Review of the Development Co-operation Policies and Programmes of the United Kingdom
See also the United Kingdom's Aid-at-a-Glance
Overall framework and new orientations
UK offers a powerful model for development co-operation
The UK is currently seen by many aid practitioners and donors as one of the bilateral models for today’s evolving world of development co-operation. The UK Government has made global poverty reduction a national priority. In 1997 it created a freestanding Department for International Development (DFID) and a seat in Cabinet for the Secretary of State for International Development. A strong political alliance was formed with the Prime Minister, the Secretary of State and the Chancellor of the Exchequer that has ensured consistent clarity of vision and the resources required to address this large and complex issue. The bedrock of the current vision is contained in the 2002 International Development Act which provided a clear legislative mandate around poverty reduction (DFID’s “ONE” aim) and gave the UK its current strategic orientation on issues of development, not only aid. This has been further refined by DFID at the policy level through a series of regular “White Papers”.
This framework has permitted the UK to organise strategically around a lean and well managed delivery system. The institutional core of the system is DFID, which has both ministerial (policy and government leadership) and agency (aid delivery, technical expertise) functions. Because it is clearly designated the lead department for combating international poverty, DFID enjoys a well defined, unambiguous relationship with other departments in this area. This permits a unified government approach and coherent policy direction around DFID leadership. DFID knowledge allows it a position of interdepartmental leadership and has raised the profile of development co-operation. DFID is responsible for almost all ODA, with direct control over some 84% of total disbursements. While development policy is strategically directed from headquarters, DFID views its delivery operations as “country led, decentralised and delegated” through a world-wide network of 67 offices. Operational follow-through on the substantive intent of the International Development Act is provided through a government-wide system of Public Service Agreements (PSA), both with respect to DFID and other departments. High calibre and highly motivated staff are also a linchpin of the DFID system.
This coherent and well organised approach to development co-operation has permitted the UK to make good progress against the DAC recommendations of the 2001 Peer Review, including substantial movement towards an ODA/GNI target of 0.7%, a sharper focus on poverty, a stronger framework for efforts of government-wide policy coherence, a proactive collaboration with other donors and improved operational guidelines (the Blue Book), headquarters-field relationships, and systems of monitoring and evaluation. DFID has gone through a “golden age” of growth and achievement since 1997, and certainly since the last Peer Review in 2001. It must now consolidate those achievements and prepare for the next growth phase, when performance scrutiny will intensify, both domestically and internationally.
Challenges of doing “more with less”
In spite of the well informed and strategic manner in which the UK has carried out its development co-operation over the last decade, it is already aware that it will face important, simultaneous challenges in the near future. It proposes to more than double its current level of ODA in the next seven years, to deliver its aid better (aid effectiveness, results monitoring) and to move further into more complex and difficult environments for aid delivery (fragile states and situations of conflict). At the same time, it plans to do so with fewer delivery resources (10% reduction in DFID staff numbers and support service costs) as part of the Efficiency Programme 2005-2008. It will be a challenge for the UK to undertake all these tasks while maintaining the quality and innovative character of its aid.
Sustaining leadership and support calls for new tactics
DFID has inspired and endorsed both the Paris Declaration on Aid Effectiveness and the EU Action Plan on Harmonisation. It is now developing a Medium Term Action Plan for aid effectiveness, which will emphasise improving the quality of aid, both through international processes and bilateral country programmes. The plan establishes an Action Matrix at the country level, based on Paris Declaration indicators and additional EU and UK commitments. For the moment, implementation of the aid effectiveness agenda is not consistent across all of DFID and the Action Matrix will be an important tool to encourage further improvement in this area. DFID (and all other donors) currently have considerable scope for innovation in favour of greater effectiveness, including immediate opportunities to foster delegated partnerships and other forms of harmonisation.
British strategic interest in promoting more effective approaches to aid includes a role to motivate bilateral and multilateral donors to act similarly. DFID frequently uses its own system flexibility to encourage more effective donor behaviour. Initiatives in this area are often highly appreciated by the international community. However, DFID enthusiasm for certain initiatives is not always shared by other partners and British advocacy can be perceived as promoting DFID’s own model rather than leading and encouraging complementary donor action. DFID may be paying more attention to the strategy of introducing reform (e.g. general budget support) than to the tactics needed to effectively implement such reforms. Broader donor receptivity and collaboration could be possible in a more inclusive and empirical environment for partnership. As DFID influences international partners toward common approaches, it should seek to strike a balance between its interest in promoting aid reform and in leading donor harmonization efforts.
It is widely felt that UK development co-operation is at an historic high point of political and public support, buttressed by a well thought through and professionally marketed Communication Strategy. National dialogue is also flourishing in the current environment, involving a rich assortment of NGO, academic, think tank and other civil society groups. However, DFID is already asking the fundamental question of “how to maintain the momentum?”. It realises that success will require an ability to communicate results convincingly and even more simply to “tell the story” of tomorrow’s development co-operation. Strategically tailored communications will be needed to report results effectively and to justify involvement in less clearly understood areas, such as expanding engagement in fragile states. Effective communications are also important when aid is suspended in a partner country in the light of serious human rights violations and corruption. Although DFID has issued a policy paper on conditionality and has drafted a statement on implementation, some stakeholder perceptions and expectations of this policy remain unclear. A further clarification of UK’s approach to political conditionality in light of recent events (e.g. Ethiopia) could also help harmonize donor approaches.
Aid volume and distribution
Strong commitment to scaling up
Over the period 2000-04, ODA volume of the United Kingdom increased by 30% in real terms. With USD 7.9 billion disbursed in 2004, the United Kingdom is now the fourth largest donor in volume terms. The ODA/GNI ratio rose progressively to attain 0.36% in 2004 and according to preliminary figures, 0.48% in 2005. In 2004, the United Kingdom committed to achieving the 0.7% ODA/GNI target by 2013, backed with a financial “roadmap” agreed to by the Treasury. When implemented, net ODA volume will increase over the 2004 level by 22% (USD 9 602 million) in 2006 and by 85% (USD 14 600 million) in 2010.
Scaling up at this speed will require development aid to remain among the top government expenditure priorities. This is particularly the case given the lower amounts of debt forgiveness in coming years (the high point of debt relief was in 2005 when it represented 34% of total ODA). Since 2000 the United Kingdom has actively promoted new funding mechanisms, such as the International Finance Facility proposed in 2003 to rapidly increase support for the MDGs over the period 2006-2015. It has also successfully supported additional debt relief for some countries, including relief of the multilateral debt of Heavily Indebted Poor Countries (HIPC).
In addition to the scaling up issue, DFID emphasises the need for better aid predictability. Thanks to three year budget allocations from Treasury, DFID is able to set rolling triennial budgets at the division and department levels and frequently enters into three-year arrangements with its partner countries. DFID is also considering longer-term arrangements with countries committed to poverty reduction and good governance, and has already signed ten-year partnership arrangements with Sierra Leone, Rwanda and Afghanistan. A Resource Allocation Model is used to carry out DFID annual planning, with emphasis on achieving a balance between the improved predictability of DFID support and the flexibility needed to adjust allocations to countries most in need, while allocating resources effectively among Low Income Countries (LIC).
Clear poverty reduction focus
DFID programming is strongly focussed on poverty reduction and closely aligned to the MDGs. Geographically, DFID currently has a PSA target of allocating at least 90% of its bilateral funding for LICs in 2005-08. Within this allocation guideline, DFID plans to emphasize scaled up aid to Africa and Asia, while de-emphasizing aid to Latin America. DFID is encouraged to sustain its strong emphasis on Africa to follow through on its G-8 Presidency and Africa Commission initiatives. Sectorally, DFID does not routinely use targets, but social infrastructure and services accounted for 41% of UK gross disbursements in 2003-04. A growing emphasis is now being placed on the “government and civil society” sub-sector in line with DFID stronger engagement in fragile states, and on basic education in support of the MDGs. DFID benefits from a clear mandate, an ambitious commitment and a strong strategic approach which efficiently drive the entire programme, whether in organisational terms or sector allocation spending. It is important that DFID avoid imposed earmarks which can contradict its ownership approach and undermine effectiveness.
The DFID approach to maintaining this strong poverty reduction focus and maximising its impact includes policy documents (e.g. the Middle Income Country policy) and programming tools (e.g. the Resource Allocation Model). In coming years, the balance between good performers and fragile states in DFID’s portfolio will need to be assessed against the ability to have the greatest impact on poverty reduction while demonstrating results to ensure continued public support. Future needs for humanitarian action will also influence DFID’s approach to geographic and sector allocations.
DFID is increasing the attention it is paying to the cross-cutting “pro-poor growth” agenda and is considering further integration of economic growth and productive sectors into programming for poverty reduction. Over the last decade, support to economic infrastructure and services as a percentage of ODA declined (although it increased in real terms) and in 2003-04 stood below the DAC average; the percentage of ODA going to the production sectors also declined, although the UK position equated with the DAC average in 2003-04. As it addresses pro-poor growth, DFID will need to emphasise its own areas of expertise and comparative advantage and seek complementarity with other donors in line with aid effectiveness principles. DFID should also pursue its efforts to better capture the gender equality dimension in its programme while taking advantage of new aid modalities. This could include widening the ownership of this objective within DFID and more closely aligning DFID’s gender agenda and decentralised country office practice.
Contributions to multilateral organisations linked to effectiveness
With about one-third of its ODA disbursed to multilateral organisations, the United Kingdom is an important contributor to that system. DFID has developed a strategic approach to the multilaterals, with individual institutional strategies framing the shape of each partnership. DFID tracks the results of the multilateral institutions through a Multilateral Effectiveness Framework (MEFF). These tools help DFID prioritise its multilateral support and provide the means to allow it to play a leading role within the international community to promote the effectiveness of multilateral aid, in line with its 2005-08 PSA objective. DFID could further capitalize on these tools to develop synergies between multilateral and bilateral channels. At the same time, it will want to keep in mind the multilateral principles when developing specific institutional strategies, allocating non-core resources and assessing multilateral organisations’ effectiveness. To this end, strategic assessment tools, such as the MEFF, have the potential to become common frameworks for all donors.
Promoting policy coherence
UK actively pursues policy coherence for development, but challenges remain
The current government used its first White Paper (1997) to establish the principle that all government policies affecting developing countries should take account of the objectives of sustainable development. A second White Paper (2000) addressed the development impact of non-aid policies and led to a substantial engagement by DFID on trade. In 2002, the International Development Act provided a legislative basis for the whole of government to deal coherently with issues of development. Much of this high level attention to policy coherence has its origins in the strong support afforded by the Prime Minister and the Chancellor of the Exchequer. It permitted the UK to use effectively its dual Presidency of the G-8 and the EU in 2005 to further the development agenda. DFID has moved rapidly to operationalise its leadership in this area. It has found its work greatly facilitated by the strategic positioning of the Secretary of State in the Cabinet and several Cabinet sub-committees (e.g. asylum and migration) and by the existence of PSA targets on this topic which are shared among government departments either with DFID leadership or its strong participation. Organisationally, DFID has a strong Policy Division which has proven effective in focussing national and international attention to issues of policy debate and in developing policy guidance that is used across government, within DFID headquarters, and in country offices to achieve development policy coherence. This policy function is instrumental in supporting DFID’s leadership at home and abroad.
Significant progress has been made in some areas of policy incoherence to date, including those relating to trade and untying, where DFID has successfully worked particularly at the national and European levels. DFID could usefully undertake a comprehensive review of its experience of untying, which would be of general interest for the other members of the DAC. A report by the Africa All Party Parliamentary Group in 2005 encouraged greater attention to national approaches concerning corruption, anti-bribery and money laundering. Another recent report from the parliamentary International Development Committee notes in summary that UK work on policy coherence for development has been good, but “could move further and faster”. For example joined-up working on migration has begun to receive greater attention, but there is still more to do in this area. Finally and more specifically, efforts to improve policy coherence toward fragile states also have been noteworthy, although further improvement is challenged by department cultures. In fragile states it is crucial to bridge institutional differences between the local DFID office and the UK Embassy and to build regular communication and effective joint approaches.
Better operationalising policy coherence: priorities, collaboration and delivery
Work on policy coherence for development to date has tended to be issue-based and has been raised through a variety of national political channels, NGOs or international campaigns. Given the UK’s recognition of the central role of policy coherence for development success, DFID could more proactively identify its priorities so as to better align partners and resources toward addressing high impact policy coherence issues. Current work on the 2006 White Paper is ideally suited to helping define these priority areas.
Such a prioritised agenda for action would have numerous operational benefits. It could facilitate the task of joining forces with other departments and would permit a more organised cross-Whitehall identification of lead departments for each issue. DFID has selectively forged effective alliances with FCO and others in London and should consider expanding these links in a manner targeted to priority issues in high payoff areas. Inside DFID, a prioritised agenda could help to establish lead responsibility for agenda implementation and help to garner the organisational forces needed to analyse and address the policy issue at hand, including an appropriate role for country offices which draws on their considerable local insight.
DFID recognises that monitoring and reporting of results is a cornerstone for the future of all aspects of its development co-operation. Policy coherence actions, given their importance for the overall achievement of results need to be fully integrated into DFID’s results framework. Because policy coherence issues generally go beyond the scope of action of any one bilateral donor, DFID should work with other partners to establish its results monitoring system.
Aid management and implementation
Scaling up implications for organisation and management
DFID senior management has carefully charted a modern, corporate management approach, including strong corporate values and a logically laid out Corporate Performance Framework, which is intended to be strategic and transparent. At the level of operational procedures, DFID issued in 2005 a 100-page Blue Book which sets out the core rules, procedures and systems of the department. Compact and user friendly, the Blue Book is one of the best examples of this kind of one-stop, primary reference guide seen in the DAC to date.
The comprehensive and logically constructed programming hierarchy found in the Corporate Performance Framework is administratively efficient, simple and transparent. However, a potential disadvantage of this top-down and organised approach is the tension between the strong, centralised directives coming from London and DFID’s objectives of country ownership and operational decentralisation. Elements of this tension may be defused as DFID implements its Medium Term Action Plan for aid effectiveness, which should improve the quality and integration of its delivery into those of other partners. Rapid scaling up of UK funding will require flexible application of the current, highly structured system.
Performance system improvements: streamlining and greater results focus
The use of a “Corporate Performance Framework” is a clear indication of DFID management intent to focus on performance as the touchstone of its operational approach. Its logical, bottom-up sequence of feedback actions reflects the performance achieved at each level of aggregation: delivery planning is submitted to routine quarterly, mid-year or annual reviews; business planning is reviewed annually; higher goals are tracked annually.
This carefully laid out approach may, over time, generate more information than needed unless care is taken to clearly articulate policy maker needs and target other specific user needs. As with other DAC member systems, there will be a need to continue simplifying and integrating reporting systems, all of which impose upon the time of field managers. Similarly, the renewed interest in “telling the story” to the British public (rather than simply reporting data) may require rethinking these systems. Increasingly, DFID will want to reflect with its partners on how to support field based, common results systems. Because of DFID’s increasingly stronger interest in fragile states, which often are less on track to meet the MDGs and have weaker data, DFID will need to develop performance measurements that demonstrate results in these special environments.
Assuring the best use of high calibre and motivated staff
As with other parts of its system, DFID manages its human resources strategically, as is currently outlined in the document Our People Strategy 2005-2008. DFID focuses on the strategic challenges of development co-operation as the starting point of its human resource management, with the aim of ensuring the availability of skills necessary to support DFID corporate objectives. The Strategy situates DFID staff at the centre of its management approach and aims to place them in a work environment of simplified procedures and “people processes” so they may function in a wide range of operating environments (e.g. flexi-time, teleworking, teleconferencing). DFID now has the reputation of being one of the UK government’s best work environments.
The fast evolving international development agenda (e.g. sharing of staff, delegated partnerships, management by results) and the features of future UK development co-operation noted previously (10% reduction in staff size, doubling of ODA volume, fragile state focus) will require regular review of DFID’s skill mix and assignment of personnel. Care will be needed to maintain a diversity of skills that reflects the range of priority interests of the Department.
Based on limited Peer Review exposure to actual field practice, DFID is encouraged to examine the current rate of staff turnover which in some cases may undermine effective programme implementation. Another personnel issue that attracted Peer Review attention was the role of the advisor as a “thinker” vs. that of a “doer” and the ever-present need to use integrated country strategic teams to both shape programmes and implement them. The Review team would also encourage staff currently working in headquarters to spend more time visiting the field and country office staff to spend more time out of capital cities. Greater effort should be made in getting key staff closer to the development realities they support. Also DFID should continually assess the optimum balance and size of staff between headquarters and the field and between well-performing and fragile countries.
Assuring aid programme quality and delivery modalities appropriate to country contexts
In parallel with top end programming processes, the structured DFID approach to development has led the Department to produce a very wide range of policies, practice papers and other directive materials, some of which are not necessarily linked to field needs or realities. Particularly as DFID becomes more field based and moves closer to an operational approach that involves multiple partners, it will want to review the utility of this type of documentation to ensure that it is not over-investing intellectual resources into an area that is either redundant with other partner efforts or of little relevance to the field. Also, thematic and cross cutting policy needs to be further mainstreamed in the DFID programme. In an effort to improve the relevance of its policy, DFID already requires that new policy documents contain implementation plans which state their intended value-added and impact. Given the well-structured, top down aid programming guidance reflected in policy documents, DFID will want to encourage and assure that their application furthers country ownership and aid effectiveness.
Poverty Reduction Budget Support (PRBS), which includes both general and sector budget support, is seen by DFID as an important means of strengthening partner country ownership and the simplest way for donors to align with government priorities. The UK is considered a champion within the DAC regarding budget support. DFID estimates that over 20% of its bilateral programme consisted of PRBS in 2004 and growing. Nevertheless, budget support is an area of donor involvement that still is actively debated, the most recent evidence for which is a major joint evaluation on the topic (supported by DFID) concluded this year. It is important that DFID’s corporate approach to PRBS be consistently applied in partner countries as part of a range of aid instruments and to avoid the impression that it may always be the preferred instrument. It is encouraged to utilise the results of the 2006 joint evaluation as an opportunity to review how its policy is to be translated to its own country offices, donor partners and recipient countries alike.
In the field, the UK needs to develop a more systematic and strategic approach to local civil society, especially given the DFID tendency to work at the high end of development co-operation, particularly at the level of policy dialogue and budget support and frequently with high level government officials. It is vital that such high level dialogue be nourished by a substantive dialogue with the lower levels of the development spectrum, particularly as the UK aims to promote results and real ownership of locally informed poverty reduction programmes.
In the large and growing group of so-called fragile states, there is a need to bring greater clarity to the relationships between different policies, units and professional cadres directly or indirectly involved in management of ODA in these countries. This should cover in particular the operational linkages between the Fragile States Team, Conflict, Humanitarian and Security Department (CHASE), Africa Conflict Group, Post Conflict Reconstruction Unit (PCRU), etc, as well as how the humanitarian, conflict and governance advisers relate to each other and to country teams on the fragile states issue.
A welcome leadership role in international humanitarian reforms
Clear operational frameworks, an active political leadership and strong organisational set-up have placed the UK as a leader among donors in improving and reforming the international humanitarian aid system and as a main financial contributor to humanitarian action. The UK is one of the largest bilateral donors in humanitarian action and is recognised as a provider of needs-based, flexible and predictable humanitarian support. According to DFID statistics humanitarian disbursements totalled GBP 437 million in 2004/05, equivalent to approximately 10% of its total ODA, which is above DAC average levels. As the volume of UK ODA increases, it should maintain its ability to respond to humanitarian crises on the scale needed.
The UK aims to further improve the capacity of the national and international humanitarian systems. In addition to its own system improvements, it is launching a reform agenda for the humanitarian part of the UN and wants to advance the “Principles and Good Practice of Humanitarian Donorship” (GHD), agreed to in Stockholm in 2003. It was on the UK proposal that the DAC formally endorsed GHD at its High Level Meeting on 5 April 2006. The UK agenda for international humanitarian reform also includes establishing and strengthening the UN Central Emergency Response Fund (CERF), strengthening the UN Common Humanitarian Action Plans and the role of UN Humanitarian Co-ordinators, increasing funding levels for humanitarian aid and disaster risk reduction, and establishing benchmarks for monitoring performance and accountability. Areas of progress include the establishment of pooled humanitarian funding at international (CERF) and country levels (e.g. DRC and Sudan).
Strong strategic foundation
The International Development Act outlines the use of humanitarian aid and its relationship to development co-operation efforts. In 2003, the UK endorsed GHD and adopted a national implementation action plan. A comprehensive humanitarian policy was launched in June 2006, covering a framework for humanitarian aid, a policy on disaster risk reduction and humanitarian features of the forthcoming White Paper 2006. The consultation process underlying these framework changes already has promoted a broader understanding of humanitarian issues across government, but further efforts to raise awareness of new policies and of GHD at the field level should be made a priority. Strong linkages with DFID development co-operation planning will be essential both to advance the disaster risk reduction agenda and to engage in new partner countries and fragile states.
Need for institutional clarity
DFID’s position as a separate ministry with a strong legislative mandate is an operational advantage and strengthens the foundations and systems for principled humanitarian aid. The particularly active role played by the Secretary of State has reinforced the overall reform agenda. Management of humanitarian aid is located in DFID and centralised in two key units; the Conflict, Humanitarian and Security Department (CHASE) in the UN, Conflict and Humanitarian Division, and in a specialised unit (Africa Conflict and Humanitarian Aid Unit - ACHU) in Africa Division. CHASE is responsible for policy development, monitoring and operational support and ACHU for humanitarian programmes at the regional and country level. The potentially overlapping mandates of CHASE and ACHU can cause difficulties for interaction with field offices and their respective responsibilities could be clarified further. The core strength of DFID’s humanitarian system is the strategic use (and the competence of) its humanitarian and livelihood advisors. The use of national/regional policy advisors is crucial for effective management of protracted and structural humanitarian emergencies. Given the importance of human resources for humanitarian action and the high expectations currently raised in this area, DFID will need to maintain and further develop its expertise in this area.
Humanitarian affairs require efficient inter-ministerial co ordination across government. Other key ministries directly or indirectly involved in humanitarian action include the Foreign and Commonwealth Office (FCO), the Ministry of Defence (MOD) and the Cabinet Office. The roles and communications between DFID, FCO and MOD around fragile states and civil military interaction need to be clarified. Priority should be given to defining roles and responsibilities and reaching consensus on how to maximise the protection of civilians.