Peer reviews of DAC members

United Kingdom (2010) DAC Peer Review - Main Findings and Recommendations

 

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Overall framework for development co-operation

 

Legal and political orientations

 

An international development leader in times of global crisis

 

The United Kingdom (UK) is a recognised international leader in development. This is the result of clear vision, consistent political leadership, strong human resource and financial capacity, and continued commitment to the 2013 target of providing 0.7% of its gross national income (GNI) as official development assistance (ODA). The UK is effective in seizing opportunities to promote development in a wider arena; for example, at the London G20 summit in 2009 it advocated for a strong development focus in the international response to the global economic crisis. It has taken a lead in a number of critical areas such as aid effectiveness, engagement in fragile states, humanitarian assistance and the reform of the international aid system. As a result, the UK is in many ways seen as a model by other donors. This gives the UK a special responsibility.


Staying committed to poverty reduction while broadening the policy agenda


The UK development co-operation programme benefits from a solid legal basis – the International Development Act 2002 clearly stipulates poverty reduction to be the purpose of development assistance. The clarity of its poverty reduction focus has been a powerful asset for the UK aid programme in past years. Meanwhile, the two most recent white papers (2006 and 2009) have progressively expanded the policy framework for development co-operation and adopted a comprehensive approach which goes beyond the aid agenda to address new global challenges. The 2009 white paper sets four key priorities: (i) achieving sustainable growth in the poorest countries; (ii) combating climate change; (iii) supporting conflict prevention and fragile states; and (iv) reinforcing the international aid system’s efficiency and effectiveness. However, the cumulative pledges made in the successive white papers (the “We will” commitments), combined with the objectives of the various public service agreements (PSAs) creates a complex array of priorities for DFID.  While broadening the development agenda, the UK will need to maintain a clear vision and mandate for its aid programme. To achieve this, DFID should prioritise clearly its policy goals and streamline further its policies and strategic guidance around core priorities linked to the Millennium Development Goals (MDGs).
 
The UK is committed to providing support to fragile countries and conflict zones, which is commendable. Its spending in fragile states has doubled over the last five years and the 2009 white paper commits at least 50% of all new bilateral country aid to fragile states, with a focus on peace and state building. The UK government combines bilateral and multilateral approaches efficiently and advocates strongly for a strengthened and more co-ordinated multilateral response during peace-keeping operations, as well as in crisis and post-conflict situations. DFID is also a driver of the OECD Development Assistance Committee’s (DAC) work on fragile situations, where its leadership and innovative approaches are much appreciated. Since 2007, DFID has focused strongly on conflict sensitivity and peace-building in failed and post-conflict states. It could now broaden its approach and develop preventive strategies in fragile but pre-crisis states.
 
DFID strives to promote gender equality in its policy dialogue and programming, seeking innovative approaches to achieve this. Continued efforts in mainstreaming gender equality will be important to ensure that any gains made are sustainable and can be intensified. The UK should also continue to learn from its work on gender equality, applying lessons to other cross-cutting issues and sharing good practice with other donors.

 

Ensuring external and domestic accountability

 

There is broad public and political support for development assistance. However, public awareness of development aid is weak, public support for more official development assistance (ODA) is declining, and public and political concerns over the effectiveness of financial aid are increasing. The aid programme is coming under greater scrutiny as its budget increases (and in light of the economic turndown). More than ever, DFID needs to demonstrate that aid is effective and having an impact if it is to consolidate public and political support. It has taken steps to demonstrate achievements by linking results to UK action and by increasing its communication efforts, including developing a new UK aid logo. The UK needs to continue to ensure that its desire for greater visibility and its need to demonstrate results support partner country priorities and that it remains accountable both to its partner countries and UK stakeholders.


Promoting policy coherence for development

 

The UK is highly committed to ensuring that all of its domestic and international policies support, or at least do not undermine, partner countries’ development aspirations. Its 2009 white paper provides an overarching plan for coherence around three key priority areas: poverty reduction and economic growth (including trade), climate change and conflict. The UK promotes coherence of its domestic and foreign policies with its development efforts in two main ways: (i) the Secretary of State for International Development participates in the cabinet and in cabinet committees; and (ii) the PSAs establish strategic cross-government objectives and targets to which several departments contribute. In practice, cross-government approaches have been strengthened both in headquarters and the field. This is especially true for trade (whose sub-committee is chaired by the Secretary of State for International Development), climate change and conflict, with closer links developed between the aid, foreign policy and defence communities.

 

DFID has made considerable progress in improving how it works across government and it is increasingly called on to work more with other UK government departments. By clearly specifying DFID’s objectives, the International Development Act 2002 has helped to ensure that the potentially competing objectives of other foreign policy, trade, climate change and national security priorities do not overwhelm development objectives. In the coming years, DFID should continue to rely on its clear poverty reduction mandate to avoid its mission being diluted when engaging with other government departments. Conversely, being at the core of the UK government should enable DFID to ensure that the machinery of government as a whole supports effective cross-government working on international policies and priorities, resulting in UK policies that are consistent with its development objectives. To do so, it should continue to use both internal and external analytical capacity to inform government discussions with strong evidence on policy inter-linkages and their impacts on development.

 

The government should broaden its efforts and deepen its commitment to the policy coherence for development agenda in selected new areas of government policy, bearing in mind the European Union (EU) platform for policy coherence for development. This requires the UK government to set out a common agenda with clearly prioritised and time-bound objectives. Relevant government departments should then fully assume responsibility for each selected area, guided by solid evidence.
 
The International Development (Reporting and Transparency) Act 2006 obliges DFID to report every year on the impact of UK policies on development, and DFID has included policy coherence indicators in several strategic objectives. However, the UK can further improve its monitoring, assessing and reporting to the public and parliament on the impact of its policy coherence for development efforts. It is encouraging that DFID’s new evaluation policy plans to assess policy coherence issues.

 

Recommendations

 

To maintain its position as a leading development player, the UK should:

  • Retain the aid programme’s clear focus on poverty reduction as the UK broadens its development agenda and DFID engages further with other government departments.
  • Prioritise policies and streamline objectives derived from the public service agreements and white papers around core priorities linked clearly to the MDGs.
  • Ensure that the stronger focus on results and communication supports partner country priorities, and that the UK is accountable both to its partner countries and domestic stakeholders.
  • Include in the common government agenda for policy coherence for development some additional priority areas in which to promote further development concerns in line with the EU policy coherence platform.
  • Improve how the UK measures, monitors and reports to parliament and the public on the impact of its domestic and foreign policies on partner countries’ development results.

 

Aid volume, channels and allocation

 

The UK’s net ODA was USD 11.5 billion in 2008, 25% more than in the previous year alone. Total ODA was equivalent to 0.43% of GNI, ranking the UK tenth amongst DAC donors for its ODA/GNI ratio. The UK is committed to reaching the target of 0.7% of GNI as ODA by 2013. The last comprehensive spending review (2007-2011) sees the UK providing 0.56% of GNI as ODA by UK fiscal year 2010/11. This would meet the EU’s individual 2010 target of 0.51%. The UK government has submitted draft legislation that would enshrine the 0.7% ODA/GNI target in law. This development is positive and, if enacted, will add to the UK’s credibility.

 

In 2008, 63% of the UK’s bilateral aid was programmed at country level. This percentage is higher than the DAC average of 58%, and demonstrates the extent of the UK’s contribution to partner countries’ development programmes, and scope for alignment with country-level decision-making processes and priorities.

 

Continued efforts to concentrate UK aid are important

 

DFID continues to deliver the bulk of British aid – 86% in 2008. Since the 2006 peer review, DFID has taken further steps to concentrate its bilateral programme geographically, and approximately 90% of its bilateral programme is now concentrated in 23 countries. Since 2002, DFID has closed offices or programmes in 36 countries. However, non-DFID ODA remains more fragmented. The UK does not report on the impact or value for money of this assistance – a situation which could be improved. Further consideration could be given to how aid delivered by departments other than DFID is allocated as its development impact is less clear.

 

DFID has developed an econometric model to guide its bilateral resource allocation decisions. This does not consider portfolio performance directly, though DFID does strive to improve its portfolio quality. DFID recognises that demonstrating results may be more challenging in fragile states, where risks and delivery costs are higher, though this has not deterred DFID from increasing its emphasis on a set of countries where needs are particularly significant. DFID does not appear to have used its resource allocation model when deciding to close country programmes. It could be clearer with its external stakeholders about how it decides which country programmes to close.

 

A strong MDG focus, though thematic spending targets continue to pose a risk

 

The UK’s bilateral ODA retains a strong MDG focus. This is reflected in both the allocation of bilateral aid to low income countries (LICs) – 61% of total ODA in 2008 – and the emphasis on social infrastructure and services, which has grown over time. The recent graduation of countries such as India to middle income status has resulted in a slight decline in the proportion of ODA allocated to LICs. Where it engages in middle income countries (MICs) such as India, the UK should sustain its focus on poverty reduction.

 

In line with the findings of the 2006 peer review, the UK continues to make significant use of sector and thematic spending targets, with 32% of DFID’s ODA affected by such targets, primarily in health and education. The problem with these targets is that they can undermine DFID’s ability to align with partner country priorities, so it is important that DFID continues to manage them carefully.

 

A positive emphasis on multilateral effectiveness

 

In 2008, 36% of UK ODA was provided through multilateral channels. The UK government demonstrates clear support for the multilateral development agenda and plans to increase its use of multilateral channels for aid delivery. 17. The fourth white paper (2009) emphasises the efficiency and effectiveness of the international aid system, and DFID draws on evidence on the performance of multilateral organisations when allocating funds. This approach includes the negotiation of new performance frameworks with several UN agencies, though a significant proportion of funding through the UN is provided as non-core contributions. DFID is an active member of the Multilateral Organisations Performance Network (MOPAN) and uses its work as part of DFID’s multilateral assessment framework. DFID could work more with other donors to promote harmonised approaches to making multilateral aid more effective.


Recommendations

 

Planned increases in the UK’s aid volume are encouraging. To build further on its efforts, the UK should:

  • Implement its commitment to providing 0.7% of GNI as ODA by 2013. Adopting legislation for this will further enhance the UK’s credibility.
  • Improve the quality of information on aid delivered by departments other than DFID, including on its development impact and value for money, in its public communications.
  • Avoid introducing further sector and thematic spending targets, and guard against existing targets undermining the ability of country programmes to align with partner country priorities.
  • Work more closely with other donors on approaches to support multilateral effectiveness. Increase the UK’s share of contributions to the UN provided as core resources in exchange for better evidence from UN Agencies, Funds and Programmes on their results, impact and contribution to wider development outcomes.

 

Organisation and management

 

A purpose- and performance-driven organisation

 

The UK institutional system offers a powerful model for development co-operation. A single department (DFID) has a seat in cabinet and manages most aspects of UK international development policy and the bulk of the aid programme. DFID is a capable, mission-driven and decentralised development ministry which delivers its aid programme effectively. It benefits from strong cohesion at management level and high-quality and committed staff. Strong linkages between headquarters and field offices and innovative approaches to working both in-house and with other UK departments and institutions are key features of DFID’s way of working. This applies for instance to DFID’s efforts to link research and internal policy making. DFID makes continuous efforts to improve both its efficiency and effectiveness. In recent years it has reinforced its corporate tools and systems to ensure compliance and has strengthened its country planning process.
 
DFID has so far been able to manage an increased aid programme whilst reducing its administrative costs. However, the scale and breadth of the challenge faced by DFID have increased to an unprecedented level: (i) the aid budget is expected to increase annually by 11% in real terms between 2007/08 and 2010/11, while the administrative budget will decrease annually by 5% over the same period; (ii) DFID has increased its engagement in fragile states, where it is more difficult and costly to operate; and (iii) DFID’s development portfolio is broader and involves working in more complex and fragmented development environments.

 

DFID is addressing this challenge through both strategic actions (e.g. decreasing the number of country offices) and corporate governance reforms (increasing efficiency and effectiveness and protecting resources on the front line, especially in fragile states). In particular, DFID has embarked on an ambitious internal change programme – “Making it Happen”. Its key objectives are to enable DFID to have more development impact with its resources and to better communicate this impact to the UK public, using evidence more effectively. Within this framework, DFID is pioneering a rigorous value-for-money approach, assessing results against the cost of achieving them.

 

Maintaining capacity and protecting DFID’s key strengths

 

Key UK stakeholders – such as the parliamentary International Development Committee and the National Audit Office – are concerned about DFID’s capacity to maintain the quality of its assistance with fewer administrative resources. In particular, the number and quality of DFID staff at country level is an asset and further staff reductions may put at risk its capacity to deliver the aid programme effectively. Maintaining the numbers of staff involved in programme delivery overseas and keeping the level of expertise is crucial. Strengthening the medium-term workforce planning exercise will be essential to ensure DFID has the right staff with the right skills, including in fragile states. DFID should continue to look beyond staffing for efficiency gains. Its recent plan to reduce administrative costs is positive, as it aims to meet the efficiency target set by the Treasury while protecting frontline staff.

 

DFID should also maintain enough flexibility within its value-for-money and results approach to safeguard the aid programme’s key objectives and assets. These include DFID’s long-term approach to development; its flexibility in delivering the aid programme; its increased focus on fragile states; and its new approach to civil society organisations.
 
DFID has established a single corporate performance framework. It also has a system of annual project reviews, as well as separate reporting on the 2009 white paper and other policy priorities. This means that the overall reporting framework is complex and time consuming, and staff in country offices feel that some of the requirements overlap and lack clarity of purpose. DFID should look at how it can integrate further its different streams of reporting. DFID has also made progress on evaluation, increasing the resources available, strengthening independence with the creation the Independent Advisory Committee on Development Impact (IACDI) in May 2007, and setting out a comprehensive evaluation policy in June 2009. These are positive developments which should help reinforce a culture of learning and evaluation across DFID and build stronger linkages to the wider DFID performance management and planning systems.


Recommendations

 

In order to maintain the credibility of its aid programme while “doing more with less”, the UK should:

  • Retain its powerful institutional system. This includes a development co-operation department with a seat in cabinet and a clear poverty reduction mandate, as well as a decentralised and flexible approach with a capacity to engage on long-term development objectives.
  • Maintain DFID’s front-line (programme) staffing levels and keep a critical mass of expertise in-house, including sector specialists. This will mean developing further DFID’s medium-term workforce planning system.
  • Streamline DFID’s reporting requirements further; continue efforts to develop an evaluation culture and to use evaluations as forward-looking management tools.

 

Practices for better impact

 

Implementing aid effectively

 

The UK performs well against the key aid effectiveness indicators, and partner country governments regard DFID as a valued and constructive donor. Implementing the Paris Declaration is a corporate priority for DFID, and is addressed explicitly in its corporate performance framework. DFID’s ability to implement its aid effectiveness commitments is supported by its decentralised model, and by significant use of general and sector budget support. Key domestic stakeholders support DFID’s use of budget support, provided that certain conditions are met. However, it is important that DFID continues its efforts to assess and communicate the benefits of budget support over other modalities.

 

External stakeholders recognise and appreciate the UK’s efforts to align with partner country priorities and to harmonise with other donors. DFID has often played a leadership role in developing joint country strategies and performance management frameworks at the country level, and it participates in delegated co-operation and silent partnerships. DFID could, however, focus its support more clearly on a smaller number of sectors in which it has clear comparative advantage, in line with the EU code of conduct on complementarity and division of labour. This will be particularly important as partner countries increase their efforts to improve donor division of labour and complementarity at the country level.

 

The UK has taken steps to implement its international commitments on medium-term predictability. DFID has instructed its country offices in most partner countries to discuss with governments likely future aid flows over a three to five-year horizon. Efforts should be made to extend this approach to all programme countries. In some countries, DFID has been innovative in implementing ten-year Development Partnership Arrangements (DPAs), though these remain in the minority and the firmness of the commitment they embody is not clear.

 

DFID’s approach to conditionality has improved, with guidance restricting the use of policy conditionality. DFID’s assistance is conditioned by three underlying partnership principles: (i) commitment to poverty reduction and the MDGs; (ii) respect for human rights and international obligations; and (iii) strengthening financial management and accountability. Adherence to these principles is assessed through mutually agreed performance benchmarks, often derived from partner countries’ own national development strategies. However, there are no explicit links between the benchmarks (which DFID stresses are not equivalent to conditions) and the partnership principles. This means that DFID could do more to implement its commitment under the Accra Agenda for Action (AAA) to make public all conditions linked to disbursements, particularly with regard to human rights issues.

 

The DAC recognises the UK’s positive contribution to international dialogue on aid effectiveness, and in particular its influential role in shaping the Accra Agenda. In recent years, the UK has focused on shorter-term and high profile initiatives – such as the International Aid Transparency Initiative (IATI) and International Health Partnership (IHP). The Committee learned that the UK has championed specific initiatives such as IATI. The UK is aiming to galvanise progress in delivering on the Accra accountability and transparency commitments by supporting IATI. At the same time, the UK can and should continue to contribute to the international dialogue on aid effectiveness, where it can share its experience and tools for the benefit of both donors and partner countries.

 

Learning from priority topics

 

Capacity development

 

The UK’s development policies are relatively strategic in their approach to capacity development; however, neither the UK government nor DFID has articulated a clear or explicit vision for capacity development in the context of UK development co-operation. The absence of an internal discourse on capacity development that cuts across DFID’s thematic work may hinder its ability to disseminate capacity development lessons across sectors and themes.

 

DFID situates capacity in the context of state capability and accountability. Accordingly, it has strengthened its approach to capacity assessment at the macro level through appropriate tools grounded in the country planning process. DFID does however face challenges at the individual programme or project level, where the design of interventions is not systematically grounded in a robust approach to capacity assessment. The placement of technical co-operation personnel is seen by DFID country offices as a fairly standard response to capacity challenges, and although this can be effective, it does not necessarily lead to the sustainable development of partner country capacities.

 

DFID’s approach to managing technical co-operation is flexible, and it has incorporated key aid effectiveness principles. As with the rest of the UK’s bilateral assistance, technical co-operation is fully untied. DFID seeks to pool resources with other donors where appropriate, and encourages the use of partner country systems for the procurement of technical co-operation expertise where feasible.

 

Supporting capacity development efforts in partner countries can place high demands on country office expertise. It is important that DFID maintains enough expertise in its country offices to ensure high quality dialogue on capacity development initiatives and, where appropriate, to continue playing a role in the direct management of inputs to projects and programmes where this is called for. The UK’s focus on state capability has tended to concentrate efforts on capacity development in the government sector. DFID recognises the need to expand its emphasis to non-state stakeholders, and plans to increase support to civil society and other non-state actors. This is a positive development.

 

Environment and climate change

 

Driven from the highest levels of government, the UK is strongly committed to tackling climate change. The prominence of this agenda is reflected in the strong legal and institutional framework in place since 2008. This created the Department for Energy and Climate Change (DECC), enacted the Energy and the Climate Change Acts, and established a specific public service agreement (PSA) on climate change. Climate change is a priority area in the 2009 White Paper on International Development. The objectives set in the PSA and the white paper are translated into DFID’s strategic objective on promoting climate change mitigation and adaptation measures and ensuring environmental sustainability. DFID now has greater internal capacity for tackling climate change and broad cross-departmental policy work is done at every level. DFID also makes effective use of various sources to develop knowledge, building close links between its internal climate change research capacity, other UK research institutes and country programmes. Climate change operations are still at an early stage, although key steps include an implementation plan approved in May 2008 and a pilot exercise involving nine partner countries. Lessons from this pilot should help develop corporate guidance on mainstreaming climate change and incorporate climate change and disaster risks into environmental screening. As the UK engages further on climate change, it must ensure that its approaches to climate change also help to alleviate poverty.

 

The UK plays an influential role in linking climate change with development in international fora. In particular, it promotes the “additionality” of climate change funding, urging that climate finance should be additional money and should not divert resources from existing ODA commitments.
 
Beyond the specific issue of climate change, DFID sees environmental protection as critical for reducing poverty. While working through international partnerships, DFID also strives to mainstream sustainable development in its bilateral programme, including in the context of budget support. In line with OECD/DAC guidance, DFID has made efforts to ensure systematic and more rigorous implementation of environmental screening and strategic environmental assessment. This comes with an increased emphasis on disaster risk reduction, with the 2009 white paper committing to allocate 10% of any natural disaster response money for prevention and preparedness. This is commendable and should be seen as an opportunity to mainstream further disaster risk reduction in the programme. To support its engagement, DFID must maintain appropriate resources and technical capacity for broader environment issues. It must also ensure that its programmatic support in partner countries is aligned to partner countries’ needs and fits into the wider division of labour, strategically selecting key issues where it can add value. In order to monitor progress, DFID could complement its annual corporate reporting on implementing climate change and environmental sustainability activities with broader impact evaluations in the medium term.

 

Recommendations

 

To increase further the effectiveness and impact of its development co-operation, the UK should:

  • Make public all conditions linked to its aid disbursements. It should clarify conditions on governance and political issues, so that partner countries are clear about what would constitute a breach of its partnership commitments. It should also continue efforts to harmonise conditions with other donors.
  • Improve internal communication and guidance on capacity development; strengthen capacity assessments in the development of projects and programmes; and implement its commitment to support the development of capacities of non-state actors.
  • Include climate change and disaster risk reduction aspects in DFID’s environmental screening system.
  • Continue to pay attention to wider environment issues, prioritising areas aligned with partner countries’ needs and where it can add value compared with other donors. Ensure sufficient capacity to engage in these areas.

 

Humanitarian action

 

The UK is a prominent actor within the international humanitarian system in both policy-setting and financial terms. Of all the DAC donors, DFID gives the third largest volume of assistance to the international humanitarian system, with 84% of humanitarian funding going through multilateral channels. In 2007, nearly two-thirds of UK’s humanitarian expenditure was either un-earmarked (40%) or lightly earmarked (24%). Much of the un-earmarked funding is given through multi-year agreements, which increases the predictability of UK support. The UK is considered to be a committed advocate for principled humanitarian action. With a prominent role in instigating and driving the UN humanitarian reform agenda, the UK has also been instrumental in promoting standards and practices across the system. The links between policy and practice within UK humanitarian assistance appear resilient with a corresponding strong association with humanitarian policy orientations at the field level.

 

DFID has a clear strategy for humanitarian action. This is anchored in the principles of good humanitarian donorship (GHD) and covers the full spectrum of humanitarian action from prevention and preparedness through response to recovery. In line with these principles, DFID has divested responsibility for humanitarian action to country teams; has invested heavily in the UN humanitarian reform process; has built strong partnerships with UN, Red Cross and NGO implementing partners; and has encouraged adherence to learning and accountability standards. The UK is also preparing a Strategy on the Protection of Civilians in Armed Conflict. This responds to the 2006 peer review recommendation for greater clarity in the roles of the relevant government departments (Foreign and Commonwealth Office, Ministry of Defence and DFID) in protecting civilians. The strategy should also help to define both the scope and limitations of protection activities financed through UK humanitarian action. However, it may also be prudent to expand the scope to protection in crisis situations other than armed conflict. The operational relationship between DFID and the Ministry of Defence during natural disaster responses is set out in a memorandum of understanding. Amongst other things, this provides for military assets to be used as a last resort, under DFID’s authority.

 

In general, DFID has successfully protected its humanitarian action from other agendas that might undermine its impartiality and independence. However, further clarity and guidance may be needed to identify the appropriate mix of DFID’s humanitarian and peace- and state- building approaches in states affected by conflict or in fragile situations.

 

DFID’s strategic objective on conflict, humanitarian and peace is underpinned by a Divisional Performance Framework. All major humanitarian responses are evaluated and recommendations are subject to management responses. Grants to NGOs require activity evaluations, and accountability to beneficiaries is promoted in the funding guidelines for NGOs. However, linkages between these different levels of performance measurement should be clarified.

 

The special needs of vulnerable groups are explicitly recognised in both humanitarian and disaster risk reduction policies. To support this approach, DFID should clarify how other corporate policies (including cross-cutting policies such as gender) intersect with the humanitarian decision-making processes.

 

Recommendations

 

To consolidate its leading role as a good humanitarian donor, the UK should:

  • Identify the appropriate mix of humanitarian and peace-building/state-building approaches in conflict-affected and fragile states.
  • Strengthen the performance framework for humanitarian action.
  • Clarify how other corporate policies intersect with the humanitarian decision-making processes.

 

Related Documents

 

United Kingdom (2006), DAC Peer Review: Main Findings and Recommendations

United Kingdom (2001), Development Co-operation Review: Main Findings and Recommendations

List of Peer Reviews of DAC Members

Effective Aid Management: Twelve Lessons from DAC Peer Reviews

 

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