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Donor countries

Bucking the trend

by Nicolaus von der Goltz

In depth

Britain sets priorities in empowering and improving the lives of girls and women. Pakistani girls with laptops

Britain sets priorities in empowering and improving the lives of girls and women. Pakistani girls with laptops

Britain’s new government is cutting costs and implementing radical saving programmes – but not at the Department for International Development (DFID). For the first time, DFID is headed by a Conservative politician, Andrew Mitchell. He is, however, not a novice in this field, but has been in charge of development issues in the Conservative shadow government since 2005. By Nicolaus von der Goltz

Neither the issues nor the ministry itself were new to Mitchell when he took office. His personal network is far-flung, and he played a leading role in drawing up the Conservative Party’s Green Paper on international development entitled “One World Conservatism“. It calls for more transparency and a ­greater focus on outcomes. This document is the foundation of Mitchell’s policy.

Two junior ministers – Alan Duncan and Stephen O’Brian – complete the new DFID leadership. They both belong to the Conservative Party. Unlike other government departments, there is no senior ­representative of the Liberal Democrats at the top level. In regard to development policy, however, the two parties hardly differ.

The coalition agreement combines continuity and change. Like the previous Labour government, the new cabinet emphasises the Millennium Development Goals (MDGs). It has maintained the ­separate department for development and reaffirmed the commitment to spending 0.7 % of Gross National Income (GNI) on aid by 2013. In continuity with Labour, the new coalition appreciates the OECD’s definition of official development assistance (ODA) and disapproves of tied aid.

Mitchell puts a greater focus on what he calls “Value for Money“, however. It emphasises transparency, evaluation and results as core issues of up-to-date development assistance. Mitchell wants to mobilise societal and political backing for the planned funding increases. DFID’s new Business Plan states: “In the current financial climate, we have a particular duty to show that we are achieving value for every pound of taxpayers’ money that we spend on development. Results, transparency and accountability will be our watchwords and will guide everything we do.“

Early on, Mitchell made an “Aid Transparency Guarantee“. From 2011 on, all new DFID projects worth more than £ 500 will be fully disclosed online. An Independent Commission on Aid Impact (ICAI) will scrutinise DFID projects and programmes and report directly to Parliament. New aid pledges are only to be made for tangible goals. At the MDG summit in New York in September last year, the British government accordingly promised to protect the lives of 50,000 pregnant mothers as well as 250,000 newborn babies for a period of five years.

All current projects, whether run by DFID or by multilateral agencies, are being extensively evaluated. The results are likely to have a bearing on future funding and policies. For instance, the number of countries that receive DFID support could decrease.

Structural reforms

DFID’s Business Plan was published in November 2010. Its further priorities are to boost economic growth, strengthen fragile states, empower and improve the lives of girls and women and fight climate change. Tangible measures include:
– A new DFID department that will focus on private-sector development and benefit from enhanced personnel exchange with private companies. The development bank, Commonwealth Development Corporation (CDC), is to focus more on poverty-relevant investments.
– ODA to fragile states is set to rise from currently 23 % to 30 % by 2014/2015. Afghanistan is to receive 40 % more funds. The idea is to stem violent conflict by combating poverty and to promote ­Britain’s security interests. The government, moreover, has pledged to boost cross-departmental cooperation in regard to fragile states.
– On top of better educational opportunities and improvements in maternal and child-health, DFID wants to empower girls and women economically and provide better access to family planning. Britain made substantial commitments to this effect at the MDG summit.
– DFID policies are meant to support low-carbon growth in developing countries in order to help to stem climate change. Closer cooperation with the private sector and increased support for developing countries in international negotiations are envisioned. An „International Climate Financing Fund“ is to be funded by DFID, the Department for Energy and Climate Change and the Department for Environment, Food and Rural Affairs to the tune of £ 2.9 billion (3.4 billion Euro) by 2014/15. DFID’s contribution will be £ 1.8 billion. This fund will comprise approximately 7.5 % of British ODA in 2014/15.

More money for development

The budget for the next four years pres­ented by the government in October 2010 includes cost-cutting and savings of over £ 81 billion by the financial year 2014/15. This comprehensive saving-programme will slash the budgets of departments by an average of 19 %. Of the six million public-sector employees, some 490,000 will be made redundant.

Bucking the trend, the DFID budget is set to increase by 37 % by 2014/15. That is in line with British ODA targets as well as the EU ODA plan, which foresees aid spending equivalent to 0.56 % of GNI by the years 2011 and 2012. In 2013, Britain is on track to become the first G8 country and first large EU-member to meet the 0.7 % pledge.

DFID’s budget is thus set to increase by £ 300 million in the coming fiscal year and by a further £ 700 million in the next. By 2013 it will be raised by 25 % (£ 2.5 billion). Other departments are also being allocated more ODA funding, but DFID’s share of 89 % of British ODA will remain constant. At the same time, however, DFID’s administrative expenditure is to be reduced by a third. It is expected to only amount to two percent of the overall DFID budget by 2014/15. Cutbacks in DFID’s management became perceptible already in 2010. Bilateral aid to China and Russia will be discontinued.

Public support

The British government is exceptional in increasing its aid budget despite massive cost-cutting elsewhere. The government justifies its course with a moral duty, but also points to domestic, foreign-affairs and security considerations as well as economic interests.

Party-political considerations also play a role. All major parties reaffirmed the 0.7 % pledge in their election manifestos. Prime Minister David Cameron has radically changed the profile of the Conservative Party in the last few years, paying special attention to social issues. In an effort to underscore this shift before the election, he promised that solidarity issues such as health care and development assistance would not be affected by cuts.

His political stand is based on the cosmopolitan character of British society. Britain has been willing to take on global responsibility ever since, and that is reflected in current development policy. Ties to Commonwealth countries remain close, and a large share of the British have roots in developing countries. British public discourse, moreover, reiterates the importance of “UK Aid“ for the nation’s international image.

In Britain, the interest in developmental issues is strong, and civil-society organisations like OXFAM enjoy considerable support. They work professionally and are in touch with Britain’s political parties and public servants. Their influence and clout are substantial.

Challenges

In terms of policies and funds, DFID looks strong after the change in government. There are challenges, however. The tabloid press was critical of the rising DFID ­budget. Media interest abated quickly, but DFID will remain under close observation. While the new evaluation commission and the transparency pledges serve to boost the legitimacy of DFID and are likely to improve its long-term performance, they also make the department more vulnerable to criticism.

It remains to be seen, moreover, how DFID will manage the ODA increase in 2013 by £ 2.5 billion, and how the money will be used for fragile states. It does not seem realistic to guarantee “Value for Money“ in this contexts, since aid to ­fragile states basically amounts to risky investments. Another interesting matter is how DFID will handle a larger budget and ­reduce administrative overheads at the same time.

The success of DFID will also crucially depend on the engagement of Prime Minister David Cameron. His predecessor Gordon Brown showed great interest in developmental issues. Cameron’s commitment will now set the tone for British involvement in international fora such as G8, G20, EU and UN. He is in favour of free trade. In the G20 context, he has called for an African free trade zone and the resumption of the Doha round of the WTO negotiations. These are sensible, but rather challenging goals.

The British public will closely watch whether other governments live up to their ODA commitments. An ODA decrease in the EU or the G8 could exert pressure on Cameron’s government. Britain needs partners to support the „Value for Money“ agenda internationally, thereby urging donor and recipient countries further from their comfort-zone. Whether DFID’s new leadership can fulfil its ambitions therefore also depends on other countries.