The Department for International Development has been told that the poorest must not lose out as the department increases its focus on aid being used to support economic development.
In a review of the department’s economic development strategy, the committee said that the plan fails to focus sufficiently on reducing poverty to help the poorest and most marginalised, leaving a risk that an economic boost for UK trade could lead to developing countries becoming the "losers" from aid.
International development secretary Penny Mordaunt had previously pledged a "bold Brexit-ready" plan to boost trade with developing countries to provide a clear "win-win" for both Britain and the world’s poorest.
Although the committee accepted the aim to achieve UK wins in trade and investment, it warned that this must come with a guarantee that the most marginalised and vulnerable in those countries do not lose out.
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Committee chair Stephen Twigg said that DfID believes that more economic growth leads to fewer people in poverty, but added that while it is acceptable for UK companies and the government to score "wins" in trade and investment in the world’s least developed countries, “it’s not just profit margins that count”.
He added: “We welcome the fact that the department lists the reduction of poverty as a key ideal in economic development, but evidence to our inquiry suggested that a strategy heavily weighted towards trade alone can actively disadvantage the most marginalised groups.
“Girls and women, disabled and young people will lose out unless DfID undertakes to protect them. The upcoming Global Disability Summit presents an opportunity to focus strategy on how to reach people with disabilities.”
Twigg also highlighted that similar concerns have been raised by the committee in its recent report examining the government’s definition and administration of official development assistance (ODA).
In a report published in June, the committee said the department needed to be given the power to approve spend on humanitarian aid which is increasingly spent by other departments including the Foreign Office, which can include an increased focus on economic development.
Today, Twigg added that there are positive signs that the department is looking to individual diagnostic tools to better inform country plans, “but we’re still missing evidence that the agencies are working together for maximum impact”. He added: “We will continue to scrutinise the department’s work, particularly about cross-government funds.”
Speaking to Civil Service World last month, DfID permanent secretary Matthew Rycroft said tightening up links with other departments was “a high priority” for him and his secretary of state Penny Mordaunt.
It is right, he said, that other departments spend funds classed as ODA, “because they have areas of expertise and other interests, and all of it should end up to be something that is more of the sum of its parts”. But he added that DfID wants to ensure the discipline applied to its own spending is in place elsewhere.
“I wouldn’t want anyone in DfID to think that the right answer is for us to spend 100% of ODA. That would be the wrong answer,” said Rycroft, “The right answer is for it to be distributed but for there to be systems in place to allow everyone to rise up to the levels of the best in terms of value for money and coherence, and to make sure that we’re all doing it with British interests in mind.”
On the role of economic development in aid, Rycroft told CSW that one of his priorities in international development was to “find the people in the system who are trying to do the right thing and then empower them and encourage them and then use our aid budget to catalyse other people to come in, because even as a very generous 0.7% donor, we – the UK – are never going to solve the world’s problems on our own, but we can have a transformative effect of leading coalitions of other donors, of international organisations like the UN and the World Bank and, critically, of the private sector".
This role for the private sector was crucial because there is “way more capital in the private sector than in even a very generous aid budget”, he added.
“So trying to find a way of encouraging the private sector to invest in those countries, and building jobs and growth to eradicate poverty, is going to be good for those countries in the long term, and good for the UK as it is creating future trading opportunities.”