Ministers admit it’s too early to know cost of merging FCO and DfID

Committee chair “astonished” government failed to consult stakeholders before announcing creation of FCDO
Scrutiny call: foreign secretary Dominic Raab PA

By Jim Dunton

05 Oct 2020

The government has told watchdog MPs that it does not know how much last month’s merger of the Foreign and Commonwealth Office and the Department for International Development will cost.

Ministers’ admission came in the formal response to a report by MPs on the International Development Committee, which sought to explore the impact of the move on UK development aid following the experience of machinery of government changes in other countries.

The response said saving money had not been the “primary goal” of the merger, but noted savings could be found from more efficient use of resources in the future. 

“We are monitoring the costs of the merger; however, at this stage it is too early to assess what these will be as the full transformation will be developed and delivered through the phased transformation programme,” ministers said. 

“Both departments are committed to minimising costs where possible, as well as maximising the opportunities for savings and efficiencies. Both the costs of the merger and potential efficiencies will be factored into the forthcoming Spending Review and FCDO are working closely with HM Treasury on this.”

At the time prime minster Boris Johnson announced plans to proceed with the long-anticipated merger in June, Institute for Government associate director Tim Durrant said departmental mergers tended to cost a minimum of £15m for up-front alignment of staff, offices and services. He said those costs were “generally dwarfed” by the productivity hit that followed as officials spent the next two years getting the new organisation up to speed.

Elsewhere, the government confirmed that the decision to merge DfID and the FCO had been taken without formal consultation with the aid sector – a move that International Development Committee chair Sarah Champion said beggared belief.

“It is astonishing that the government has admitted that there was no prior consultation to the biggest change in development policy since DfID was established in 1997,” she said.

“Stakeholders and external partners contribute to the UK’s development superpower status, and the government must not compromise the future success of development by alienating them.”

The government also pointedly failed to support the International Development Committee’s call for a new parliamentary panel tasked with scrutinising aid spending across all departments.

MPs said that UK aid spending had totalled £15.2bn in 2019 and that the size and complexity of the budget would be best performed by a dedicated select committee whose responsibility would be looking at “the totality” of the UK’s Official Development Assistance.

However the government said its view was that select committees in the House of Commons should generally mirror government departments. 

“The prime minister has said he expects parliament will want to set up a new committee to scrutinise the new department,” it said. “Ultimately the structure and remit of select committees is a matter for parliament.”

Champion said the government’s commitment to spend 0.7% of Gross National Income on development was life-changing for the world’s poorest people, and a committee had to exist to make the case for that spending to be maintained.

“This is why continuing to have a committee scrutinising international development is so important,” she said. 

“The money must be going to the right people for the right reasons. The government has said in its response that it will ensure value for money for UK taxpayers, but it cannot mark its own homework and close parliamentary scrutiny is needed.”

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