Submission to the House of Commons International Development Committee
UK aid: other government departments inquiry

This submission examines the growing importance of OGDs in terms of UK ODA expenditure, the manner in which their mandate differs from DFID, and limitations concerning their scrutiny. It notes the significant risk that a greater role for OGDs will conceal a diminished focus on Africa. The author recommends a greater guidance role for DFID, and the bodies responsible for monitoring UK aid.

The International Development Act 2002 stipulates that:

“The Secretary of State may provide any person or body with development assistance if he is satisfied that the provision of the assistance is likely to contribute to a reduction in poverty.”

While the Department for International Development (DFID) must comply with the provisions of this Act, other government departments and non-departmental contributors (OGDs) are not bound by the requirement that official development assistance (ODA) expenditure be linked to poverty alleviation. Instead OGDs must adhere to OECD guidelines, which link qualification as ODA to “the promotion of the economic development and welfare of developing countries”.

Until 2010, the proportion of ODA spent by OGDs stood at less than 10% of the total, while the gross sum remained under £1 billion. The proportion of ODA spend by OGDs has since increased to 19.5% in 2015 and 26% in 2016. This surge has exceeded targets set by DFID, which had anticipated reaching 26% only in 2019/20. In raw numbers, OGDs were responsible for £3.5 billion of ODA expenditure in 2016; that is £1.1 billion more than in 2015 and £2.5 billion more than in 2011.

Where OGDs are responsible for ODA, DFID’s role is limited to compiling statistical data. Were DFID to be engaged in a consortium, as a co-funder, it could help to quality-control ODA expenditure and ensure that reporting guidelines are met. DFID is unable to influence the geographical distribution of UK ODA, and it is apparent that OGDs do not share its regional focus.

According to Statistics on International Development 2016, while DFID increased its ODA to Africa during each of the preceding five years, OGD expenditure targeted toward the continent remained static between 2011 (£211 million) and 2015 (£210 million). In terms of the proportion of OGD ODA spent in Africa, this amounted to a decline from 21% to 9%.

Monitoring such changes will prove increasingly problematic in future as DFID compiles ODA statistics by region, but OGDs are not subject to the same reporting constraints. It is thus probable that government statistics will fail to capture a continued decline in the proportion of OGD expenditure in Africa – and the extent of this trend. OGDs’ regional expenditure priorities may therefore be subject to less scrutiny by the International Development Committee (IDC), the Independent Commission for Aid Impact (ICAI), civil society and aid beneficiaries.

A related concern is that OGDs fail to properly capture such data as a result of their relatively limited experience of ODA reporting, or the lack of a concomitant commitment to aid transparency. The Home Office, for example, was responsible for £136 million in 2014, £222 million in 2015, and £362 million in 2016. This was an increase of 63% each year. Were this rate of increase to continue, the Home Office would be responsible for £590 million of ODA expenditure in 2017; £962 million in 2018; £1.6 billion in 2019; and £2.6 billion in 2020. The IDC may wish to consider whether the Home Office possesses the capacity to administer such significant volumes of aid, and to accurately report their contribution to UK ODA in terms comparable to that of DFID.

The Department for Business, Energy and Industrial Strategy (BEIS) was responsible for £687 million of ODA in 2016, an increase of £160 million – or 30% – on 2015. ODA expenditure by BEIS is now equivalent to 5.2% of the UK’s total expenditure on aid. This growth has been primarily driven by the former Department for Business, Innovation and Skills (BIS), which was then integrated with the Department for Energy and Climate Change (DECC) to form BEIS in June 2016. In 2014, BIS was responsible for £74 million of ODA expenditure; in 2015, this increased to £191 million; by 2016, it amounted to £377 million. Increasing the amount of ODA spent by BIS five-fold in the course of three years, ostensibly without an inquiry into its effectiveness, raises questions as to whether BEIS and DFID are subject to equivalent degrees of scrutiny, particularly around value for money and impact. In the absence of a common oversight mechanism for ODA expenditure across government, this task would fall to the IDC or ICAI.

One mechanism to ensure that BEIS delivers impact overseas and value for money might be to afford DFID a greater role in coordinating both delivery and reporting of ODA. The establishment or expansion of consortia, or the signing of compacts, which introduce DFID as a co-funder, could be encouraged. In instances where BEIS-administered funds are being rapidly scaled up, such as the Newton Fund (worth £735 million over 5 years), such a shift might also lead to improvements in regional reporting. At present Kenya, South Africa and Egypt are the only states on the African continent named amongst the 16 partner countries, and the proportion of ODA expenditure which they receive may not be property captured or scrutinised.

Nick Branson

Senior Researcher

Africa Research Institute

55 Tutfton Street

London, SW1P 3QL

Phone: 0207 222 4006

Email: nick@africaresearchinstitute.org