becoming implicitly tied, and how it is mitigating those risks.”
The committee has also become “increasingly concerned about the lack of emphasis on strategy within DfID at an operational level,” according to the report.
“While DfID is generally doing good work, it is not necessarily doing so in a consistent and coherent manner due to the lack of strategic guidance provided at an operational level,” it said.
The committee urges DfID to set a clear strategic direction for all policy areas, based on evidence and with sufficient flexibility to allow teams to adapt to specific circumstances.
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