Exploring the cost-effectiveness of unconditional cash in achieving International Development Committee priorities

Submission to open call for Parliamentary Inquiry ideas - December 2024

This inquiry would look at the impact, efficacy and value for money of unconditional cash transfers (UTCs) across the international aid functions of the Foreign, Commonwealth and Development Office, and Official Development Assistance (ODA) across Government departments.

Whilst a DFID report from 2011[1] notes the benefits of cash transfers to promote a range of development outcomes, and their ‘thorough’ but ‘uneven’ evidence base, less evidence exists for unconditional cash transfer programmes.[2] Whilst unconditional cash has become a norm as an immediate and temporary response following humanitarian disasters, there is now a growing body of research and practice regarding its impact on a range of other committee priorities such as: poverty reduction; climate resilience; conservation & biodiversity outcomes; green energy transitions; peacebuilding; food security and nutrition; health; and the empowerment of women and girls. Leading research from NGO Give Directly has demonstrated the cost-effectiveness of unconditional cash, as well as the impact unconditional cash can have in the long term on health and livelihood outcomes.[3] In October 2024 USAID released a position paper in support of this approach,[4] and multilateral institutions like the UN and INGOs like the WEF[5] and Oxfam[6] have also expressed clear support for UCTs.

Given the intersecting priorities of ensuring public money is spent efficiently and the impact of ODA is maximised, it is notable that, to our knowledge, the FCDO (or any other government department) has not carried out a review of the merits of conditional versus unconditional cash transfers in their programming. This is despite providing funding for numerous cash-based programmes, including unconditional ones like the CLARISSA pilot in Bangladesh.[7] It would make sense for government programmes to prioritise unconditional transfers, should it be found that through reducing administrative costs they can make programmes more efficient and cost-effective to deliver, and that through removing end-use conditionalities, they can produce stronger outcomes with a wider range of positive externalities for recipients.

Committee action in this area can not only advise on ways to improve the efficiency and impact of government programmes, but also provide data on best practice for practitioners in other sectors. Specifically, government policy could be developed and improved in the following ways:

●        Publication of the comparative cost-effectiveness of UCTs, CCTs and other development programmes on a range of committee-relevant outcomes;

●        Consider the adoption of an ‘unconditionality first’ approach to cash transfer programming, with conditionalities only used where there are valid and necessary reasons for doing so (beyond current advice which prioritises unconditionality only in emergency circumstances);

●        Production of best-practice guidance on the design, implementation and evaluation of unconditional cash transfer programmes for government departments and relevant stakeholders;

●        Scoping work on the longer-term economic and social impacts of unconditional vs conditional cash transfers, with a particular view to avoiding ‘cliff edges’ in programming and supporting income sustainability at programme end.

Thank you for considering this idea for an inquiry. If you require further information regarding this submission, please contact Equal Right as the lead organisation for this submission using the details below.[8]

Kind Regards,

Dr Patrick Brown

Executive Director, Equal Right

patrick@equalright.org