FCDO to step up aid scrutiny as minister admits UK 'not a development superpower'

Development minister also planning restructure which could include new second perm sec
Andrew Mitchell at the committee hearing. Photo: Parliamentlive.tv

By Tevye Markson

08 Dec 2022

The FCDO will set up a committee to scrutinise how other departments are spending aid cash, new development minister Andrew Mitchell has said – after admitting a rise in spending on domestic refugee services could leave the department with control of just a quarter of official development assistance.

The Foreign, Commonwealth and Development Office's internal scrutiny committee will aim to “drive up the quality of spend, particularly in other departments”, Mitchell, who was secretary of state at the Department for International Development a decade ago, told MPs this week.

The Home Office is currently spending large amounts of ODA on domestic services for refugees, with the department’s demands on the aid budget rising by 73% this year and Mitchell admitted he does not know how high these costs will climb.

Appearing at the International Development Committee, Mitchell also revealed the FCDO is looking into changing structures in the department to help get Britain back to being a “development superpower”. This could include creating a second permanent secretary position, Mitchell said.

Keeping other departments in check

ODA is currently limited at 0.5% until until debt is falling as a percentage of GNI, when it can rise again to 0.7% – the United Nations target. The Foreign Offie spends around three-quarters of the budget, with the Department for Business, Energy and Industrial Strategy; Department for Environment, Food and Rural Affairs; Home Office; and Department for Levelling Up, Housing and Communities also taking money from the pot.

Mitchell said one if his first priorities as development minister will be to improve the way the budget is spent. To do this, the department is setting up a cross-government scrutiny mechanism which will have the “aim and remit of questioning the quality of ODA spending”, he said.

The Ukraine and Afghanistan refugee crises have put increasing pressure on the budget, Mitchell said. Under international aid rules, countries can spend ODA on supporting refugees from eligible countries for the first 12 months after their arrival.

The Home Office has estimated it is spending £2bn on refugee accommodation and a further £1bn on food and travel, with all of that expenditure taken from the ODA budget. 

However, last month the IDC said the Home Office had not been forthcoming about how much aid money it was spending – in party spurring its inquiry. Committee chair Sarah Champion told CSW up to £5bn of ODA may have been spent on in-country refugee funding so far and that the MPs were concerned the Home Office had a "blank cheque" for this money.

Mitchell admitted the rise in Home Office ODA spend could soon mean the FCDO only has control of 25% of aid funds. “The reality is I do not know the full extent of what the Home Office demands will be,” Mitchell said.

“I’m trying to drive them down. Through this new committee we’re setting up, we’re going to drive them down but this is an open-ended cost.”

The Autumn Statement allocated an extra £2.5bn in aid cash to the Home Office over the next two years, which will push aid spending to 0.55% of GNI. But the Treasury has also asked the department to find 30% in cuts to bilateral aid programmes, the third round of major cuts in the last three years.

Mitchell said the new scrutiny committee will be like a “star chamber” – a mechanism for questioning and scrutinising government spending with roots dating back to the 15th century, when King Charles I used them as a method of state terror.

The mechanism, which in its modern form has been used to oversee other departments' spending, was reintroduced by Margaret Thatcher in the 1980s and most recently by the 2010 coalition government, both with the aim of reducing government spending.

Mitchell's committee, which will focus only on ODA spend, will be chaired by the development minister and John Glen, chief secretary to the Treasury. It will initially focus on schemes which cost more than £60m, and meet only once or twice a year physically, doing most of its work by letter, Mitchell said.

Structural change to regain “superpower” status

The FCDO is also working on structural changes to the department to help get Britain back to being a “development superpower”, Mitchell revealed. 

He pointed out that the government is currently spending 0.55% of gross national income on foreign aid compared to 0.51% under the New Labour and coalition governments and yet has lost its position as a “superpower”.

As a backbench MP, Mitchell – who became the first Conservative development secretary in 2010 – called the 2020 merger of DfID and the Foreign and Commonwealth Office a “quite extraordinary mistake”.

Ahead of the merger, he told CSW that subsuming DfID into the Foreign Office would lead to an exodus of staff and that "we will at a stroke have collapsed the preeminent and most respected engine of international development in the world".

Mitchell told the committee he has not changed his view but accepts the merger is settled government policy. But he said structural changes “can and should be made”.

“I am trying to work with the different people who care about this inside the Foreign Office and in government to see what we can do to improve the structures. At the moment, the international development effect is less than the sum of the two halves – DfID and the Foreign Office – and we need to make it, within this new system, more than the sum of two parts," he said.

He said this would focus on thematic rather than geographical aid allocation, and may recruit a second permanent secretary who would have responsibility for ODA.

The minister said the restructure would also aim to return development work to DfID’s “old hallmark” of being "very transparent". UK aid watchdog the Independent Commission for Aid Impact recently raised concern that transparency has dipped following the 2020 merger. 

It said “a recent decline in aid transparency risks sending a signal that the UK’s commitment to excellence in development cooperation is waning”.

Skill 'lacuna' and morale issues

Mitchell also warned of a major skills gap and morale issues in the development section of the FCDO.

“There are currently 200 vacancies in what were previously DfID jobs,” Mitchell said.

"There is no question that there are morale issues among development staff and we need to do a lot more to recruit motivate and retain people.”

He said the latest round of cuts, which require the department to reduce ODA spend on bilateral aid programmes by 30% this year, was having a “pretty severe effect” on the diplomats who have to decide which programmes to cut.

Mitchell warned these issues could lead to "money not being properly accounted for, not being properly spent, because there is a lacuna in the skill there.”

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