House of Commons International Development Committee Department for International Development: Departmental Report 2004 Eighth Report of Session 2003–04 Report and formal minutes, together with oral and written evidence Ordered by The House of Commons to be printed 16 November 2004 HC 749 (incorporating HC 749–i) Published on 25 November 2004 by authority of the House of Commons London: The Stationery Office Limited £15.50 The International Development Committee The International Development Committee is appointed by the House of Commons to examine the expenditure, administration, and policy of the Department for International Development and its associated public bodies. Current membership Tony Baldry MP (Conservative, Banbury) (Chairman) John Barrett MP (Liberal Democrat, Edinburgh West) Mr John Battle MP (Labour, Leeds West) Hugh Bayley MP (Labour, City of York) Mr John Bercow MP (Conservative, Buckingham) Ann Clwyd MP (Labour, Cynon Valley) Mr Tony Colman MP (Labour, Putney) Mr Quentin Davies MP (Conservative, Grantham and Stamford) Mr Piara S Khabra MP (Labour, Ealing Southall) Chris McCafferty MP (Labour, Calder Valley) Tony Worthington MP (Labour, Clydebank and Milngavie) The following Member was also a member of the Committee for part of this inquiry: Mr Andrew Robathan MP (Conservative, Blaby) Powers The Committee is one of the departmental select committees, the powers of which are set out in House of Commons Standing Orders, principally in SO No 152. These are available on the Internet via www.parliament.uk Publications The Reports and evidence of the Committee are published by The Stationery Office by Order of the House. All publications of the Committee (including press notices) are on the Internet at www.parliament.uk/indcom. A list of Reports of the Committee in the present Parliament is at the back of this volume. Committee staff The staff of the Committee are Alistair Doherty (Clerk), Hannah Weston (Second Clerk), Alan Hudson and Anna Dickson (Committee Specialists), Katie Phelan (Committee Assistant), Jennifer Steele (Secretary) and Philip Jones (Senior Office Clerk). Contacts All correspondence should be addressed to the Clerk of the International Development Committee, House of Commons, 7 Millbank, London SW1P 3JA. The telephone number for general enquiries is 020 7219 1223; the Committee’s email address is [email protected] Footnotes In the footnotes of this Report, references to oral evidence are indicated by ‘Q’ followed by the question number. References to written evidence are indicated by the page number as in ‘Ev 12’ DFID’s Departmental Report 2004 1 Contents Report Page Summary 3 1 Introduction 5 2 How much? The volume of UK aid 7 Partnerships for poverty reduction 7 Meeting our side of the bargain 7 3 Where to and why? Poverty, politics and aid 11 The poverty-focus of aid and the multilaterals 11 Iraq: Aid diversion, spending and achievements 13 Iraq and Afghanistan: The security/development nexus 15 Zimbabwe and Sudan: Responding to humanitarian needs and resolving conflict 16 Uganda, Rwanda, Kenya and Ethiopia: Picking winners or backing the wrong horse? 17 DFID, poverty reduction and politics 18 HIV/AIDS and sexual and reproductive health 20 4 How? Poverty Reduction Budget Support 23 What is Poverty Reduction Budget Support? 23 DFID’s cautious enthusiasm for Poverty Reduction Budget Support 23 Poverty Reduction Budget Support and the problem of fiduciary risk 24 Donor harmonisation, volatility and DFID’s skills-mix 25 5 With what results? Monitoring the impact of UK aid 27 Targets, progress, corrective action and attribution 27 Data and performance management 28 6 Learning to be more effective 31 Conclusions and recommendations 33 List of acronyms 37 Formal minutes 38 Witnesses 39 List of written evidence 39 List of unprinted written evidence 39 Reports from the International Development Committee since 2001 40 DFID’s Departmental Report 2004 3 Summary In this report we explore a range of issues which come out of our reading of DFID’s Departmental Report 2004. The purpose of this exercise is to make DFID more accountable to Parliament and other stakeholders, and to encourage DFID to reflect on how it manages and spends the increasing UK aid budget, so as to help DFID to make a more effective contribution towards meeting the Millennium Development Goals (MDGs). We comment on the UK’s development effort over the past year, as well as highlighting several areas where DFID could improve its performance. We welcome the Government’s announcement of further large increases in aid. If the rate of growth to be achieved by 2007–08 is maintained, the target of providing 0.7 per cent of Gross National Income in aid will be met by 2013. Meeting the target earlier would be better still. We welcome too the Government’s announcement on deepening and widening multilateral debt relief, and the progress being made with increasing the poverty focus of the UK’s bilateral aid budget. Our recommendations include, that: x The Departmental Report provide more information about the poverty focus of the multilateral organisations—such as the EU—through which 43 per cent of UK aid is channelled. x DFID and others with a commitment to international development remain vigilant, to ensure that DFID’s funds are spent on things which will have the maximum impact on poverty reduction. In cases where there are competing priorities—as was the case with the diversion of funds to Iraq—DFID ought to encourage a wider open debate. x The roll-out of Poverty Reduction Budget Support must be evidence-based. If it is not producing the results expected, then the delivery mechanism must be modified. x DFID improve its useful “traffic light” system of showing progress on its Public Service Agreement targets, by explaining what will be done in cases where progress is unsatisfactory. By accepting these recommendations and others, DFID could take another step towards being more transparent and more accountable, enabling it to learn more and become a still more effective player in the fight against global poverty. DFID’s Departmental Report 2004 5 1 Introduction 1. The Department for International Development (DFID) leads the UK Government’s contribution to the international effort to reduce poverty and to meet the internationally- agreed Millennium Development Goals (MDGs).1 DFID’s Public Service Agreement (PSA) enables DFID, the Treasury, and others to assess DFID’s performance in pursuit of the MDGs.2 DFID’s Departmental Report 2004 describes and explains what DFID has achieved in the year April 2003 to March 2004.3 This year, in line with a recommendation which we made in each of the last two years, the Departmental Report is structured around DFID’s PSA, making it easier for the reader to see how DFID is doing in terms of its own targets.4 2. Each year, the International Development Committee holds a short inquiry into DFID’s Departmental Report. This gives us the opportunity both to assess whether the Departmental Report paints an informative picture of DFID’s work, and to examine particular aspects of DFID’s work in some detail. This report aims to make DFID more accountable to Parliament and to other stakeholders, and to encourage DFID to reflect on how it manages and spends UK aid. The overall purpose of this exercise is to help DFID to perform more effectively, and to hasten progress towards the MDGs. 3. Following the publication of DFID’s Departmental Report 2004 on 29 April, we invited organisations with relevant experience and expertise to provide us with written evidence relating to the Report. Five written submissions were received, from DFID, from a group of small UK-based international NGOs, and from individual NGOs (Christian Aid, Marie Stopes International with Interact Worldwide and One World Action).5 Background papers were also received from DFID, Interact Worldwide and One World Action. On 22 June we took evidence from DFID officials. In a welcome innovation, intended to increase accountability and deepen the dialogue6, all four members of DFID’s Management Board gave evidence: Suma Chakrabarti, DFID’s Permanent Secretary; Masood Ahmed, the Director General for Policy and International; Mark Lowcock, the Director General for Corporate Performance and Knowledge Sharing; and Dr Nicola Brewer CMG, the Director General for Regional Programmes. In addition to this formal evidence session, we also had two informal briefing meetings. One concerned the predictability of aid flows. Another concerned the use of Poverty Reduction Budget Support (PRBS—also called Direct Budget Support) as a way of delivering aid. We are very grateful to all those who provided us with information, formally or informally, to assist us with our inquiry. 1 For further information about the Millennium Development Goals see http://www.developmentgoals.com 2 For further information about DFID’s Public Service Agreement see http://www.dfid.gov.uk/pubs/files/psa/index.asp 3 Department for International Development, Departmental Report 2004, Cm 6214. Available at http://www.dfid.gov.uk/pubs/files/departreport04chap1.pdf (subsequent chapters end “chap2.pdf” etc.) 4 International Development Committee, Sixth report of Session 2001-02, Department for International Development Departmental Report 2002, HC 964, paragraph 18—available at http://www.publications.parliament.uk/pa/cm200102/cmselect/cmintdev/964/964.pdf; International Development Committee, Eighth report of Session 2002-03, Department for International Development Departmental Report 2003, HC 825, paragraph 10—available at http://www.publications.parliament.uk/pa/cm200203/cmselect/cmintdev/825/825.pdf 5 Ev 68-72 6 Q 1 [Mr. Suma Chakrabarti, Permanent Secretary, DFID] 6 DFID’s Departmental Report 2004 4. Our report has six chapters. Following this introduction, in chapter two we comment on the volume of UK aid. In chapter three we examine the poverty focus of UK aid. Chapter four explores some issues relating to Poverty Reduction Budget Support as a way of delivering UK aid.