After the release of a surprising new U.K. aid strategy on Monday, the aid community is coming to grips with a slew of new priorities and shifts in the government’s aid budget.
U.K. Chancellor of the Exchequer George Osborne announced Wednesday the results of the government’s comprehensive spending review, and although the Department for International Development’s budget is technically sealed at 0.7 percent of gross national income, the government is delivering on its promise to use more official development assistance in other government departments.
Despite an overall $6 billion increase in the aid budget by 2020 as a result of the U.K.’s increasing gross national income, DfID will be tasked with cutting $400 million in “efficiency measures” by 2020. Cuts will focus on “streamlining administration and procurement,” a DfID source told Devex.
Other shifts include scaling up the U.K.’s “cross-government” strategy, which will see the bulk of the expected aid increase — about $6 billion, or 27 percent of total ODA — disbursed through non-DfID ministries and departments, including the Foreign Commonwealth Office, the Home Office, the Ministry of Defense and the Department for Business, Innovation and Skills, among others.
The decision raises questions in the U.K. aid community about whether these departments — some of which consistently receive “Poor” and “Very Poor” ratings in Publish What You Fund’s Aid Transparency Index — will be able to maintain the same aid transparency standards as DfID, which has received a “Very Good” rating for the last five years.
Building on commitments outlined last week to spend half of all U.K. aid in “fragile and failing states and regions,” the new aid strategy will also invest more in cross-government funds, including a new $1.5 billion Prosperity Fund, run by the National Security Council.
Another NSC-affiliated, cross-government fund — the Conflict, Stability and Security Fund — will also be expanded under the new strategy. The aid increase will be used to establish a $1.5 billion cross-government “Ross Fund,” in partnership with the Bill & Melinda Gates Foundation, to research and develop products to fight infectious diseases and eliminate malaria. Finally, the aid increase will fund a new $750 million “ODA Crisis Reserve.”
But not everyone is happy with these changes. Several of DfID’s major implementers and NGO partners raised concerns about the new strategy.
Is a ‘cross-government’ approach good for aid?
Other strategy highlights:
• The new aid strategy will end all general budget support in favor of earmarked aid.
• Sources at DfID who wish to remain anonymous claim a “20 percent staffing cut is still on the cards.”
• The strategy aims to double the amount invested in the tax systems of developing countries, rising to $60 million by 2020.
• Little is revealed in the aid strategy document about U.K. Prime Minister David Cameron’s announcement earlier this year that the U.K. will double its commitment to slowing climate change. A source at a U.K. implementer who wished to remain anonymous said the “government is waiting until [the 2015 Paris Climate Conference] to unveil [new] specifics.”
• The government will invest a further $105.9 million in the Fleming Fund, as well as implement the U.K. AMR Strategy 2013-18 and deliver the new Global AMR Innovation Fund launched with China.
• The government will create a grand challenges-based research fund of $2.2 billion over the next five years to ensure U.K. science takes a leading role in addressing the problems faced by developing countries.
• The new strategy includes an expansion of the cross-government Conflict, Stability and Security Fund’s governance work in North Africa by $120 million per year by 2019-20.
While DfID will continue to spend approximately 72 percent of total ODA, other government departments will be tasked with managing an increasing amount of aid over the next four years, despite persistent questions about some departments’ ability to distribute aid effectively, and concerns among the aid community that variation in contracting and procurement protocol could unnecessarily complicate aid work.
At the same time, some development organizations, like Crown Agents, have actively partnered with non-DfID departments and ministries for many years. Ian Shapiro, chief partnership and growth officer at Crown Agents, told Devex that for organizations already working with these departments, not much will change in terms of strategy.
“Who spends the money isn’t important if those standards are met, and bringing all skills to bear on development work is a really good thing,” he said.
Still, Shapiro pointed out that a “cross-government” approach will present some risk, especially when partnering with those departments that have less experience administering aid.
“DfID has 18 years of experience of assessment, has checks and balances in place, [effective] monitoring practices and so forth, [whereas] other parts of the U.K. government have much less experience,” he said.
Publish What You Fund’s 2014 Aid Transparency Index rates the FCO as “Poor,” and rates the MOD as “Very Poor.” The new aid strategy stipulates that all aid-administering departments must achieve a “Good” or Very Good” rating by 2020, but that leaves a five-year window in the interim with potentially low or mediocre aid transparency.
While the cross-government strategy reflects a strong sensitivity to current crises, “there is a real risk of mission creep in government putting ODA at the heart of national security and foreign policy,” said Leigh Daynes, executive director of Doctors of the World. “Aid spending should be predicated on meeting unmet need, never as an instrument of foreign policy, national self-interest or the whims of some sections of the populist press.”
Given that two of the four cross-government funds are either managed by or involve the NSC, concerns that politics and national security concerns could eclipse aid priorities hold some merit.
‘Expanding’ the definition of ODA — a slippery slope
The new aid strategy pledges to stick to the guidelines for ODA set out by the Organization for Economic Cooperation and Development’s Development Assistance Committee. At the same time, the strategy also commits to working closely with other countries to “modernize the definition of ODA at the OECD-DAC, ensuring it reflects the breadth of the new international development agenda set by the new U.N. Global Goals, and fully incentivizes other countries to meet these goals,” the strategy says.
Some officials expressed concerns that the U.K. could join a small lobby of OECD countries like Norway and Sweden, among others, hoping to expand the definition of ODA to include security-related costs, as well as extend the period in which governments are allowed to use ODA to resettle refugees in-country, which is currently capped at one year.
At the same time, the definition of ODA hasn’t been updated in almost 40 years, an issue that some say has allowed donors and providers to abuse the guidelines.
The new aid strategy, for example, also sets out a funding increase to the BBC World Service by $51 million in 2016 and $128 million in subsequent years, a “significant portion of which will be ODA,” the strategy document says.
Updating the definition of ODA while preventing political abuse of ODA funds could be a challenge for the U.K., said Diane Sheard, director of the ONE Campaign.
We have real concerns this will trigger a race to the bottom,” Sheard told Devex.
“Rather than tighten the rules, emphasising that ODA's principle aim is to fight and end poverty, it's likely that OECD member states will try to widen the definition to cover all sorts of government spending that doesn't share this core priority.”
Shapiro pointed out that the U.K. would need to manage these risks, as well as those presented by organizations or donor agencies advocating for a more security-friendly definition of aid, or a definition that might be more “provider-focused.”
50 percent of all U.K. aid will be spent on fragile states
The government’s decision to spend half of aid on fragile states has been met with largely positive responses from aid organizations, but some are concerned that political and foreign policy issues — namely the migration crisis and the Syrian conflict — could eclipse the need for assistance in those fragile states that have fallen from the headlines.
“While there is a clear relationship between poverty and fragility, we must ensure that resources are prioritized for the poorest fragile states such as South Sudan and the Democratic Republic of the Congo, not just fragile but richer countries such as Egypt and Iraq,” said Sheard.
If executed well the strategy could create an opportunity and incentive for specialists and organizations across sectors to translate their work into fragile and unstable contexts, she added.
“Hopefully this will create coalitions of talented, capable partners, and we’re trying to encourage other specialist agencies to come and work with us,” said Shapiro. “So if you’re a youth or child rights specialist, for example, you can’t ignore conflict-affected states, because there’s a really important constituency for you there as well.”
The U.K. government currently spends about 42 percent of aid on fragile states, a DfID spokeswoman told Devex, adding that the increase to the 50 percent target is a milestone in the long-held goal to increase aid to “fragile and failing states and regions.”
Considering the complexity of working in fragile states, some aid experts suggest the shift will place a degree of strain on DfID’s already limited staff. With rumors of staff cuts swirling, one alternative is to increase ODA to multilaterals like the United Nations and the World Bank. Romilly Greenhill, team leader for the development finance team at the Overseas Development Institute, sees two advantages to this strategy.
“Multilaterals are important, partly to save staffing costs, but [also because] working in fragile states inevitably involves taking risks,” she told Devex in an email. “Multilaterals tend to be better insulated from public pressure, and thus better able to take risk, and can also pool risk — combining donor aid across a large number of countries and projects, some of which are likely to do better than others.”
Greenhill pointed out that multilaterals are able to work without the political scrutiny that national governments are typically subjected to, which is “particularly important in fragile contexts.”
Questions still remain about how the new strategy will be implemented, namely how funding will be redistributed and from which sectors and to what countries. The ongoing multilateral aid, bilateral aid, and CSO partnership reviews — all due out in early 2016 — will offer a more specific breakdown of funding shifts.