Which non-DFID departments are spending ODA, and how?

Banknotes of the pound sterling. Photo by: Victor / CC BY

LONDON — Last week, the United Kingdom’s official ODA statistics for 2016 revealed that 26 percent of its 13.4 billion pounds ($17.8 billion) aid budget is now being spent by government ministries other than the Department for International Development — a 50 percent increase year-on-year.

This is in line with the U.K.’s November 2015 Aid Strategy, which included a plan to allocate 28 percent of aid outside DFID by 2020. Between 2015 and 2016, the total non-DFID spend rose from 2.4 billion to 3.5 billion pounds.

The analysis comes at a time when competition for aid resources is likely to increase. While the government remains committed to spending 0.7 percent of gross national income on ODA, revised economic forecasts announced during the latest government budget on Thursday mean that 375 million pounds will be shaved off the ODA budget in 2018-19, and 520 million pounds in 2019-20. 

While aid experts say a joined-up government approach to aid is welcome, there are concerns that the rapid outsourcing of spending to other departments could mean aid is not spent as transparently, effectively, or as in line with the aims of the 2002 International Development Act as it would be by DFID. Last week’s budget announcement also showed that 800 million pounds is to be cut from the Foreign & Commonwealth Office, leading to concerns that the department may look to ODA funds to fill the gap.

There are also concerns about the accountability and coherence of aid under the cross-government strategy.

“The idea of spending more ODA outside of DFID is not intrinsically wrong, it’s about how you go about doing it rather than creating just more fragmentation,” said Amy Dodd, head of the U.K. Aid Network, who added, “development is not just about aid — it includes humanitarianism, trade, diplomacy … [and] generally I’d be very keen to see a truly cross-governmental approach.”

According to statistics released last week, 74 percent of U.K. ODA was spent through DFID in 2016, either bilaterally or via multilateral agencies. A further 16 percent was spent by other government departments, namely the Department for Business, Energy and Industrial Strategy (BEIS); the Foreign Office; and the Home Office, as well as through the cross-departmental Conflict, Stability and Security Fund (CSSF).

Most of the remaining 10 percent of non-DFID ODA was split between the U.K.’s contribution to the European Union (3.6 percent), and the International Monetary Fund (3.3 percent) for the Poverty Reduction and Growth Trust. Some was also spent by the Scottish and Welsh governments.

Here, Devex looks at the biggest non-DFID recipients of ODA spending and the concerns they raise among analysts and civil society groups.

Department for Business, Energy and Industrial Strategy

The largest increase in non-DFID ODA spending went to BEIS, “which tackles climate change and supports research in developing countries,” the DFID report states. The department spent

687 million pounds of ODA in 2016, an increase of 160 million pounds compared to the previous year.

Part of this was spent on research and innovation into the links between poverty, disease and climate change, through the Newton Fund and the Global Challenges Research Fund. The remainder was allocated to the International Climate Fund, which is jointly managed by ministers from DFID, BEIS and the Department for Environment, Food and Rural Affairs. The fund publishes its results online.

Cross-governmental funds

The CSSF, formerly the Conflict Pool, is a cross government fund, housed in the Foreign Office, which “provides development and security support to countries which are at risk of conflict or instability.” In 2016, the fund allocated 575 million pounds of ODA, 251 million pounds more than in 2015. The fund contains a mix of ODA and non-ODA resources, which any departments within the National Security Council can bid for. In 2016, the Foreign Office was the largest recipient and spent nearly 73 percent of the total CSSF ODA allocation, while DFID spent 19 percent. The Ministry of Defense is also a recipient.

Another cross-government fund, the Prosperity Fund, launched in 2016 to promote economic reform and development in recipient countries, accounted for 38 million pounds of ODA. The Independent Commission on Aid Impact’s recent report on the Prosperity Fund raised concerns around transparency and the limited information in the public domain about its strategy and how it operates. It has also attracted criticism for its emphasis on middle-income countries, which appears to go against DFID’s commitment to target the poorest countries.

Foreign Office

In evidence submitted to the parliamentary International Development Committee earlier this year, Foreign Office officials said the department’s ODA work “is planned and delivered along with other diplomatic tools,” and is split between five main areas. These include policy programs, which include scholarship programs; the Magna Carta Fund, which works on human rights; and also national security programs, funded through the CSSF. Some ODA also goes toward Frontline Diplomatic Activity and British Council activity in ODA eligible countries. Finally, it also covers grants to the BBC World Service, and subscriptions to international organizations including the United Nations and the Commonwealth Foundation.

According to the statement, the department provides DFID and the Treasury with monthly spending accounts and forecasts, and said the Foreign Office is developing IT systems “to meet external reporting demands [such as those of the Organization for Economic Cooperation and Development] and our transparency commitments.”

Home Office

The Home Office can spend ODA on asylum seekers and supporting refugees, in line with rules set out by the OECD’s Development Assistance Committee. Those rules have been a source of contention in recent years and were clarified at DAC’s high-level meetings in Paris last month, as Devex reported — although the spending of ODA domestically remains controversial with civil society groups.

A spokesperson for the department told Devex in a statement: "Home Office ODA spending helps protect people who have fled conflict and persecution to the U.K. and also tackles issues that affect the U.K. upstream. The majority of our budget is spent on asylum support and resettlement schemes, including the Vulnerable People Resettlement Scheme.”

"In addition the Home Office supports projects to build the capacity and capability of source countries to deal with border security, drug smuggling, modern slavery and child protection online. This spending aims to prevent criminal activity before it gets underway and reduce the push factors that are driving people to make perilous journeys to Europe and the U.K.”

Questions about oversight

While the rise in the share of ODA being spent through other departments is “very much in line with trends we knew were happening already,” the ODA figures show that this equates to “big sums of money and a big percentage increase,” which is “striking but not a surprise,” according to Catherine Blampied, a senior research officer at the London-based think-tank, the Overseas Development Institute. This is leading to increased attention and concern about how that ODA is being administered and delivered, she said.

In response, the U.K. Parliament’s International Development Committee is looking into the issue as part of an inquiry that should start hearing evidence early next year, Stephen Twigg, chair of the IDC, told Devex. This is the resumption of a previous inquiry that had to be postponed due to Britain’s snap general election in June.

“We want to make sure that if other departments are spending ODA that it’s done well, that it’s done in line with … poverty reduction goals, and that the other government departments have the capacity to spend ODA properly,” he said.

The Independent Commission for Aid Impact, whose job is to scrutinize all ODA spending, has conducted reviews of cross-Whitehall funds, including the Global Challenges Research Fund and the Prosperity Fund, and will be looking at CSSF next year.

“ICAI’s mandate covers all U.K. ODA, no matter how it is spent. So as more and more ODA is spent by other departments we are increasingly looking outside of DFID to ensure our robust, independent scrutiny improves ODA spend across government,” ICAI’s Chief Commissioner Alison Evans told Devex.

Transparency and scrutiny

One of the major concerns is around levels of transparency within other government departments, Blampied explained, adding that “DFID has an incredibly strong record on transparency, but other major U.K. departments responsible for spending aid” do not.

Cross-government pooled funds, such as the CSSF and the Prosperity Fund, which often use a combination of ODA and non-ODA finance, raise further transparency issues and can be difficult to scrutinize. In written evidence submitted to the IDC, Rupert Simons from the campaign Publish What You Fund, said that these pooled funds “have disclosed very little information on their operations to date.”

These concerns have led some to question how well equipped existing bodies, such as the IDC and ICAI, are to scrutinize non-DFID departments and spending by pooled funds. “Now other departments are getting a rising share [of ODA] there’s a bit of a lag in what the scrutiny architecture looks like,” Blampied said, adding that their mandates need to be “formally extended … so that it’s very clear and formalized what they have scope to scrutinize,” she said.

Dodd agreed it is unclear “how much other departments listen to ICAI” or the IDC. However, she emphasized that the solution lies in a wider mandate and sufficient resourcing for existing bodies, rather than the creation of new ones.

Aid coherence

While the 2015 U.K. aid strategy made a clear push for an integrated cross-governmental approach to aid, this has not materialized, Blampied said.

“We have a strategy with a strong emphasis on a whole-of-government approach and delivering aid in the national interest, but in practice it’s not really integrated,” she said. What typically happens with cross-governmental funds is that departments “bid into a fund” that has no clear, overarching strategy behind it, she added.

Dodd agreed, saying it is unclear how the pooled funds play into the broader vision for U.K. aid outlined in the 2015 strategy — “I’ve spoken to people [on the funds] and it’s not clear to me that they’re thinking about how it’s all interconnected or where they add value,” she said.

As a broader example of this lack of coherence, Dodd pointed to the fact that ODA is used to fund climate finance through BEIS, but is also increasingly being allocated to the CDC — the U.K.’s development finance institution — which still funds oil and gas exploration, she said.

There is also a concern that some government departments may not have the necessary incentives or expertise to spend ODA effectively.

“It must not be the case that ODA is spent by a department in order to allow them to meet their own objectives by drawing on funds that could otherwise better be deployed in pursuit of the economic development and welfare of developing countries by DFID,” evidence submitted to the IDC by Save the Children states.

A potential solution would be to create a better cross-governmental mechanism to coordinate aid and development policy, Blampied said. “It shouldn’t just be ad hoc; there should be a formalized system where DFID shares its incredible expertise with departments which don’t have a history of doing aid projects,” she said.

Update, Nov. 27: This article was amended to clarify the idea of a cross-governmental mechanism.

For more U.K. news, views and analysis visit the Future of DFID series page, follow @devex on Twitter and tweet using the hashtag #FutureofDFID.

About the author

  • Edwards sopie

    Sophie Edwards

    Sophie Edwards is a reporter for Devex based out of Washington D.C. and London where she covers global development news, careers and lifestyle issues. She has previously worked for NGOs, the World Bank and spent a number of years as a journalist for a regional newspaper in the U.K. She has an MA from the Institute of Development Studies and a BA from Cambridge University.