The UK’s independent aid spending watchdog has praised the Department for International Development (DfID) for the progress it has made on embedding value for money principles into its programmes.
The Independent Commission for Aid Impact (ICAI), which reports to Parliament, commended the department on becoming “a global champion on value for money” but pointed to weaknesses in aid programmes dealing with more complex and longer-term problems.
“There is a risk that the current approach leads DfID to prioritise the short-term and immediate results of its own programmes over working with and through others to achieve lasting change,” it said in its latest performance review, which includes five recommendations for the department.
Former international development secretary Priti Patel brought in a raft of measures to tackle wasteful practices among some of DfID’s contractors, while her successor Penny Mordaunt has pledged to continue that work and help other government departments deliver aid more effectively too.
The review highlighted that DfID, which is currently responsible for three-quarters of UK aid, had strengthened its processes and systems in order to cut waste, detect fraud and improve efficiency since the UK government pledged to boost overseas aid to 0.7% of GDP.
The department was praised for the work it has done globally to advocate value for money, and for the way it prizes quality as well as quantity of results, often measuring value in terms of “equity” as well as “economy, efficiency and effectiveness” – thereby acknowledging the additional cost it takes to reach some marginalised groups.
DfID’s staff were also commended for their awareness of their own responsibilities on value for money objectives. The review picked out the department’s introduction of senior responsible owners empowered to make certain decisions as one of the reasons for success in this area.
But ICAI also found that the department didn’t always have the right approach when it came to complex interventions, where “what works” may not be known in advance. It also pointed to weaknesses in DfID’s management at a country portfolio level – where, for example, the department doesn’t always adequately report on how programmes work together to deliver lasting impact and reduce dependency on aid.
The watchdog made five recommendations to help DfID further strengthen its value for money approach.
- DfID’s overseas offices should “articulate cross-cutting value for money objectives at the country portfolio level”, where the review found management issues.
- The department should encourage programmes to experiment with different ways of delivering results more cost-effectively. While DfID was praised for its “strong focus on controlling costs and holding implementers to account for efficient delivery”, the review pointed out that more complex goals, such as helping local communities adapt to climate change, may require experimentation before the right set of interventions becomes apparent.
- DfID should ensure “principles of development effectiveness” – such as building national capacity and empowering beneficiaries – are reflected in the value for money frameworks of programmes.
- The department should be more explicit about the assumptions underlying the economic case in its business cases, reassess those assumptions periodically, and take them into account when monitoring a programme.
- Annual review scores – a system of monitoring programmes that DfID admitted to ICAI risks “creating incentives to focus on efficiency of delivery more than on progress towards end results” – should include an assessment of whether programmes are likely to achieve their intended outcomes in a cost-effective way.
Tina Fahm, the ICAI commissioner who led the review, said the department had come a long way on embedding value for money principles into its work and was “undoubtedly making the UK’s aid spending go further and reach more people”.
However, he added: “There are still important areas for improvement to ensure the department delivers the maximum value for UK taxpayers and makes the biggest difference possible to the lives of those it helps.
“For example, by adding equity considerations into its value for money assessments, DfID acknowledges that reaching marginalised groups can be more costly. We are yet to see evidence, however, that DFID has considered how to weight the needs of different beneficiary groups in its decision-making on value for money.”
A DfID spokesperson responded: “This report rightly recognises that DfID is a global champion in achieving value for money and is leading the rest of the world in pushing vital reforms through to ensure UK aid cannot be better spent.
“We are continuing to hold aid organisations to account by tying funding to performance, closing programmes which fail to meet objectives and increasing efficiency savings.”
The review was published amid scrutiny of the UK’s aid budget as government-backed international charities, including Oxfam, become embroiled in a sex scandal and were accused of mishandling allegations.
The department has launched an internal investigation following claims made by Patel that civil servants knew of – and ignored – warnings of sex abuse of charity staff. Charities working with DfID have been given until the end of the month to report their safeguarding arrangements to department officials.