By Joshua.Chambers

02 Nov 2011

The head of the only department to receive a real-terms increase in its budget, DfID permanent secretary Mark Lowcock, tells Joshua Chambers how he intends to get maximum bang for the taxpayers’ bucks.

Mark Lowcock (pictured above) doesn’t use acronyms. It’s a minor observation, but a major achievement. After all, the permanent secretary of the Department for International Development has spent his entire career in a field peppered with constantly-changing jargon.

His plain language and straightforward manner stand in stark contrast to the brightly-coloured abstract art that adorns the walls of his office. As it happens, the paintings were chosen by his predecessor Minouche Shafik; he has been in the role for five months but, he says, hasn’t had time to tinker with the trimmings.

Instead, Lowcock spends much of his time travelling from country to country, checking on the work of his department and the wellbeing of his staff. He sees DfID’s role as “dramatically improving the lives of people who are in the worst possible situation you could imagine: people who are hungry, find it difficult to send their kids to schools, and too often die unnecessarily of completely preventable diseases.”

It may, at times, seem an endless, impossible task – but Lowcock is confident that his department’s work has made a tangible difference. “One of the things that’s great about being in DfID over the last 15 years is that there’s been enormous progress in almost all of the countries we work in,” he says. He can reel off staggering statistics about mosquito nets, malaria vaccines, infant mortality and more, each one of them representing lives made better by the British government.

Fitting into the jigsaw
The work of DfID is crucial, but it can seem somewhat removed from that of domestic departments. Lowcock is keen to bring it closer to the rest of Whitehall; indeed, the department is actively considering moving its headquarters onto the famous street. He also stresses that his department shouldn’t be seen as a separate fiefdom. “We’re the same as every other department,” he says – even if DfIDs service delivery frontline is on other continents.

Further, he points out that the department does have to meet administrative efficiency savings, just like the rest of Whitehall. “The efficiency agenda we have here is very similar to the one in the rest of government. We’re in the middle of closing one third of our country offices, which affects hundreds of people, and we are taking 35 per cent out of the costs of our administration budget, which has very substantial implications for our corporate services and other things.”

Of course, the department as a whole is unique because its budget is increasing in real-terms: in 2010-11 DfID’s budget was £7.8bn, but in 2014-15 it will be £11.5bn. Might its rising income relieve DfID of the pressure to make significant savings? Lowcock disputes this with a chuckle, insisting that the department is focused on cutting administration to ensure the cash reaches the front line: “In a way, our efficiency challenge is a really unusual one because our overhead budget is being cut dramatically, and we have to deliver more results from a higher programme budget, so the pressures on the organisation in a way are more acute than they might be in other circumstances.”

As departments cut back on administration, Lowcock is clear that government must ensure that civil servants still feel valued. “When times are really tough, it’s really important that leaders – and that includes the permanent secretaries, the top civil servants and also ministers – recognise that people come into the public service, often giving up opportunities which may be better paid, because they have a public service vocation; because they want to make a difference,” he says. Therefore, leaders must “respect, recognise, value, talk positively about that vocation of trying to make a difference… I think we collectively need to do a better job on that.” Lowcock also argues that there must be a “compelling vision” for the future of the civil service, setting out why people would still want to work in the public sector.

The new approach
The coalition isn’t just spending more money on aid; meanwhile, it is changing the focus of its spending. “When the government came in, they asked us to conduct a root and branch audit of all the programmes we finance. That led us to concentrate our effort in a much smaller number of countries,” Lowcock explains. Sixteen countries lost direct aid funding, including Russia, China, and smaller countries such as Burundi. Aid is also being focused on more specific development aims: for example, supporting democratic elections in 13 countries, securing schooling for 11 million children, and helping 10 million more women get access to modern family planning.

The department is working to build stability overseas, and promote democracy and security in areas where Britain’s interests are at stake. DfID is therefore working jointly with the Foreign Office and the Ministry of Defence to pursue joint foreign policy aims, for example in Afghanistan. “To achieve our objectives in Afghanistan and other highly fragile environments, we need effective joint-working on defence and security issues, on political and diplomatic issues and on development and aid issues,” Lowcock says. “That’s what the National Security Council is there to do. The permanent secretaries meet every week in that environment, including me, Simon Fraser from the Foreign Office and Ursula Brennan from defence. We spent a lot of time together on this and there are a lot more synergies than tensions”

DfID is also working with the Department of Energy and Climate Change and the Department for Environment, Food and Rural Affairs to tackle climate change globally. Lowcock explains that the spending review allocated £2.9bn to addressing the problem in development countries in two ways.

First, DfID will help move countries onto a “lower-carbon growth path”. But is there an appetite for that in developing countries? Do they not aspire to adopt the same lifestyles as people in the West, which in many cases are carbon-intensive? “Every country, every government wants to provide opportunities for its own people to provide better living standards,” he responds. “The issue is the path through which you get there and, actually, many developing countries are blessed with climates or resource endowments which enable them to develop in a much greener way than we have.” For example, Ethiopia is reducing its reliance on fossil fuels and is making a massive investment in hydro-power.

Second, the department is working to minimise the effects of climate change on poorer countries. “I think everyone accepts that developing countries will be hit first and worst by the impact of climate change,” he says. “There is still some dispute at the margins about the science of this, but most people now accept that the growing number of natural disasters, floods, violent storms, the prospect of much more variable rain patterns in many developing countries, will have a big impact.”

On top of changing its aims, the coalition also plans for DfID to deliver aid in new ways, working more with the private sector as well as charities and aid organisations. Lowcock explains that DfID can partner with investors to boost infrastructure in developing countries. For example, it is already partnered with Vodafone in Kenya to create a mobile banking system. The department advised the central bank in Kenya on an appropriate financial regulatory regime, and then gave a grant to the telephone company to install a system for people to move money using text messages. DfID has been able to use this system to respond to the food crisis in the Horn of Africa, he says, by “sending a little bit of money – five pounds every two months – to the most severely affected families in northern Kenya, most of whom will have access to a mobile phone.”

Value for money
The biggest message ministers have sent civil servants is that they must achieve better value for money. “The test is not how much money we spend; the test is what results we achieve. That’s quite a big change,” Lowcock says.

To get more bang for its buck, the department is “revolutionising” its approach. It is publishing much more information online, and has developed a framework to measure the ‘three Es’ – economic use of resources by purchasing at the cheapest price; efficiency in delivery systems; and effective products and programmes.

Some interventions can be easily assessed. “We know that if we immunise children, it’s very cheap: all you have to do is inject the child and you’re guaranteed the benefit,” Lowcock says. However, he admits that it can be very difficult to quantify everything the department does. “That’s increasingly the challenge for us. Not everything you do in life – including some important things – can be counted. But the things that we can quantify, we are making a big effort to quantify. We are increasingly able to compare costs between countries,” he says.

A problem recently highlighted by the Public Accounts Committee is the difficulty of tracking value for money when working through multilateral organisations. Lowcock admits that it’s “a fair point: if you are one country out of a hundred in an organisation, it’s true that you don’t have the degree of control that you have if you are just delivering your own programme.”

To tackle this, the department left a number of multilateral organisations last year where “the value for money results or approach wasn’t adequate.” The department is also saying to other organisations that “we’re limiting the amount of money we’re giving you, we want to see you improve. If you don’t, you shouldn’t be surprised if we take different decisions with our own resources.” That’s prompted a “healthy international debate” on the topic.

Is he saying that DfID is reducing the amount spent through multilateral organisations as a proportion of its spending? No, he replies: “For the decisions we’ve taken so far, it’s roughly stable.” However, they are “focusing on the good ones.”

DfID has now set up a new quango to scrutinise the department’s future spending: the Independent Commission for Aid Impact. This body has a skeleton staff and uses consultants to measure the effectiveness of some of DfiD’s programmes – a model out of kilter with Whitehall’s bonfire of the quangos and consultancy freeze. Lowcock explains that “when he was in opposition, the secretary of state decided it was really important to reinforce the independence of assessment the public can see. It was deliberately set up to be independent of the department, to report to Parliament, in order to increase taxpayer confidence.” ICAI aims to write 20 reports a year, after discussions with the Commons’ International Development Committee. However, “what they do is not a substitute for us at all,” says Lowcock, adding that DfID also needs to improve its own internal scrutiny.

Finance skills
Lowcock wants his department to boost its finance skills so that it can achieve better value for money. DfID is training more of its staff as accountants, he says, “which is really, really important, because those people will know our business as well as being competent in finance”. A number of DfID’s senior civil servants have qualified as chartered accountants, including the head of its office in India, the director general for finance, and Lowcock himself. “I’m one of only two permanent secretaries who are qualified accountants – not just now, but ever!” he says with a grin. Before you ask, the other is communities department chief Sir Bob Kerslake.

Lowcock wants finance to “course through the lifeblood of the department”, and has given all staff a finance improvement plan that tells them what questions, specific to their roles, they should be asking on a daily basis in order to improve value for money. “Everyone, whatever job they’re doing, has a responsibility and a contribution to make to value for money and efficiency,” he says.

However, “that’s not enough,” Lowcock admits. “We also have to bring people in from outside as well.” This is unusual for Whitehall: to comply with the Cabinet Office’s restriction on external appointments and to minimise the impact of job losses, many departments are closing ranks and recruiting from within. Lowcock argues that external recruitment is essential to bring in the skills that DfID needs: “I’m a big fan of harvesting all the skills we can find, wherever they come from, as well as growing our own.”

Increasingly, the department is recruiting “from the private sector, from other bits of central government, from local government”, he says. Recently DfID has recruited from British Airways, the Prudential insurance company, and big banks. Between 1 July 2010 to 1 July 2011, DfID secured 25 exceptions from the Cabinet Office’s recruiting restrictions (see Special Report).

Lowcock also stresses that DfID is hiring more people from other departments. “It’s important to make a point that we do hire quite a lot in Whitehall. We’ve just hired two new directors general: Mark Bowman comes from the Treasury, and Joy Hutcheon spent her first 10 years in the Home Office and then spent time in the Strategic Rail Authority. We value a wider perspective.”

While he likes to recruit widely, Lowcock has spent his entire career with the same department. “You’re right to say that I spent the whole of my career here, but I’m very unusual in that sense and it’s not something I recommend to my colleagues,” he comments. “I try to do lots of other things outside my role in the department, so hopefully I bring lots of other experiences into the department.”

Challenging times
Lowcock is easygoing throughout the interview, frequently chuckling and often animated as he expresses himself. But whenever he talks about international aid, his face shows only concentration.

The global economic outlook seems increasingly bad, I say. Will a collapse in global demand prevent the department from achieving its aim of developing sustainable economies in the poorest parts of the world? “Over the last 15 years, there’s been faster progress in dealing with the core problems that we use our aid budget for than at any other time in human history,” he replies.

“Fewer die in infancy; fewer women die in childbirth; incomes are rising; there is a reduction in the number of people whose lives are completely blighted by conflict and security. The main reason for that is that a lot of the poorest countries have been growing quite fast – and a high level of global growth is very important for the poorest countries, in the same way that it is for the UK.”

However, he adds that “aid is a multiplier of progress, so it accelerates the rate at which we deal with all those problems”. Aid doesn’t work independently of global growth rates, he says: growth is “very important, but we can still make a lot of progress on those things as growth rates go up and down.”

Even as Britain struggles with low growth and the public sector feels the pinch, Lowcock argues that aid is not only a moral imperative, but also boosts Britain’s prospects in the long-term: “It’s worth bearing in mind that most developing economies are growing fast. That is a very good thing for the global economy, and in the long term it’s a really, really good thing for the UK, because those are potentially our future markets. At the moment they’re very small markets, but the better they do, the more they will become important export markets for us.”

On that positive note, the interview ends – and he didn’t use a single acronym. I leave his office and he gets back to work, helping LEDCs improve their GDP with the help of the UN, the EU, and assorted NGOs.

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