The Bond Disability and Development Group (DDG) submission to the IDC’s inquiry on the FCDO's approach to Value for Money

January 2025

About the Bond Disability and Development Group

The BOND Disability and Development Group (DDG) brings together over 110 UK-based development organisations – both mainstream and disability-specific – to ensure that the rights of people with disabilities are included in the UK development and humanitarian sectors. The DDG represents a large body of experience based on direct work with people with disabilities, their representative organisations, and the disability movement in low- and middle-income countries, as well as advocacy and policy engagement with service providers and policymakers globally. The DDG has a strong relationship with the Foreign, Commonwealth, and Development Office’s (FCDO) Disability Inclusion Team, and welcomes this opportunity to support them, the wider FCDO, and the International Development Committee’s (IDC) endeavours to ensure a stronger, more inclusive future for all.

Summary

1. FCDO has made important progress through defining Value for Money (VfM) through the "4Es" framework: Economy, Efficiency, Effectiveness, and Equity. However, there is limited guidance on how this framework is applied in practice.
2. While equity is increasingly incorporated into VfM, it is often treated as secondary, despite its importance in ensuring that marginalised populations are not excluded. The higher costs to reach marginalised groups should be seen as necessary for greater impact and reduced inequality.
3. Considering the human rights case, the promise to leave no one behind to achieve the SDGs, and the social and economic benefits of disability inclusion, FCDO should apply a disability lens in its VfM assessments. 
4. Although the impact of the merger is unclear due to limited publicly available information, this has likely made the approach to VfM less transparent and reduced the focus on equity, particularly in tackling inequality. Monitoring of VfM has also weakened, with reduced transparency and burdensome requirements for third-party monitoring.
5. FCDO should prioritise equity in its VfM assessments, simplify oversight processes, and commit to consistent, long-term funding.

1. How does the FCDO currently define the term VfM? Are there any other aspects of VfM that the FCDO should be considering in its assessment?

FCDO’s Programme Operating Framework (ProF) defines Value for Money (VfM) through the widely accepted ‘4Es’ framework: Economy, Efficiency, Effectiveness, and Equity. However, there is a lack of publicly available information regarding how this framework is applied in practice or the specific guidance provided to staff for its implementation. Business cases for recent FCDO programmes typically follow the 4Es model, with some incorporating cost-effectiveness. Yet, there seem to be differences in how the framework is interpreted and applied.

The fourth ‘E’

The inclusion of the ‘fourth’ E, Equity, is essential if FCDO is to ensure that VfM does not exclude those harder or more expensive to reach. Approaches to VfM increasingly include equity, however, it is often seen as an add on rather than a core component of VfM assessments.

Achieving inclusion and equity can cost more. If interventions incorrectly equate value on having a low cost per beneficiary that only reaches those who are easier to reach, they will not be effective and can exacerbate inequalities[1]. These higher costs should instead be considered ‘necessary’ to maximise the effectiveness of an intervention and reduce inequalities, rather than undermining other aspects of VfM.

We recommend VfM approaches must consider the following:

• Equity is both a cross­cutting and a stand­alone issue when assessing VfM of global development programmes. FCDO should frame equity as central to the success of a programme rather than implying a trade-off between equity and economy/efficiency/effectiveness.
• Taking a ‘do no harm’ approach that avoids incentives which discourage actors from reaching ‘hard-to-reach’ groups. Recent evidence has indicated that the cost-per-beneficiary analysis which formed a crucial part of DFID’s 2019 Approach to VfM discouraged grantees from budgeting to fully safeguard persons with disabilities as the costs associated with disability-inclusive safeguarding can be seen as expensive[2]. The FCDO should review its approach to securing VfM in development programmes, ensuring these considerations do not adversely impact on the ability of programmes to effectively safeguard people with disabilities[3].
• Equity should be considered throughout the results chain, from procurement of inputs to the monitoring of outputs and outcomes. Procurement of goods and services throughout the project should seek to enhance equity, for instance requiring that technologies be accessible, and where possible by supporting suppliers who come from marginalised communities.
• If equity is seen as a core component of VfM assessments, then investment in the full and meaningful inclusion of people with disabilities is hugely important. This involves accepting that in some cases it means a higher cost per beneficiary, not to interpret this as ‘expensive’ or requiring additional justification or impact. The fact that an investment is successfully improving the lives of some of the most marginalised people in the world is proof of VfM in itself.
• Ensure the cost drivers of disability inclusion are identified and justified, giving clarity on why unit costs might be higher than a programme that does not include people with disabilities. For example, programmes should explain where costs, such as time taken to identify hard to reach children with disabilities, are essential in order to reach people with disabilities, and explain how other nonessential costs will be kept down.

VfM and disability inclusion

VfM and disability inclusion are often perceived to be in opposition. This is usually because VfM incorrectly equates ‘best impact’ with one that ‘reaches the most people for the lowest cost’. This negatively affects people with disabilities, particularly those with complex needs such as deafblindness, and those experiencing intersectional inequalities, such as women with disabilities, who are often harder and more expensive to reach. The recent IDC report reflects this situation, with only around a third the UK’s bilateral Official Development Assistance marked disability inclusive and less than 1% targeted at people with disabilities[4].

Investing in the inclusion of people with disabilities is fundamentally about upholding and defending human rights, whilst also making economic sense. A number of papers clearly make the economic case for disability inclusion in development[5], providing evidence of the added benefit and increased VfM investing in disability inclusion offers.

Exclusion of people with disabilities is costly. It limits the opportunity of nearly 1.3 billion people, or 16% of the global population from contributing to national and global income[6],  impoverishing and increasing the economic burden on families, and increasing reliance on costly social welfare spending[7]. For example, a study in Bangladesh demonstrated that excluding children with disabilities from education was costing the government $26 million per year due to the reduced earning potential of person with disabilities as a result of lower education levels[8].

In contrast, investing in people with disabilities creates diverse societies and leads to more productive and profitable economies[9]. If people with disabilities are able to access livelihoods without discrimination, this opens up new opportunities to contribute economically[10].

But the economic benefits of inclusion are far wider than direct access to income generating work. For example, investing in inclusive education can lead to increased human capital, employment and better self-sufficiency, reducing reliance on social protection and welfare schemes and decreasing government spending on these programmes[11],[12]. Empowering people with disabilities to live more independently provides important implications for gender equality, since more than three-quarters of unpaid care work in the world are carried out by women and girls[13].

The human rights case, the promise to leave no one behind to achieve the SDGs, and the social and economic benefits of disability inclusion, means FCDO cannot afford not to apply a disability lens in its VfM assessments.

2. To what extent did the merger of DFID and the FCO affect what the FCDO considers to be VfM? 

Apart from the short mention of VfM in the ProF (mentioned above), there are limited publicly available documents articulating FCDO’s approach to VfM. It is also unclear what internal guidance staff receive on VfM, making it difficult to assess the full extent of the merger to this approach.

Evidence demonstrates that the departmental merger and cuts undermined the UK’s position on leave no one behind[14] indicating a reduced[15] prioritisation of equity in its VfM considerations. Many projects that tackled root causes of inequality were cut in preference to others in several areas and highlighted in the published Equalities Impact Assessment. Additionally cuts in technical capacity since the merger has particularly impacted programme implementation. This decrease in technical skills could lead to inaccuracy in assessing what counts as VfM, particularly when considering equity.

The merger bought together some markedly different processes, language, roles and responsibilities, and to some extent cultures, which may have impacted how different teams and individuals conceptualise and approach VfM. Whilst the full impact of the merger on VfM is hard to assess externally, appetite of the UK government to take on the risk, expense and complexity of the ‘harder cases’ may have been eroded by the cuts and the merger combined. It is worth noting several key points and areas for concern:

Delivering value to who?

DFID's approach to VfM was built on the principle that VfM calculations should focus on delivering 'value' to the people targeted by its programs and policies[16]. The Smart Rule on VfM began by emphasising DFID's commitment to maximising the impact of every pound spent, aiming to improve the lives of poor people through economy, efficiency, effectiveness, and equity, before recognising the importance of ensuring value for the UK taxpayer. In contrast, the FCDO's ProF framework defines VfM exclusively in terms of the value it provides to the UK taxpayer rather than the need for sustainable impact to improve the lives of those ODA targets.

DFID's policies and guidance on equity

Equity was mentioned in DFID’s original VfM framework in 2011 as a factor to consider and was then formally incorporated into its VfM framework as the fourth E. The Smart Rules explicitly detail how equity and VfM could interact, stating: “If paying a bit more means the programme is more efficiently implemented, outcomes more effectively met and/or greater equity is achieved, then that payment is likely to be justified.” In contrast, the ProF does not provide any clarification on ‘Equity’.

Additionally, in 2019, ICAI found that a substantial number of DFID programmes contained objectives around reaching marginalised groups. The additional costs of doing so were discussed in their VfM assessments and justified, based on need[17].

Building the evidence base for equity

DFID's Smart Rules also acknowledged that a lack of evidence should not be considered an obstacle to considering VfM. Instead, this was framed as an opportunity to build a stronger evidence base with each new programme, ensuring future VfM assessments are guided by increasingly detailed and nuanced information. DFID also tested methods for incorporating equity into VfM assessments, such the ‘marginalisation weighting’ adopted in the Girls’ Education Challenge.

We propose the following recommendations:

• The UK government should take steps to ensure that equity is clearly signalled to staff as a priority, and not an optional extra to be sacrificed when budgets are reduced, with linked monitoring and enforcement that meaningfully delivers on equity alongside other VfM considerations.
• The FCDO should provide clear guidance and build technical capacity of staff  to ensure equity is incorporated  into VfM considerations. Guidance should be widely disseminated cross-departmentally and monitored to ensure effective integration into VfM discussions and informs business case decision-making. When reissuing or updating guidance, FCDO could consider adopting a similar approach to the playbook on disability rights which has recently been launched by the U.S. Department of State[18]. This playbook shows employees “how they can incorporate disability issues into their own work,” and outlines how inclusion intersects with U.S. foreign policy.

3. How effective is the FCDO at monitoring the delivery and outputs of its programming to ensure its achieving VfM? Is there a cohesive approach across the merged FCDO? 

Evidence has shown that the departmental merger and cuts have reduced transparency[19], critical for monitoring and accountability of VfM. FCDO must improve their quality, disaggregation, and transparency of data to enable better tracking and accountability of VfM in its programming. FCDO could also include requirements on reporting on VfM in proposals and programmes, enabling more information on VfM being achieved in specific programmes.

We support the principle of third-party monitoring and evaluation; however, it is essential to establish a shared and clear understanding of what constitutes VfM in this context. Additionally, these requirements can be overly bureaucratic and burdensome for third-sector organisations, especially grassroots, including Organisations of Persons with Disabilities. This diverts time and resources away from programme implementation, potentially undermining the original objectives, and placing undue burdens on local actors.

4. How could the FCDO improve its oversight mechanisms to ensure VfM of its ODA budget?  

A rights based VfM agenda must be driven by the need for greater accountability to individuals living in extreme poverty, making it essential to include their voices in VfM assessments and oversight mechanisms. We encourage all development actors, including FCDO to utilise participatory planning and feedback mechanisms, with appropriate facilitation, ensuring the inclusion of people with disabilities, and their representative organisations, in VfM assessments.

Clearer, more widely understood criteria and proportionate requirements for programme providers would be highly beneficial to oversight mechanisms. A move towards more predictable, flexible and longer-term funding models, could also reduce the perverse incentives created by short-term funding cycles, such as "use it or lose it" spending.

We support the continued role of The Independent Commission for Aid Impact (ICAI) in overseeing and scrutinising the effectiveness of UK aid spending.

6. Does the FCDO’s funding model impact the cost effectiveness of its aid budget? 

FCDO's preference for commercial contracts over non-commercial grants negatively impacts VfM by forcing applicant NGOs to invest in expensive high-level technical expertise for commercial approaches, including hiring specialist staff and providing training. It can also exclude organisations that lack the resourcing to manage commercial contracts, particularly smaller, local civil-society groups, including OPDs.

Decisions on cuts to where ODA is spent, including high in-donor refugee costs, negatively impacts the effectiveness of its aid budget to the most marginalised. Since 2019, the UK’s commitment to Leave No One Behind’ has been largely absent as a core consideration and principle, alongside decisions and changes made to its international policies, programming and investments. It is important to underscore that the SDGs must be implemented with LNOB as a foundational principle, because of the lack of inclusive progress to date[20]. 

The cuts to ODA disproportionately impacted the poorest and most marginalised communities across the globe. The DDG and its members provided a list to the IDC on how devastating the cuts have been to a large number of programmes that were providing specific support to people with disabilities in poverty-affected areas[21][22], [23][24]. It is critical that lessons are learnt from the cuts and the mechanisms put in place to improve decision making around allocation of resources to improve the effectiveness of UK aid spending.

FCDO's funding approach has also had significant effects, both on the number of people reached and on overall cost-effectiveness. The short-term, stop-start nature of FCDO funding in recent years has posed particular challenges for development NGOs[25]. Although the FCDO has since restored some funding, these issues remain a concern. FCDO should be committing to provide financing, which is consistent, locally led, reliable and long-term.

7. To what extent does the philosophy of aid at the FCDO align with its finance delivery partners, including British International Investment, and other Multilateral Development Banks? 

As previously highlighted by the IDC, there are concerns regarding BII's lack of focus on the inclusion of marginalised groups, which could potentially undermine the FCDO’s efforts on disability inclusion. The IDC also raised valid questions about the extent to which the FCDO targets poverty reduction and who the “ultimate beneficiaries” of BII’s investments are given the greater emphasis on financial return. These concerns are particularly relevant when considering a Value for Money (VfM) approach that aims to create the maximum value for the populations UKAID seeks to support, in accordance with the International Development Act.