Press Notice 04a, Session 2006-07

PUBLICATION OF REPORT

DEPARTMENT FOR INTERNATIONAL DEVELOPMENT DEPARTMENTAL REPORT 2006

BIGGER BUDGET WILL MEAN SPENDING PROBLEMS FOR DFID

The Government's tripling of international aid by 2015 will be constrained by its need to cut 10% of its overseas development staff, says a report published today by the House of Commons International Development Committee.

The substantial increase in DFID's budget is welcomed by the Committee in its report on the Department for International Development Departmental Report 2006. However the report argues that effective distribution of these new funds will be a challenge given DFID's efficiency target of cutting its staff headcount by 10%.

Rt Hon Malcolm Bruce MP, Chairman of the International Development Committee, said, "DFID is the only government department which focuses more on inputs rather than outputs. Whilst we very much welcome the increase in DFID's budget, we have concerns that a 10% staff cut will necessitate the Department spreading itself too thinly across the world, and may risk compromising DFID's international reputation for the quality of its aid."

Today's report assesses DFID's options for doing 'more with less' whilst maintaining the quality of its aid. An increasing aid budget does not necessarily enable a simple increase in funding to the developing world. Many countries have limited 'absorptive capacity' to accept and spend large payments from donors. For instance, doubling an education budget will not yield development benefits unless sufficient numbers of teachers are trained and classrooms built. The intricate work required to channel this extra aid effectively will be made all the more difficult if DFID is to reduce its staff.

One option for 'doing more with less' is channelling more UK funds through multilateral institutions such as the UN. However, this risks diluting DFID's ability to influence its own aid objectives. It is clear that DFID already has major concerns with how multilaterals spend UK funds. The Chairman said: "Hilary Benn withheld a £50 million contribution to the World Bank in September 2006 to register his disagreement with the Bank's policy on setting conditions for aid payments to developing countries. If these issues are not resolved, it may mean that DFID chooses in future to spend more of its money directly rather than channelling it through multilateral bodies. Hilary Benn will need to make strong representations to the Chancellor to ensure that DFID's capacity to spend money effectively itself is not compromised because of staffing constraints imposed by the Treasury."

Another method for effective distribution of increased funds is wider use of budget support, whereby funds are paid directly into a developing country's central exchequer. However, it seems that the UK Government is yet to make up its mind on the usefulness of budget support, having recently withdrawn support of this kind to Uganda and Ethiopia because of concerns about political governance and human rights abuses.

Whilst recognising that new funds will permit a valuable expansion of the UK's efforts, the Committee has questioned the rationale for certain new areas of work, notably DFID's new work-stream on fragile states. DFID does not, historically, have a comparative advantage in fragile states; more established work is carried out in 'good performers' such as Tanzania and Ghana. Whilst the importance of donors addressing the huge need in fragile states such as the Democratic Republic of Congo (DRC) is undisputed, DFID's sudden prioritisation of such states seems arbitrary€”DFID has not made similar forays into other fragile states. Working in countries such as the DRC, which is French-speaking and remains conflict-affected, is expensive and greatly increases DFID's exposure to risk.

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The report (including oral and written evidence) will be published on Thursday 30 November at 00:01 hrs as HC 71 of Session 2006-07.

An embargoed electronic or hard copy will be available for witnesses, Government Departments and the press from 11.00 a.m. on Wednesday 29 November 2006. If you would like to be emailed an embargoed copy or would like to arrange collection of an embargoed report from 7 Millbank please e-mail [email protected] or call 020 7219 1223.

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Further Information:

The membership of the Committee is as follows: Malcolm Bruce MP (Chairman, Lib Dem), John Barrett MP (Lib Dem), John Battle MP (Lab), John Bercow MP (Con), Hugh Bayley MP (Lab), Richard Burden MP (Lab), Mr Quentin Davies MP (Con), James Duddridge MP (Con), Ann McKechin MP (Lab), Joan Ruddock MP (Lab), Mr Marsha Singh (Lab).

Media Enquiries: Alex Paterson, 020 7219 1589 or [email protected]

Committee website: www.parliament.uk/indcom

Watch committees and parliamentary debates online: www.parliamentlive.tv

Publications/Reports/Reference Material: Copies of all select committee reports are available from the Parliamentary Bookshop (12 Bridge Street, Westminster, 020 7219 3890) or the Stationery Office (0845 7023474)