Watchdog finds UK aid cuts lacked transparency, regard for impact

The United Kingdom’s aid cuts policy lacked transparency and consultation, and it caused “value-for-money risk,” including to the government’s reputation, according to a major new report by the country’s public finances watchdog, which also said the policy did not sufficiently consider the impact on development programs.

The National Audit Office review examined how the government carried out the reduction of the official development assistance budget from 0.7% to 0.5% of national income, which was announced by Chancellor Rishi Sunak in November 2020. The review did not make a judgment on the decision to cut the budget.

“The scale and speed of decision-making meant FCDO [Foreign, Commonwealth & Development Office] staff were acting under considerable pressure, and there were risks to overall value for money that FCDO found difficult to fully mitigate in the time available,” said the report, which was released Thursday.

The review revealed new details around the process used by FCDO to reduce the aid budget by £4.2 billion, as well as new examples of cuts, which had been kept secret by the U.K. government. It described this cut as happening in a “very short time,” which caused value-for-money risks by distorting government objectives for the aid budget and disproportionately hurt bilateral programs — which were cut by 53%, despite the total aid cuts amounting to 30%.

“The Foreign, Commonwealth & Development Office took the lead in setting clear parameters for reducing the ODA budget while looking to local offices to make decisions about individual programmes,” said Gareth Davies, the head of NAO, in a statement.

“However, the speed and depth of reductions has had an immediate impact locally and the effect on long-term value for money is not yet known,” Davies continued. “FCDO must build its understanding of how the spending reductions have affected development outcomes to help it plan its approach to future budget allocations, including a planned return to the 0.7% ODA target.”

NAO’s report said FCDO had a “clear, centralised approach to allocating a reprioritised and reduced ODA budget, but this did not fully consider the impact on outcomes.” The department used a “three-stage approach, starting with ring-fencing significant longterm commitments and multilateral payments, followed by allocating funding to other government departments, and finally allocating the residual budget across FCDO.”

But the short time that FCDO had to make the reductions meant “there was limited consideration of the impact on development outcomes or of different scenarios for allocations across the seven strategic priorities to help inform ministerial decisions,” the report said. There were “substantial budget reductions” in programs across these strategic priority areas — including for COVID-19, conflict, and economic development — with the only exception being climate and biodiversity, which saw twice as much funding as in 2020.

Funding was cut by 62% for Bangladesh, 69% for Syria, 49% for South Sudan, 46% for Myanmar, and 50% for the Pan Africa Department, according to the report. The Southern Africa Regional Trade and Connectivity Programme was among the projects that were closed as a result of the aid cuts, as was a project related to health and education for Palestinian refugees in Syria, which was already “extremely stretched” before the reductions.

The report also found that a lack of “transparency in the approach to and outcome of ODA changes affected the quality and scrutiny of the allocation decisions and contributed to uncertainty in the sector” and that the information the government did publish was “on an inconsistent or limited basis.” Devex reported extensively in 2021 on the lack of transparency surrounding the aid cuts, including how NGOs were gagged from talking about the reductions experienced by their organizations.

FCDO ministers also decided that “country and regional offices should not formally discuss planned reductions in budgets with delivery partners until they had been allocated a budget and had been given permission to make contact,” the report said.

The report attributed that decision to FCDO’s assertion that “it did not want to share information which might change” but found that this approach had “some negative consequences,” such as a lack of information from partners that could have supported the decision-making and the potential effect that the lack of consultation could have on FCDO’s relationships with its delivery partners. “More generally,” it noted, “delivery partners would have been left uncertain about their futures.”

“The impact on public finances from COVID meant government took a scythe to UK overseas aid spending. Cutting fast and deep across its programmes meant FCDO had to make compromises, which inevitably increased risks to value for money,” said Meg Hillier, a member of Parliament and chair of the Public Accounts Committee, in a statement.

Hillier continued: “Ultimately, the cuts mean vulnerable people living in the most difficult parts of the world, such as Syria, face being without the support they desperately need. The FCDO must now prepare for when public finances return to a healthier state, so it can ensure an increased aid budget is spent effectively on those who need it most.”

“We now know just how opaque the process was, how rushed and outsized the cuts to bilateral programmes were, and have more detail about where the cuts fell,” said Abigael Baldoumas, policy and advocacy manager at Bond, the U.K. network for NGOs, in a statement.

She called on the U.K. government to “learn from its mistakes and implement NAO’s recommendations, including assessing the impacts of the cuts, improving transparency and preparing for a return to 0.7%.”

An FCDO spokesperson said: “The UK is one of the largest global donors, spending over £10 billion in aid around the world in 2021. Our vital work continues to save lives, providing wide-ranging support from urgent humanitarian assistance to investments in infrastructure. We are committed to protecting the world’s poorest and the most vulnerable, and will increase spending to 0.7% as soon as the fiscal situation allows.”

Update, March 31, 2022: This story has been updated to add a comment from FCDO.